Credit Suisse ‘failed to protect my wealth’, says Georgian tycoon
Week two begins today in the Supreme Court case where a former prime minister of Georgia is alleging that a Credit Suisse Bermuda unit bears responsibility in how $400 million of his money went missing.
Bidzina Ivanishvili concluded on Friday his third day of testimony remotely before Chief Justice Narinder Hargun, relating to how the massive investment held in a Credit Suisse Life (Bermuda) Ltd insurance product went sour.
About $755 million of Mr Ivanishvili’s multibillion-dollar fortune was held in the Bermuda-based products.
An approximately five per cent stake in Raptor Pharmaceutical Corp was a significant part of the investment portfolios of the two unit-linked life insurance policies.
But when trials of a new drug being developed by the company failed, the value of the stock plunged.
During testimony, Mr Ivanishvili said that it had been a great shock to see the call for $400 million to cover the cost of the Raptor shares appear in his bank statements.
Unit-linked life insurance policies are tax-saving financial products that allow for both insurance and investment.
Mr Ivanishvili, speaking through a rotating team of interpreters, said that he knew very little about the management of his assets held by Credit Suisse and his only instruction to the bank was to preserve the value of his fortune.
He and his assistants’ contact with the bank had been primarily through a man called Patrice Lescaudron who, it later emerged, had been stealing from the bank’s clients for a decade.
The discovery was made in the wake of the $400 million call and subsequent bank investigation.
Lescaudron was ultimately convicted of financial crimes, imprisoned for five years, released after a year on grounds of ill health, but committed suicide soon after.
Mr Ivanishvili and other plaintiffs argue that the bank should have protected the former leader’s money, especially in light of Lescaudron’s crimes.
He told the court: “What I know today is that Credit Suisse failed to preserve my wealth.”
But Steven Thompson, the bank’s lawyer, like his colleague Stephen Moverley Smith, QC, who had questioned Mr Ivanishvili on Wednesday and Thursday last week, accused the former Georgian leader of being misleading and proposed that he was involved in the investment decisions made for the unit-linked life insurance policies.
Mr Thompson also suggested that Mr Ivanishvili was being dishonest about the level of his knowledge about the products, saying: “I am suggesting … that you knew you could pay lump sums in and take lump sums out.”
The former prime minister responded: “You are free to believe whatever you wish. It’s your problem.”
The tone of the testimony grew increasingly testy as the lawyer pressed about the details of, and dates on which, Mr Ivanishvili had signed a range of documents.
When Mr Ivanishvili testified that he had minimal memory of the events, the lawyer expressed disbelief and repeated his questions.
The Chief Justice intervened twice, once asking where the lawyer was going with his line of questioning.
A second time Chief Justice Hargun admonished the lawyer, telling him: “His evidence is that that is what the documents say and he does not have an independent recollection.”
George Smoulha, QC, counsel for the former prime minister and his fellow plaintiffs, established that Credit Suisse prepared documents, complete with Post-it notes, for Mr Ivanishvili’s signature.
Through questioning, Mr Ivanishvili held that when he was presented with a large stack of documents for him to sign in different places, he was not taken through them page by page.
He said that he was taken to the places where he was asked to sign.
Viewing one of the documents brought into evidence, Mr Smoulha said: “On the right-hand side it looks like there is a sticker, a Post-it note, marking where Credit Suisse wanted a signature.
“Are you able to say that is what it is? Are you able to say that is the way places that required a signature were indicated?”
Mr Ivanishvili said: “There were legal stickers marking the places where I was required to sign.”
The former prime minister’s assistant, George Bachiashvili, also took the stand on Friday.
He said that he used a “dashboard” to compile and relay financial information to Mr Ivanishvili and to act as an intermediary between the billionaire and Credit Suisse.
He testified: “It was not my job to question any investment decision of Credit Suisse.”
The lawyer put to him that he was essentially looking after Mr Ivanishvili’s investments while he was occupied as prime minister.
“My job was to relay the performance and communications,” he said.
“If I (had been) asked to monitor investments, I would have said no, because it is a full-time job”, Mr Bachiashvili said, adding that he was employed full time elsewhere and so he could not take on the additional responsibilities.
Answering questions posed by Mr Moverley Smith about the nature of the mandates that governed the accounts that held Mr Ivanishvili’s assets, he said: “In 2012 if anyone had said discretionary or non-discretionary, I would not have understood.”
He also said: “To be extremely frank and (it is) a bit embarrassing … I really did not understand the difference between the terms.”
Mr Bachiashvili said that when “the situation messed up” in 2015, and he began looking through e-mails and working on Mr Ivanishvili’s claims with the lawyers, “I tried to understand a lot of other things as well.”
He added: “My understanding was Credit Suisse was managing all the assets — it was discretionary.”
Mr Bachiashvili recalled a point where Credit Suisse said it had changed its system, explaining that it was a “new procedure” that meant that Mr Ivanishvili would now be required to sign all the “over-the-counter” orders.
In hindsight, he said, he saw this as a sign that “… a big fraud was happening in our accounts”.
Mr Bachiashvili was charged by Mr Moverley Smith that he had discussed with Lescaudron and agreed to the investments to be made for the portfolio.
“I don’t know where you get this information,” the billionaire’s assistant responded.
“Perhaps there were two or three times Patrice (Lescaudron) proposed investments — Twitter or Spotify and one related to ING bank (Group).”
He said that none were explicitly approved as an investment.
He added that there had been between 20,000 and 40,000 transactions involving assets in total in Mr Ivanishvili’s accounts.
Mr Bachiashvili said that he also recalled an e-mail that referred to a mandate “grey zone” in which the bank was operating, which had concerned him, and he had pressed for that to be rectified.
The case continues this morning.