Credit Suisse Fraudster’s Victim Urges Judge to Hear Bank Staff
Credit Suisse Trial May Lift Lid on Rogue Banker’s Fraud Scheme
(Bloomberg) -- A lawyer for the Georgian billionaire victim of rogue Credit Suisse Group AG banker Patrice Lescaudron said a Bermuda court needs to hear more evidence from the late fraudster’s colleagues.
Bidzina Ivanishvili, a former prime minister of Georgia, accuses Credit Suisse Life (Bermuda) Ltd. of failing to stop Lescaudron from losing $400 million of his fortune when clues as to his crimes had become apparent. As the trial got underway in the Bermuda capital Hamilton on Monday, Ivanishvili’s lawyer Joe Smouha urged the judge to hear accounts from other staff including Lescaudron’s former section chief.
The court can’t conclude “that there was nothing wrong, no fraud, no misconduct, no forged signatures, no unauthorized transfers, no improper dealing on the accounts,” Smouha said, when “individual employees and senior ones still employed by the bank who could and should’ve given evidence on those matters are not being called.”
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. Lawyers for those clients argue that the bank either knew about it, or didn’t, and bears legal responsibility for failing to spot it.
Though a handful of Lescaudron’s colleagues and supervisors did testify at his 2018 trial, their testimony shed little light on how Lescaudron got away with his fraud for nearly a decade.
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.
Smouha cited the Finma report for examples of where Lescaudron’s section chief “breached his supervisory obligations and did not properly escalate the non-compliance with instructions by Lescaudron.”
Up until the ruling, Credit Suisse had successfully fought in U.K. 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.
Both Credit Suisse and a spokesman for Ivanishvili declined to comment before the trial.
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