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The Singapore court ruling is one of the largest court rulings against the bank.
Credit Suisse was ordered on Friday to pay the former Prime Minister of Georgia $926 million for losing part of his fortune. A court ruling in Singapore is one of the largest court decisions against the bank.
The Singapore International Commercial Court said a department of Credit Suisse acted in bad faith and failed to protect Bidzina Ivanishvili’s assets. This is the latest blow for the troubled bank being taken over by UBS (UBS).
Credit Suisse (CSGKF) said it would appeal the decision.
Billionaire businessman Ivanishvili, who was Georgia’s prime minister from 2012 to 2013, placed $1.1 billion under the care of the Credit Suisse Trust in 2005, the court learned.
Ivanishvili’s lawyers Cavinder Bull and Woo Shu Yan of law firm Drew & Napier said the Credit Suisse Trust’s failures had resulted in fraudulent mismanagement and significant losses.
In its ruling, released on Friday, the court said the bank had failed to protect Ivanishvili’s assets. It should have prevented Patrice Lescaudron, an adviser to Singapore’s Credit Suisse Trust later convicted of fraud, from gaining access to them.
Lescaudron was convicted by a Swiss court in 2018 of forging signatures of former clients, including Ivanishvili, over a period of eight years. He admitted to falsifying deals and concealing losses, earning him tens of millions of Swiss francs. He was released in 2019 and took his own life in 2020.
“It will not be accepted that the defendant’s conduct was reasonable,” Judge Patricia Bergin said in a written ruling.
“Mr. Lescaudron’s importance in retaining the key client, the plaintiff, in the Credit Suisse organization became more important than meeting his core obligation to keep the trust assets safe.”
Credit Suisse knew Lescaudron had violated fraud prevention regulations and waited up to two years for a response from him when questioned, Bergin said.
“The condoning of these blatant violations was not in good faith and was inappropriate,” added Bergin.
The $926 million to be paid by Credit Suisse will be reduced by $79 million that it already paid in December.
“The judgment released today is incorrect and raises very significant legal questions,” Credit Suisse said in a statement. “Credit Suisse Trust Limited intends to appeal vigorously.”
The bank is also appealing another judgment related to the administration of Ivanishvili’s assets.
A Bermuda court ruled in March 2022 that Ivanishvili and his family were entitled to around $600 million in damages from the local life insurance arm of Credit Suisse.
The final amount owed by Credit Suisse should be reduced further to prevent an overlap with the Bermuda case and a so-called double recovery, the court said. Credit Suisse is currently appealing the Bermuda decision.
A person familiar with the matter said the overlap is estimated at around $300 million and that Credit Suisse has already accrued some of the total compensation.
In the Singapore case, the bank will appeal on the grounds that the compensation relates to money lost due to bad investment decisions and not just fraud.
A spokesman for Ivanishvili welcomed Singapore’s decision.
“Despite the verdict in Bermuda last year and the admission of dereliction of duty in the Singapore trial, Credit Suisse has continued to thwart efforts by our clients to seek redress for crimes committed by their employees,” the spokesman said.
“We expect Credit Suisse to fully comply with the ruling and finally take responsibility for its failures.”