GENEVA — A Credit Suisse Group trust has admitted it failed to tell its billionaire client about unauthorized transfers of his accounts, in an unexpected move that could shape the outcome of a lawsuit in Singapore over potential liability. unit for losses related to a rogue banker.
During the first nine days of the trial, Mr. Lee Eng Beng, lead counsel for Credit Suisse Trust (Singapore), argued that his liability was limited to the administration of assets belonging to Mr. Bidzina Ivanishvili and that it was the tycoon, or his Georgian business adviser, who made the investment decisions and should be responsible for any losses.
But on Friday afternoon, Mr. Lee admitted to the presiding judge that the trust had acted in breach of its fiduciary duties for Mr. Ivanishvili’s investments held through an entity called Meadowsweet.
“The defendant acknowledges that it should have, as of December 31, 2008, taken reasonable steps to resolve the issue of unauthorized transfers from Meadowsweet Assets Limited bank accounts, including contacting Mr Ivanishvili directly to verify the regularity of the transfers outside from Meadowsweet’s bank account.”
The shift in strategy by Credit Suisse Trust’s legal team represents an attempt to draw a line in the sand and limit the potential fallout from damaging testimony by trust staff earlier in the trial following a court loss against Mr. Ivanishvili earlier this year.
Mr Ivanishvili, a former Prime Minister of Georgia, is suing the trust for US$800m (S$1.13bn) in damages and lost income he would have earned over the years had the money been invested safely.
Last week, Mr. Ivanishvili testified that apart from some investments in Russian stocks, he did so through Credit Suisse at first “I didn’t manage anything” and left those decisions to investment to rogue banker Patrice Lescaudron.
The Frenchman was found guilty of fraud in 2018 over the scheme he executed for fake signatures and trading orders to try to cover mounting losses among his clients’ wallets.
Mr Ivanishvili won a $607 million judgment in March from a Bermuda court, which ruled that a local life insurance unit of Credit Suisse had turned a blind eye to the Lescaudron fraud. Credit Suisse Life is appealing this decision.
A spokesman for Mr. Ivanishvili declined to comment on Mr. Lee’s remarks in court, as did a spokesperson for the Swiss bank. BLOOMBERG