Billionaire wins $500m lawsuit against Swiss banking giant
Billionaire and former Prime Minister of the Caucusus nation of Georgia, Bidzina Ivanishvili, won a half billion-dollar lawsuit in Bermuda’s Supreme Court today in a legal battle that pitted him against Swiss banking giant subsidiary Credit Suisse Life (Bermuda).
Chief Justice Narinder Hargun’s 281-page judgment in the complex and lengthy case concluded that the plaintiffs, who as well as Mr Invanishvili were family members and two companies, were victims of fraud and that the Swiss bank had put revenue ahead of the interests of their clients.
Mr Invanishvili’s relationship manager at Credit Suisse, Frenchman Patrice Lescaudron, committed multiple fraudulent acts, and the bank and/or Credit Suisse Life (Bermuda) did not take adequate action to prevent the fraudulent acts from occurring, said the Chief Justice.
His judgement stated: “The group function (of Credit Suisse) and/or CS Life did not take action (or adequate action) to prevent Mr Lescaudron’s fraudulent mismanagement of the policy accounts because it was prioritizing the revenues Mr Lescaudron generated for Credit Suisse over the interests of its clients including the policyholders or Mr Ivanishvili.”
The case was brought because the plaintiffs were seeking relief for the losses they suffered because of Lescaudron’s wrongdoing in respect to their Credit Suisse Life unit-linked life insurance policy accounts.
Unit-linked life insurance policies are tax-saving financial products that allow for both insurance and investment. The holder of the policy, through a power of attorney for the insurer, can also withdraw funds.
The plaintiff’s primary claim was for damages calculated as amounting to $553.86 million, which was assessed as being the difference between the value of assets had they been invested in a medium risk portfolio and its actual value.
The Chief Justice ordered forensic accounting experts for the parties in the case to calculate the damages according to his instructions, which would determine the losses in line with the plaintiff’s claim.
Mr Hargun added that Lescaudron had committed a long-running fraud against Mr Ivanishvili involving the policy accounts. “That fraud included:
(i) making investment decisions without proper authority;
(ii) forging documents;
(iii) executing investments for the purpose of obtaining lawful commissions;
(iv) directing the sale of assets for an undervalue;
(v) directing the purchase of securities at an overvalue; and
(vi) transferring assets to other clients.”
He also said Lescaudron was fraudulently mismanaging accounts with the bank before the policies were taken out.
“If Mr Ivanishvili had known that fraudulent transactions had been taking place on his accounts with the bank, he would not have agreed to set up the LPI policies but would instead have moved the management of the money to a reputable European bank to be invested in a medium risk investment portfolio,” he said.
A spokesman for the Ivanishvili legal team said: “The verdict utterly discredits CS Life’s argument that it was separate from Credit Suisse and confirmed that CS Life was aware of the frauds being committed at Credit Suisse, yet failed to inform the Claimants and deliberately withheld key documents and witnesses as a result of direction from central counsel’s offices in Switzerland.
“The Court has found CS Life responsible for losses which Credit Suisse has itself recognised as more than $500m. It is shocking that Credit Suisse continues to refuse to offer the Claimants compensation or repay the money it admits was stolen, whilst continuing to behave in a manner which has drawn severe criticism from the Court.
“The Claimants will continue to quantify their losses both in Bermuda and in Singapore where Credit Suisse’s Trust business is adopting the same tactics to avoid taking responsibility for crimes committed by the Bank’s personnel.”