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CS Victims: Judgment orders Credit Suisse subsidiary to pay more than USD600m within 42 days

LONDON, July 27, 2022 /PRNewswire/ -- In the latest judgment of the Supreme Court of Bermuda, CS Life has been ordered to pay USD607.35m in damages within 42 days. The money will be held in an independent account until CS Life’s appeals have been determined, following which the final damages amount will be paid to Plaintiffs, including the former Prime Minister of Georgia, Bidzina Ivanishvili. The judgment follows the March ruling which found CS Life responsible for not taking adequate actions to prevent fraud and mismanagement on the accounts. Total losses on accounts with Credit Suisse owned by Mr Ivanishvili and his family amount to more than USD1.2bn.

At a hearing on 21st June, CS Life argued that it should not have to pay the Judgment Debt until all appeal routes had been exhausted and sought to rely on a guarantee from Credit Suisse AG as being sufficient security. In his judgment, Chief Justice Hargun dismissed the application, referencing the recent decision of the UK Financial Conduct Authority to place Credit Suisse on its watch list of institutions requiring tougher supervision as a result of its failure to address its culture, governance and risk controls, including a “lack of internal challenges to risky transactions.”

The judgment also stated that the Plaintiffs should not be required to assume the ‘credit risk’ of Credit Suisse and confirmed the Plaintiffs’ “justifiable concerns that CS Life and the Bank may not voluntarily honour the terms of the guarantee.” As a result, CS Life has been ordered to pay the full amount of damages into an escrow account within 42 days.

CS Life’s application that damages should be limited to assets in the Plaintiffs’ own accounts was dismissed and found to be to an ‘abuse of process.’ Chief Justice Hargun questioned the timing of this application, which was made “nearly 5 years after the proceedings were issued and 7 weeks after the Judgment was handed down.” As a result, CS Life is liable to pay the full amount of the Judgment Debt from its general account.

The Plaintiffs were also awarded an interim payment of more than USD10m for costs, which was ordered to be paid within 42 days. The Judgment made an indemnity costs order on the basis of CS Life’s failure during the trial to give proper discovery, its failure to call relevant witnesses and the non-admission of the fraud and mismanagement on the accounts; circumstances which were described as “truly exceptional and involve grave impropriety.”

A spokesperson for Mr. Ivanishvili commented:

“The judgment emphatically dismisses the ongoing efforts of Credit Suisse and its subsidiaries to avoid taking responsibility for the fraudulent acts perpetrated by its personnel. CS Life’s cynical attempt to limit damages to the victims’ own accounts was rightly dismissed by the Court and demonstrates the contempt which the Bank shows towards its own clients.

The fact that the Bank’s guarantee was not considered adequate by the Court is emblematic of the problems currently facing Credit Suisse and the damage these have caused to its reputation and Swiss banking as a whole. We look forward to payment of the full amount of the Judgment Debt into escrow and the awarded costs being made by 5th September.

The judgment was damning in its criticism of the actions of Credit Suisse and we continue to find it extraordinary that an international bank is allowed to behave in this manner. We will continue in our efforts to seek redress in the imminent trial in Singapore.”

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Information for editors
CS Victims was established by the representatives of certain clients of Credit Suisse.

They are victims of an estimated $1 billion fraud perpetrated by the Bank’s personnel over seven years. At least one of Credit Suisse’s employees has been convicted of fraud and FINMA has highlighted failures in Credit Suisse’s systems and controls which led directly to crimes being committed.

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