16/11/2021 • BusinessWorld

Credit Suisse trial may lift lid on banker’s fraud scheme

An offshore unit of Credit Suisse Group AG goes to court Monday in a case that could lift the lid on how a rogue Geneva employee got away with defrauding some of the firm’s richest clients for nearly a decade.

Georgian billionaire and former prime minister Bidzina Ivanishvili accuses Credit Suisse Life (Bermuda) Ltd. of failing to stop the late Patrice Lescaudron from losing $400 million of his fortune.

Ivanishvili is one of at least five wealthy victims of Lescaudron who together lost hundreds of millions before the Frenchman’s fraud was exposed in 2015.

The Bermuda trial has suddenly gained in importance after the island’s Supreme Court ruled in September that a pair of reports – one by PricewaterhouseCoopers commissioned by Credit Suisse, and a second from Switzerland’s banking regulator – must be shared with the bank’s local unit so they could be admitted into evidence for the trial.

Up until the ruling, Credit Suisse had successfully fought in UK and Swiss courts to keep those reports private. But Bermuda judge Narinder Hargun made clear he was seeking to correct an imbalance in the Bermuda trial by admitting the reports into the pretrial process known as discovery.

“The bank has a direct economic interest in the outcome of these proceedings, and it seems clear that it is controlling the discovery process and indeed this litigation,” Hargun said.

Ivanishvili, worth an estimated $6 billion, sued the Bermuda unit four years ago for failing to ensure the prudent investment of his fortune. While Ivanishvili’s losses also spurred lawsuits in Singapore and New Zealand, Bermuda accounts for close to half of his total losses, his lawyers say.

Lescaudron, who took his own life in 2020, was a lone wolf who hid his crimes from colleagues and superiors, the Zurich-based bank has consistently said. Ivanishvili and other plaintiffs say that his colleagues must have known about his fraudulent behavior and if they didn’t, bear criminal responsibility for failing to spot it.

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