Credit Suisse fraudster’s statements weren’t just ‘human errors’, adviser testifies

AN adviser to the billionaire suing a Credit Suisse trust for US$800 million in damages told a Singapore court that the disgraced banker who defrauded his boss made mistakes in the portfolio statements that clearly went beyond just “human errors”.

Patrice Lescaudron, the banker whose conviction for fraud triggered lawsuits around the world from clients including Bidzina Ivanishvili, admitted in 2015 that he had faked signatures and trading orders to try and recover losses in his clients’ portfolios. He also confessed to running 2 sets of client statements at times to hide the hidden trades and differing valuations.

George Bachiashvili, Ivanishvili’s adviser, testified about those discrepancies at the trial, which pits the Georgian against Credit Suisse Trust (Singapore), through which Ivanishvili had hundred of millions invested. 

“Some were human errors but some ... there’s change in value dates that clearly were not human error,” Bachiashvili said on Friday (Sep 9) in court, referring to private-equity positions that were updated with a time lag.

Bachiashvili testified after his boss spent 4 days on the stand, fending off attempts by CS Trust’s lawyer, Lee Eng Beng, to prove Ivanishvili was no novice but an experienced investor who knew the risks and was more actively involved in the management of his portfolio than he’s let on.

One of the key questions for the Singapore judge to evaluate is whether Credit Suisse or any of its units bear responsibility for Lescaudron’s behaviour. The Zurich-based bank has repeatedly argued that the Frenchman was a lone wolf who hid his crimes from his colleagues and supervisors around the world. Ivanishvili has consistently countered that at some level, Credit Suisse either knew or should have known about his near decade-long deception – and should be held responsible.

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Bachiashvili said he set up a database to track the tycoon’s money but that it was based on data he received from Lescaudron that he didn’t have reason at the time to question the figures. Moreover, Bachiashvili testified, neither he nor Ivanishvili would steer Lescaudron, one way or another, into recommending certain investments during their regular meetings with the Frenchman but left that up to the bank’s advisers.   

But Lee pushed the issue of responsibility, pointing out that Bachiashvili was named as an investment manager on one of the trusts handling Ivanishvili’s money. Bachiashvili became an additional investment manager of the Mandalay Trust in December 2013, according to a court filing.

“In investment banks, there are many hundreds of vice-presidents, different types of managers,” said Bachiashvili. “It doesn’t mean much. It’s just a title.” BLOOMBERG