ZURICH (Reuters) -A Bermuda court on Tuesday ruled former Georgian Prime Minister Bidzina Ivanishvili and his family are due damages “substantially in excess of $500 million” from Credit Suisse’s local life insurance arm in a costly setback for the bank.
The court said that Ivanishvili and his family were due the damages as a result of a long-running fraud committed by a former Credit Suisse adviser, Pascale Lescaudron.
Credit Suisse said its life insurance subsidiary, which is in the process of being wound down, intended to “vigorously pursue” an appeal of the verdict.
The ruling is another blow for the scandal-stricken bank, still reeling from billions in losses racked up in 2021, which prompted a top management shake-up, and as it faces further probes over compliance and risk failings.
Chief Justice Narinder Hargun of the Supreme Court of Bermuda said: “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 interest of its clients.”
A client of Credit Suisse between 2005 and 2015, Ivanishvili alleged he racked up hundreds of millions in losses due to forged trades made by his Geneva-based private banker, Lescaudron, appointed to handle his investments in 2006.
Lescaudron was convicted by a Swiss court in 2018 of having forged the signatures of former clients, including Ivanishvili, over an eight year period, and admitted he falsified trades and hid mounting losses as part of a scheme that made him tens of millions of Swiss francs. https://reut.rs/2BlfjOf
The Bermuda case covers only a portion of the damages Ivanishvili is seeking from Credit Suisse, centering on roughly $400 million in alleged losses incurred from fraudulent and “imprudent” trades on $755 million invested in insurance policies at Credit Suisse’s Bermuda-based life insurance subsidiary, CS Life.
The Bermuda court said the extent of damages was yet to be settled but should be calculated based on the amount Ivanishvili’s policies would have generated through March 29, 2022 had they been invested in a suitable medium-risk portfolio instead.
“The plaintiff’s primary claim is for damages calculated as amounting to $553.86 million as of 31 July 2020, being the difference between the value of the assets on the policy accounts…and the total value…had they been invested instead in the medium-risk portfolio identified by the plaintiffs’ investment expert,” Hargun said in the verdict delivered by video conference.
A spokesperson for Ivanishvili said total losses yet to be repaid, spanning investments in Bermuda, Singapore and Switzerland, exceeded $800 million.
The Swiss bank last week flagged potential losses exceeding $500 million in connection to the ruling.
(Reporting by Brenna Hughes Neghaiwi; editing by John O’Donnell and Jane Merriman)
