Bidzina Ivanishvili, the biggest victim of a rogue trader at Credit Suisse Group, is suing one of the bank’s trusts in Singapore for at least US$300 million (S$415.6 million), opening a fresh front in the long-running dispute.
The lawsuit alleges that the Credit Suisse trust “failed to act in good faith and in the best interests of the beneficiaries”, namely Mr Ivanishvili and his family, by neglecting to do proper due diligence on how their investments were managed.
Singapore’s top court paved the way for the lawsuit earlier this month when it ruled that the city-state had jurisdiction over the case.
Credit Suisse has sought to limit court battles over Patrice Lescaudron, the bank’s former star wealth manager, to Geneva where he was convicted in 2018. Lescaudron was sentenced to prison for forging signatures and faking trades to cover mounting losses of clients, including Mr Ivanishvili.
But Mr Ivanishvili as well as Lescaudron’s other eastern European victims have never accepted that Lescaudron could have kept his fraud alive for nearly a decade without help from inside the bank. Mr Ivanishvili, a Georgian billionaire who made his fortune in banking and electronics, has the means to continue the fight as well as the scope to do so around the globe, given he had investments with Credit Suisse as far afield as New Zealand and Bermuda.
In their lawsuit, the lawyers cite the trust’s own records showing its Meadowsweet fund as having a value of US$307 million at the end of 2014 but then presentations from the bank showing it having jumped to US$439 million just three months later.
The trust “ought to have become aware that the presentation was wrong”, his lawyers said in the lawsuit. Had the trust “alerted the plaintiffs to the true investment position of the trust fund and/or bank’s misconduct, the plaintiffs would have taken steps to avoid or reduce such losses,” Mr Ivanishvili’s lawyers said.
Lescaudron’s fraud would only be discovered in September 2015 when the shares of Raptor Pharmaceuticals Inc plummeted. The Frenchman had built up a huge position on the stock on behalf of Mr Ivanishvili, without the latter’s knowledge. The stock plunge prompted the Georgian to get millions of dollars in margin calls and Lescaudron to confess four days later.
Credit Suisse said that the Singapore Court of Appeal’s decision this month “only pertains to the question of jurisdiction”. The Credit Suisse Trust, a subsidiary of the Zurich-based bank, “intends to vigorously contest and defend the claims on the merits.”
Mr Ivanishvili won the right to sue in Singapore after the city-state’s highest court rejected Credit Suisse’s arguments that it would be difficult to procure witnesses and bank documents protected by Swiss bank secrecy in Singapore.
“The availability of evidence is only a weak point in favor of Switzerland being the appropriate forum,” the judges said in their ruling. “There is no doubt that the Singapore courts are the most well-placed to decide issues of Singapore trust law.”
The new lawsuit focuses on the Singapore trust rather than the Swiss bank, which helped secure jurisdictional approval for the Georgian’s claim.
Mr Ivanishvili, a former prime minister of Georgia, is suing for more than US$300 million in losses, with the precise amount still to be determined, his spokesperson said. The damages sought will be equal to the difference between the actual value of the trust fund and the value that the trust fund should have achieved had the breaches of duty not taken place.
He is represented in the Singapore lawsuit by Drew & Napier.
Singapore is the world’s third-largest offshore wealth hub, with total assets of US$1.1 trillion in 2019, according to a June report by Boston Consulting Group. While Switzerland remains the destination of choice for those wanting to place money abroad, Hong Kong and Singapore are catching up. Both are expected to grow the assets they manage more than twice as fast as Switzerland over the next five years, the report said.