First endurance test for Credit Suisse chief lawyer Markus Diethelm
As the new chief legal officer at Credit Suisse, Markus Diethelm has to prove himself quickly in the lawsuit against the preferred head of government in Georgia. For the big bank itself, it’s about checking off old mistakes and finally building a new risk culture.
A three-week trial that could end up costing Credit Suisse (CS) hundreds of millions of dollars begins on (today) Monday before the international commercial court in Singapore.
The former head of government of Georgia is on the plaintiff’s side Bidzina Ivanishvili and his family. They are demanding damages of around 800 million dollars from the Scheizer major bank because a CS subsidiary is involved in the fraud of a former CS employee, like the agency “Reuters” Reported over the weekend.
The process becomes the first endurance test of the 65-year-old CS chief lawyer Markus Diethelm. His predecessor Romeo Cerutti had recently lost the confidence of important CS shareholders because the elusive chief legal officer had cut an increasingly unfortunate figure in defending against Iwanishvili’s lawsuits.
Cheated out of hundreds of millions
Between 2005 and 2015 Iwanishvili was a customer of CS. He lost because of the behavior of his Geneva client advisor Patrice Lescaudron Hundreds of millions of francs.
By 2011 at the latest, the CS consultant had diverted millions from the assets he managed to wealthy clients, including Iwanishvili, in order to invest them in a CS life insurance structure.
Piling losses hidden
Lescaudron was removed from CS without notice in 2015 and sentenced to prison in Geneva in 2018 for fraud. For eight years he forged the signatures of former clients like Iwanishvili, concealed mounting losses and pocketed millions.
CS, which was repeated as a victim in the proceedings, repeatedly emphasized that Lescaudron had been a lone wolf, unsupported by any other bank employee.
guilty verdict in Bermuda
In addition to Singapore, the former Georgian Prime Minister also dragged CS into the dock in Bermuda in connection with the Lescaudron fraud case. Last March, the local court sentenced local life insurance companies that held part of Ivanishvili’s assets. According to the verdict, CS Life Bermuda had taken insufficient measures to prevent the relationship manager’s fraudulent mismanagement.
Then, in June, it was announced that the total damages to be paid by the CS affiliates was $607 million, as well finews.ch reported. The major Swiss bank had previously announced that it would contest the verdict.
Discomfort also in Switzerland
According to circles quoted by “Reuters”, CS should appeal a guilty verdict in Singapore. However, there is currently no sign of an out-of-court settlement.
If the banks’ subsidiaries were convicted in both Bermuda and Singapore, it would have to be broken down what payment is made where. The damage can only be claimed once.
The money house is also threatened with further hardship in Switzerland. On the one hand, a criminal investigation by the public prosecutor’s office in Geneva is currently underway in the Lescaudron case. On the other hand, the Georgian could also file a lawsuit against the big bank in Switzerland. Last December also reported finews.ch, that six former and current high-ranking employees of CS had been summoned for questioning by the Geneva public prosecutor’s office in Geneva.
Change in risk culture
In recent years, the Institute has had to dig deep into its pockets to settle legal cases. In the first half of 2022 alone, the bank increased the risk of legal risks by around CHF 1.1 billion.
It would be a liberation if the big bank could tick off old misconduct. In addition, the risk culture of the big bank urgently needs to be overhauled.
Is the party on the stock exchange finally over?
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Yes, the looming recession and persistent inflation are the reasons for this.
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Yes, because investors have become risk-averse.
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The stock market always goes up and down – but you have to be patient.
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No, you can switch to other asset classes.
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No, you have to choose your investments more carefully.