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Credit score Suisse ignored brazen compliance violations by certainly one of its prime bankers for years, as he stole from billionaire shoppers and flouted anti-money laundering directives, a leaked regulatory report reveals.
For greater than a decade, Patrice Lescaudron defrauded a few of the Swiss financial institution’s most delicate accounts — together with these held by former Georgian prime minister Bidzina Ivanishvili and Russian oligarch Vitaly Malkin — funding a lavish life-style of luxurious homes, sports activities automobiles, Rolex watches and items of Chanel jewelry.
Repeated warning indicators, proof of a whole bunch of suspicious transactions and 4 formal disciplinary proceedings, weren’t acted upon by Credit score Suisse, nevertheless, in keeping with findings revealed inadvertently in a damning 270-page report compiled by attorneys for Switzerland’s market regulator, Finma.
“There have been even makes an attempt to gloss over the violations,” the report mentioned.
Credit score Suisse has lengthy maintained that Lescaudron — who was criminally convicted in 2018 and dedicated suicide final yr after an early launch — was a extremely profitable rogue operator who labored tirelessly to cover his criminality from superiors and colleagues. The Swiss legal case in opposition to Lescaudron discovered the financial institution to have been a wronged occasion.
The disclosures deal one more blow to Switzerland’s more and more embattled monetary companies business, which has been beset by a collection of ugly courtroom instances and regulatory censures in current months. In December, new UBS chief govt Ralph Hamers turned embroiled in a Dutch cash laundering case. Final month, two former chief executives of Julius Baer have been formally reprimanded for his or her compliance failures in reference to soiled cash from Venezuela.
Earlier than Lescaudron’s downfall in 2015 — when large trades he had been making utilizing misappropriated consumer funds went awry — the Frenchman had been certainly one of Credit score Suisse’s prime three moneymakers.
Because of his success — constructed on a cluster of relationships with extraordinarily rich however politically uncovered Russian-speaking shoppers — Lescaudron was paid as a lot as 12 occasions that of fellow bankers in Credit score Suisse’s crown-jewel wealth administration division, which caters to the world’s super-rich.
Credit score Suisse has lengthy maintained that Patrice Lescaudron was a extremely profitable rogue operator who labored tirelessly to cover his criminality from superiors and colleagues © AFP through Getty Pictures
Particulars of the financial institution’s oversight of Lescaudron have been till now tightly managed by Switzerland’s courts.
Finma’s regulatory investigation into the affair concluded in 2018. Publicly, it mentioned Credit score Suisse’s controls had been “insufficient” however judged that the case didn’t benefit any punitive motion. The censure didn’t title Lescaudron.
On Thursday, nevertheless, an obvious clerical error led to the disclosure of the file on which Finma’s public findings had been based mostly.
A bunch calling themselves “CS Victims” — who accuse Lescaudron of appropriating $1bn from them, and are suing Credit score Suisse for damages — revealed the doc on their web site.
The group has repeatedly sought to achieve entry to the Finma file. However two authorized rulings by Swiss courts — the most recent in September final yr — had ordered the file to be sealed.
Swiss regulatory legislation locations a excessive worth on the confidentiality of Finma’s resolution making and enforcement powers. The regulator very hardly ever publicly castigates banks and normally takes remedial motion in personal solely.
In a press release, Credit score Suisse confirmed the veracity of the report, whose content material is now extensively within the public area, however confused it offers solely a partial image of a multiyear regulatory investigation.
“This particular doc corresponds to the early levels of a closed legacy case evaluation. Such evaluation didn’t reveal any information that might help the legal complaints in opposition to Credit score Suisse,” the financial institution mentioned.
Finma declined to remark.
The leaked report paints an image of chaotic supervision over Lescaudron within the financial institution’s wealth administration arm.
“[Lescaudron’s] disregard of inner directives and pointers, the insufficient safeguarding of consumer documentation in addition to unauthorised settlements of consumer transactions had been identified to the financial institution since June 2011,” the attorneys who authored the report discovered, based mostly on intensive interviews and a evaluation of hundreds of inner Credit score Suisse paperwork.
Round a dozen senior Credit score Suisse executives — together with prime administration — have been conscious of issues over Lescaudron and repeated rule breaking by him, the report mentioned.