Credit Suisse loses appeal against $600m judgment
The Court of Appeal has dismissed the appeal of a judgment of more than $600 million against a Bermuda unit of the international bank Credit Suisse.
In a matter before the president of the Court, Sir Christopher Clarke and Justices of Appeal Geoffrey Bell and Sir Anthony Smellie, Credit Suisse Life (Bermuda) Limited has failed to have overturned a Supreme Court judgment delivered against them on March 29, 2022.
The appeal came after a five-week trial in November and December 2021, leading to Chief Justice Narinder Hargun awarding the plaintiffs damages for the losses they had suffered in consequence of a long-running fraud perpetrated by Credit Suisse employee Patrice Lescaudron.
The court had found the victims of the fraud were Georgian billionaire Bidzina Ivanishvili, members of his family and two companies (Meadowsweet and Sandcay) and were awarded $607.35 million in damages.
Mr Ivanishvili is a successful businessman, philanthropist and former Prime Minister of Georgia.
A spokesperson for Mr Ivanishvili was pleased with the judgment stating: “The Court of Appeal was reminded of the finding of the first instance court that Credit Suisse had turned a blind eye to the wrongdoing of its employee Mr Lescaudron, because he was generating such large revenues for Credit Suisse.
“The time has come for Credit Suisse to take responsibility for the crimes committed by its personnel, accept the rulings and repay in full the damages awarded by the courts.”
Mr Ivanishvili’s legal team involved Blake Morgan LLP (London) and Hurrion & Associates Ltd, Bermuda.
A press statement on behalf of the Ivanishvili family from Blake Morgan welcomed the judgment dismissing the appeal and upholding the original judgment.
It read: “The Court of Appeal was highly critical of the manner in which CS Life had run its case from the outset, having first refused to admit the frauds committed by Mr Patrice Lescaudron at trial, and then raising a new argument during the appeal that in fact the solution to this litigation should now come in the form of an evaluation of the worth of a claim to be made by CS Life against Credit Suisse AG for damages, which Lord Falconer told the Court of Appeal CS Life could have brought, but had not.
“Lord Falconer offered no explanation for CS Life's failure to sue Credit Suisse AG over the many years which had elapsed since Mr Lescaudron's fraud had been discovered, and he accepted during the course of the appeal that the non-pursuit of this claim was a breach of contract.
“The Court of Appeal was ‘deeply cynical’ that this new argument simply represented ‘more of the same’ from CS Life.
“Despite Lord Falconer opening the appeal hearing with a statement seeking to address the criticisms made against CS Life in the underlying judgment, this new argument was raised on the first day of the appeal without any warning and was found by the Court of Appeal to be an abuse of process by CS Life.
“The Court of Appeal remarked that even when CS Life was trying to raise this new argument, it was still not prepared to admit Mr Lescaudron's fraud.”
“This is the third substantive judgment in the Ivanishvili family's favour in the past 15 months in this multi-jurisdictional litigation.
“The fraud perpetrated against our clients and its concealment spanned almost a decade, and the extraordinary facts of the case are a shocking indictment.
“The Court of Appeal was reminded of the finding of the first instance court that Credit Suisse had turned a blind eye to the wrongdoing of its employee Mr Lescaudron, because he was generating such large revenues for Credit Suisse.
“Despite this, Credit Suisse have fought all our clients' claims every step of the way since they were commenced in 2017, at enormous legal expense, which Credit Suisse is also going to have to pay.
“We hope that Credit Suisse will now finally accept its responsibilities to our clients, desist from fighting the Ivanishvili family's claims further, and accept and make full payment of everything that it owes, including the damages of USD 607.35 million payable pursuant to the underlying judgment which have been held in escrow pending the determination of this appeal, preventing our clients from receiving the damages awarded in March 2022.”
From 2005, Mr Ivanishvili had invested more than $1 billion with the Credit Suisse group. His relationship manager with the bank, Mr Lescaudron’s fraud was said to have spanned from as early as 2007 through to September 2015.
It involved, as the Chief Justice found, not only the misappropriation and mismanagement of Mr Ivanishvili’s accounts and those of Meadowsweet and Sandcay, but also those of other Credit Suisse clients.
The appeals court said that the question as to which Credit Suisse entity Mr Lescaudron was acting for when the frauds were perpetrated is at the heart of the issues in this case.
CS Life had unsuccessfully contended in court that any claims the plaintiffs may have had in relation to the frauds could properly be pursued only against Mr Lescaudron’s employer, the bank, and not against CS Life.
• To read the judgment in full, see “Related Media”
