New legal charges arriving almost daily for Switzerland's second-largest bank. It should prompt the finance sector to think twice.
The so-called «CS Victims» group sees themselves as just that. But right now, they are landing the most punches against Credit Suisse. The group of Eastern European oligarchs including former Georgia Prime Minister Bidzina Ivanishvili filed charges just a few days ago in the Channel Island of Guernsey. The accusations are aimed at a certain Green Vals Trust and a fiduciary arranged by the bank.
But the charges are new, even unexpected, at least in comparison to the ones levied until now related to the fraud undertaken by former Credit Suisse banker Patrice Lescaudron. The fiduciary refused to make payments to the trust in March and April several times due to the «geopolitical situation in Eastern Europe». That violated the rights of the beneficiaries, ostensibly including Ivanishvili himself.
Victory in the Bermudas
The accusers maintain that Ivanishvili is a Georgian and French citizen and has no connection to any sanctions person or organization. That means that the trust's beneficiaries were discriminated against. According to individuals knowledgeable about the case, the damages being asked are relatively modest. But that does not make the matter any less explosive for Credit Suisse and the finance sector as a whole.
The group needs to be taken very seriously. As finews.com previously reported, they have landed a major victory in the Bermudas in March. The case is now costing them $600 million US dollars in damages after they had originally been estimated at $500 million. But Ivanishvili and the others are asking for $800 million back and the two sides are likely to face each other in court in the fall, this time in Singapore.
US Lawyers Close at Hand
Credit Suisse seems to have become an ideal target for legal action. US law firms are preparing class-action lawsuits against Credit Suisse for the twin fiascos related to Greensill supply chain funds collapse and the Archegos family office implosion. Now, it appears that new charges are coming into view. Potential US plaintiffs appear to be accusing the bank of continuing to serve Russian oligarchs after the outbreak of the war in Ukraine in March, breaking American law.
The bank itself has confirmed that charges have been raised against senior management and the board of directors related to Archegos. There have also been reports that a US retirement fund wants to take legal action against former chairman Urs Rohner. This comes at the same time that clients of the Greensill funds have aired their grievances publicly that they may have to wait up to five years to get their money. And they also threaten legal steps.
Confirming Old Cliches
That practically anything that comes to mind potentially results in new legal charges should give much food for thought. Even though the bank only has itself to blame. The actions taken by authorities in connection with the Mozambique mess and last fall's regulatory slap related to «Spygate» show a bank that has drifted off course - ethically. The «Suisse Secrets» leaks in February related to its former business with criminals and potentates confirm many of the old cliches about Swiss banking.
Finance sector representatives raised the alarm over «Suisse Secrets» in view of the wave of charges rolling at one of the country's main banks. Every single case means puts Credit Suisse in the headlines for months, with the alleged missteps lingering in everyone's heads. That is sure to keep Switzerland and the finance sector part of an unwelcome, very public discussion.
Vladimir Putin
When it comes to Russian sanctions, minds are pretty well made up. The accusations by the Commission on Security and Cooperation in Europe leveled last week at a panel briefing do not make for light reading.
«Long known as a destination for war criminals and kleptocrats to stash their plunder, Switzerland is a leading enabler of Russian dictator Vladimir Putin and his cronies» the panel indicated.
«Panelists discussed how a compromised Switzerland affects U.S. national security and whether the United States should rethink its strategic bilateral relationship with Switzerland,» they added.
Blocking More Assets than Required
The Russian sanctions regime is shaping up to be a very public source of criticism but it can also become an inadvertent own goal when it comes to the sector's clients. The accusations leveled by CS Victims related to Green Vals Trust show that clients not directly affected by sanctions feel discriminated against and can take legal action.
That is all not very far-fetched. According to the Swiss government, the domestic banks are doing their utmost to ensure compliance. They are blocking far more assets than they need to under Swiss rules. But this «overcompliance» could also lead to a belated form of revenge in the future.
