Banking giant Credit Suisse has been ordered to pay $926m (£750m, €863m) in compensation after a Singapore court said it had breached its duty to safeguard the assets of a former prime minister of Georgia.
Bidzina Ivanishvili sued the bank’s trust arm for damages and lost income that he claims he would have made over the years if his money had been safely invested. He was a former client of wealth manager Patrice Lescaudron, who admitted hiding losses of CHF143m (£128m, €145m, $154m). In 2020, Lescaudron took his own life.
Ivanishvili, a tycoon and former prime minister of Georgia, was the victim of a scheme Lescaudron ran to cover growing losses among other client portfolios.
It is not the first time that Credit Suisse has made headlines in the wake of Lescaudron’s actions. In March 2022, the bank said it was expecting a Bermuda court to hand down a $500m penalty to its life insurance subsidiary Credit Suisse Life Bermuda.
According to a judgment posted on 26 May, Credit Suisse Trust breached its duty to the plaintiffs in failing to safeguard the trust assets.
Judge Patricia Bergin said: “The plaintiffs have established that the defendant breached its duty to the plaintiffs to safeguard the trust assets as at 30 March 2008.
“The loss suffered by the plaintiffs is the difference between what would have been achieved if the whole portfolio had been removed and managed by a competent, professional trustee and the trust assets were not affected by fraud, and what was actually achieved.”
She added that Credit Suisse is liable to compensate the former Georgian prime minister’s family for their losses from 30 March 2008 to the date of the judgment. As a result of the settlement, the sum should be reduced by [just over $79m].
“Further, the parties will ensure that any sum recovered in the Bermuda Proceedings will be adjusted so as to ensure there is no double recovery,” Bergin added. “If the parties are unable to reach agreement on costs and/or interest, they should file an agreed timetable for submissions on costs and/or interest by no later than 30 June 2023.
“If the parties agree, the question of costs and/or interest, will be dealt with on the papers. If the parties wish to have an oral hearing in respect of costs and/or interest, they should deal with this in the timetable.”
A spokesperson for Credit Suisse told International Adviser: “The Singapore International Commercial Court delivered its judgment on May 26 in relation to trust services provided by Credit Suisse Group’s Singapore subsidiary, Credit Suisse Trust Limited.
“The judgment published today is wrong and poses very significant legal issues. Credit Suisse Trust Limited intends to vigorously pursue an appeal.”
This comes several months after international wealth management giant UBS agreed a deal to acquire struggling Swiss banking group Credit Suisse for a total consideration of CHF3bn.
The deal is expected to create a global wealth management business with more than $5trn (£4.1trn, €4.7trn) in total invested assets and sustainable value opportunities.