26-5-2023 (Singapore) In a landmark ruling, the Singapore International Commercial Court has ordered Credit Suisse Trust to pay compensation of $926 million (S$1.25 billion) to Bidzina Ivanishvili, a tycoon and former Prime Minister of Georgia, and his family. The court found that a fraudster within the bank had embezzled millions of dollars from the trust over a period of nine years, and Credit Suisse Trust had failed in its duty to protect Ivanishvili’s assets.
The case, which involved top lawyers including Senior Counsel Cavinder Bull and Ms Woo Shu Yan from Drew and Napier representing the plaintiffs, was heard over multiple days in September 2022 and February 2023. Lawyers from Allen & Gledhill, Ms Han Rebecca and Mr Justin William Jeremiah, represented Credit Suisse Trust, a wholly owned subsidiary of Swiss company Credit Suisse Trust AG, incorporated in Singapore.
Ivanishvili, along with his wife and three children, filed the lawsuit against Credit Suisse Trust, seeking damages of approximately $1.2 billion. The plaintiffs were beneficiaries of the Mandalay Trust. The court found that an officer named Patrice Lescaudron, appointed as the trust’s relationship manager, had committed the fraud. Lescaudron misappropriated significant sums of money from the trust over a period of nine years, until his actions were discovered and he was arrested in 2015.
The Swiss Correctional Court had previously found Lescaudron guilty of embezzlement and sentenced him to five years’ imprisonment in 2018. However, Credit Suisse Trust initially contested the plaintiffs’ claim, asserting that they had to prove the fraud despite Lescaudron’s guilty plea and conviction.
During the trial, Credit Suisse Trust eventually admitted its duty to safeguard the trust assets if it had knowledge of mismanagement. However, the bank argued that its role was limited and that it could not have prevented or stopped the fraud based on the information it received. Nevertheless, Judge Patricia Bergin, in her 257-page judgment, determined that Credit Suisse Trust had breached its duty to the plaintiffs by failing to protect the trust assets.
Justice Bergin ruled that the plaintiffs had established the defendant’s breach of duty as of March 30, 2008. She stated that the loss suffered by the plaintiffs should be calculated based on the difference between the actual outcome and what would have been achieved if a competent trustee had managed the portfolio without fraud. Consequently, the court ordered Credit Suisse Trust to compensate the plaintiffs with a sum of $926 million, of which $79.4 million has already been paid.
Credit Suisse Trust expressed its intention to vigorously pursue an appeal following the court’s decision.
