Credit Suisse turned a blind eye as top banker robbed billionaire clients
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Credit Suisse has ignored blatant compliance violations by one of its top bankers for years as it stole billionaire clients and flouted anti-money laundering guidelines, a leaked regulatory report reveals.
For more than a decade, Patrice Lescaudron defrauded some of the Swiss bank’s most sensitive accounts – including those held by former Georgian Prime Minister Bidzina Ivanishvili and Russian oligarch Vitaly Malkin – by funding a lavish lifestyle luxury homes, sports cars, Rolex watches and Chanel jewelry gifts.
Repeated warning signs, evidence of hundreds of suspicious transactions and four formal disciplinary proceedings, however, were not followed by Credit Suisse, according to findings inadvertently published in a damning 270-page report compiled by lawyers for the regulator of the Swiss market, Finma.
“There were even attempts to cover up the violations,” the report says.
Credit Suisse has long maintained that Lescaudron – who was convicted of criminal charges in 2018 and committed suicide last year after early release – was a dishonest trader who worked tirelessly to hide his illegal activity from his superiors and these partner’work. The Swiss criminal case against Lescaudron concluded that the bank had been wronged.
The disclosures are another blow to the increasingly besieged Swiss financial services industry, which has been beset by a string of ugly court cases and regulatory censorship in recent months. In December, new UBS CEO Ralph Hamers mingled in a money laundering case in the Netherlands. Last month, two former CEOs of Julius Baer were formally reprimanded for their failure to comply with Venezuela’s dirty money.
Prior to Lescaudron’s fall in 2015 – when huge transactions he made using embezzled client funds went awry – the Frenchman had been one of Credit Suisse’s top three money producers.
Thanks to his success – built on a set of relationships with extremely wealthy but politically exposed Russian-speaking clients – Lescaudron has been paid up to 12 times that of his fellow bankers in Credit Suisse’s Crown Jewels wealth management division. , which is aimed at super-rich.
The details of the bank’s oversight of Lescaudron have until now been tightly controlled by Swiss courts.
Finma’s regulatory investigation into the case concluded in 2018. Publicly, he said Credit Suisse controls had been “insufficient”, but ruled that the case did not merit any punitive action. Censorship did not name Lescaudron.
On Thursday, however, an apparent administrative error led to the disclosure of the case upon which Finma’s public findings were based.
A group calling itself “CS Victims” – which accuses Lescaudron of appropriating $ 1 billion and is suing Credit Suisse for damages – released the document on their website.
The group has repeatedly sought access to the Finma file. But two judicial decisions of Swiss courts – the last one last September – had ordered the sealing of the file.
Swiss regulatory law attaches great importance to the confidentiality of Finma’s decision-making and executive powers. The regulator very rarely publicly criticizes banks and usually takes corrective action only in private.
In a statement, Credit Suisse confirmed that the report was leaked. An English translation is now largely in the public domain, but the bank stressed that it only gives a partial picture of a multi-year regulatory investigation.
“This specific document corresponds to the first stages of an examination of a closed file. This review did not reveal any facts that could support the criminal complaints against Credit Suisse, ”the bank said.
La Finma declined to comment.
The leaked report paints a picture of Lescaudron’s chaotic surveillance in the bank’s wealth management branch.
“[Lescaudron’s] disregard for internal guidelines and directives, inadequate protection of customer documentation as well as unauthorized settlements of customer transactions had been known to the bank since June 2011, ”the lawyers who drafted the report found, based on ‘in-depth interviews and a review of thousands of internal Credit Suisse documents.
A dozen senior Credit Suisse executives, including senior management, were aware of concerns over Lescaudron and repeated rule violations on his part, according to the report.