LONDON (AP) — Credit Suisse owes former Georgian Prime Minister Bidzina Ivanishvili hundreds of millions of dollars for failing to protect the billionaire’s money held in a trust pilfered by a manager, a Singapore court ruled Friday, the latest scandal for the Swiss bank whose yearslong problems forced its takeover by a rival.
Ivanishvili in 2004 put more than $1.1 billion into a trust overseen by the bank’s Singapore subsidiary, Credit Suisse Trust Limited, and the employee managing the trust “misappropriated many millions of dollars” over nine years before being caught and sent to prison, the Singapore International Commercial Court said.
Bidzina, who amassed a fortune in Russia as a businessman before serving as Georgia’s prime minister from 2012 to 2013, sued the Swiss bank for about $1.2 billion, saying it failed to properly administer the trust and keep its assets safe.
“The judgment published today is wrong and poses very significant legal issues,” Credit Suisse said in a written statement. “Credit Suisse Trust Limited intends to vigorously pursue an appeal.”
The bank has previously acknowledged that it did not take reasonable steps to protect the trust’s assets as of the end of 2008 and agreed to pay more than $79.4 million last year in a settlement.
“The defendant is liable to compensate the plaintiffs for their loss,” which has been calculated at $926 million, minus the amount of the settlement, Judge Patricia Bergin said in a ruling.
She added that any payout in a related case in Bermuda must be reduced so there isn’t “double recovery.”
The bank has appealed a decision by the Supreme Court of Bermuda that Credit Suisse failed to prevent “fraudulent mismanagement” of Ivanishvili’s assets in two life insurance policies taken out with Credit Suisse Life, a subsidiary based in the island territory.
Ivanishvili claimed damages of nearly $554 million in that case.
The once-venerable Swiss lender has seen a string of scandals over the years that hit the heart of its business, ranging from bad bets on hedge funds to failing to prevent money laundering by a Bulgarian cocaine ring and accusations it didn’t report secret offshore accounts that wealthy Americans used to avoid paying U.S. taxes.
The Swiss government hastily orchestrated a $3.25 billion takeover of Credit Suisse by UBS in March after Credit Suisse’s stock plunged and customers quickly pulled out their money, fearing its collapse could further roil global financial markets following the failures of two U.S. banks.
The Associated Press