In the past two years, Courts in Bermuda and Singapore have ruled against entities of Credit Suisse as the victims have sought the truth of how the convicted Relationship Manager was able to defraud and mismanagement their investments which led to losses of more than $1 billion.
In all cases, the Judgements are critical of the way in which the Credit Suisse entities had presented their cases, refusing to accept any liability until the trial in Singapore during which Credit Suisse Trust (Singapore) admitted it had acted in breach of its trustee duties. Despite the takeover by UBS, Credit Suisse continues to refuse to compensate the victims for the crimes committed by its personnel which stains the banking industry in Switzerland.
The Judgements can be downloaded from the links below:
CCourt of Appeal to the Supreme Court of Bermuda
CS Life’s appeal was dismissed and the Judgement was highly critical of the manner in which CS Life had run its case from the outset, having first refused to admit the crimes and then raising a new argument during the appeal that CS Life should have made a claim against Credit Suisse AG for damages. No explanation was provided for CS Life’s failure to sue Credit Suisse AG over the many years which had elapsed since the crimes had been discovered, and CS Life accepted during the non-pursuit of this claim amounted to a breach of contract. The Court of Appeal was “deeply cynical” that this new argument simply represented “more of the same” from CS Life.
International Commercial Court of the Republic of Singapore
The Court dismissed Credit Suisse Trust’s arguments that tried to limit the scope of the duties of the trustee and that sought to attribute partial responsibility for the losses to the victims. It found that any trustee acting honestly and in good faith in compliance with its duty to safeguard the assets would have had no justification for continuing to allow the convicted Relationship Manager to have access to those assets from 30 March 2008, by which date many millions of trust assets had been transferred without authorisation, and the defendant was very well aware of this. The defendant was found to have preferred the “importance” of retaining the “big client” with the Credit Suisse organisation to the compliance with its core obligation of keeping the trust assets safe. The Judgement confirmed that Credit Suisse Trust knew that Mr Lescaudron was in breach of the very directions that had been established for the purpose of avoiding fraud, and yet in some instances waited for up to 2 years for a response from him when he was questioned about his breaches. The defendant’s tolerance of the flagrant breaches of Mr Lescaudron was not in good faith and was unreasonable. The Judgement ordered Credit Suisse trust to pay $926 million in compensation for the loss suffered by the victims.
Supreme Court of Bermuda
The Court upheld the claims by Bidzina Ivanishvili, former Prime Minister of Georgia, versus CS Life, a wholly-owned subsidiary of Credit Suisse. The damning judgement confirmed that Credit Suisse had been aware of its employee’s crimes, including fraud and mismanagement, but did nothing to prevent these and chose to prioritize profits over the legitimate interests of the client. The Court also found that CS Life deliberately withheld key documents in substantial numbers over many years, which prejudiced the Claimants and the Court’s ability to deliver its verdict. The Court has firmly held CS Life responsible for very substantial losses caused by it and Credit Suisse Group and ordered CS Life to pay more than $600 million in damages and costs which forced Credit Suisse to issue a regulatory announcement. The verdict was appealed which was subsequently dismissed.