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Credit Suisse Life denied fraud case court request

Credit Suisse Life (Bermuda), a division of the banking giant Credit Suisse, has had an application before the Supreme Court rejected by Chief Justice Narinder Hargun.

CS Life wanted a $607.35 million judgment against them to be paid from accounts set up to hold the family assets of the former prime minister of Georgia, Bidzina Ivanishvili.

But the Chief Justice has ruled that all orders for costs against CS Life are liabilities of the insurer’s general account under the Segregated Accounts Companies Act.

He said the application made by Credit Suisse was of such “fundamental importance in the context of these proceedings, nearly five years after the proceedings were issued and seven weeks after the judgment was handed down …

“In view of this finding of abuse of process, the court does not allow CS Life to raise the new point at this very late stage of the proceedings.”

The Chief Justice ordered Credit Suisse to pay the plaintiffs an interim sum of $10.47 million and place the amount of the judgment into an escrow account within 42 days.

Credit Suisse will also have to pay interest of 3.5 per cent per annum on the money until the outcome of an appeal they have said they will mount against the $607.35 million judgment.

In this week’s judgment, Mr Hargun again addressed the bank officer Patrice Lescaudron’s wrongdoing, while criticising the bank’s case.

“In all the circumstances, the court considers that the award of indemnity costs of these proceedings against CS Life is justified either on the ground of serious deficiencies in the discovery provided by CS Life or on the ground of failure to call relevant witnesses who should have been called.

“Such an order is also supported by CS Life’s failure to admit that Mr Lescaudron committed a long-running fraud against Mr Ivanishvili, involving the policy accounts and CS Life’s failure to disclose the group function either to the plaintiffs or to the court prior to the commencement of the trial.”

The Ivanishvili family were plaintiffs in an earlier case they brought against CS Life after hundreds of millions of dollars were lost from their accounts. From that, the court agreed that the bank bore some culpability.

Mr Hargun ruled in March that the plaintiffs were victims of fraud and the Swiss bank had put revenue ahead of the interests of their clients.

The client’s relationship manager at Credit Suisse, Patrice Lescaudron, committed many fraudulent acts, and the bank and/or Credit Suisse Life (Bermuda) took no adequate action to stop the fraud, the court ruled.

The judgment said: “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 prioritising the revenues Mr Lescaudron generated for Credit Suisse over the interests of its clients including the policyholders or Mr Ivanishvili.”

Large tranches of the Ivanishvili family wealth valued at hundreds of millions of dollars had been put with the insurer in unit-linked policies, held in segregated accounts.

Segregated accounts legally separate the assets they hold along with any liabilities from other segregated accounts as well as the general account of the company in which the segregated accounts are held.

Credit Suisse Bank insurance unit, Credit Suisse Life (Bermuda), has court application rejected

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Published July 27, 2022 at 7:44 am (Updated July 27, 2022 at 7:44 am)

Credit Suisse Life denied fraud case court request

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