GENEVA – A Credit Suisse Group trust admitted it failed to let its billionaire client know about unauthorised transfers from his accounts, in an unexpected move that may shape the outcome of a Singapore trial over the unit’s potential liability for losses tied to a rogue banker.
Over the first nine days of the trial, Lee Eng Beng, the lead lawyer for Credit Suisse Trust (Singapore) Ltd, had argued that its responsibility was limited to administration of the assets belonging to Bidzina Ivanishvili and that it was the tycoon, or his Georgian business adviser, who called the shots on investment decisions and should be liable for any losses.
But on Friday afternoon (Sept 16), Mr Lee, admitted to the presiding judge that the trust acted in breach of its trustee duties for Mr Ivanishvili’s investments held through an entity called Meadowsweet.
“The defendant accepts that it ought to have, as at 31 December 2008, taken reasonable steps to address the issue of unauthorized transfers from the bank accounts of Meadowsweet Assets Limited, including directly contacting Mr Ivanishvili to verify the propriety of the transfers out of Meadowsweet’s bank account.
The shift in strategy by CS Trust’s legal team represents an attempt to draw a line in the sand and to limit the potential fallout from damaging testimony from trust staff earlier in the trial following a court loss to Mr Ivanishvili earlier this year.
Mr Ivanishvili, a former prime minister of Georgia, is suing the trust for US$800 million (S$1.13 billion) in damages and lost income he said he would have made over the years if the money had been safely invested. Mr Ivanishvili last week testified that apart from some investing in Russian shares he did through Credit Suisse early on “I didn’t manage anything” and left those investment decisions to rogue banker Patrice Lescaudron.
The Frenchman was convicted in 2018 for fraud because of the scheme he ran to fake signatures and trade orders to try and cover growing losses among his clients’ portfolios.
Mr Ivanishvili in March won a US$607 million judgement from a Bermuda court, which ruled a local Credit Suisse life insurance unit there had turned a “blind eye” to Lescaudron’s fraud. CS Life is appealing that decision.
A spokesman for Mr Ivanishvili declined to comment on Mr Lee’s court remarks as did a spokeswoman for the Swiss bank. BLOOMBERG