In the fall of 2006 Manager Credit Suisse Patrice Lescaudron flew to Tbilisi to meet with his new client. The driver took the representative of the Swiss Bank with one of his superiors in the Imereti village of Chorvila for a meeting with billionaire Bidzina Ivanishvili. By the time the future Prime Minister of Georgia sold its steel assets, including Stoilensky and Mikhailovsky GOK, and a stake in Impexbank, helped for all of about $2.7 billion and returned to his native village. He lived as a hermit, gave generously to the countrymen who gathered in the personal zoo of rare animals and birds, including penguins, and at the same time gave orders for the purchase of securities, Picasso and other famous artists.
Lescaudron gently asked whether the billionaire to be a client of Credit Suisse. Ivanishvili responded positively. By this point in his Swiss Bank account was several hundred million dollars invested primarily in three-four Russian securities (with leverage) — not the most interesting portfolio of those that got to the management Lescaudron, although quite typical of a billionaire from an emerging market. They agreed that Ivanishvili will call Lescaudron directly and order the transactions in the market. Until early 2007 the Manager just follow the instructions of their client.
Ivanishvili at that time I became interested in playing the stock market, and considered himself a specialist. In 2005, he told Forbes that almost all the proceeds invested in “blue chips”. Most of them are in shares of “Gazprom” (at one time he owned about 1% of the shares of the company) and Sberbank. The portfolio was LUKOIL, RAO UES and “Vympelcom”. Ivanishvili carefully studied the report, looking analytical programs “RBC-TV”, most of all trust the opinion of stock market Explorer Stepan Demur and sometimes followed his advice.
And opinion Lescaudron he also trust — during the year, the Swiss convinced Ivanishvili of the need for portfolio diversification and has advised to buy stocks of foreign companies. Gradually, the billionaire entered into the taste and proudly telling their friends about their success in foreign markets.
This picture emerges from the materials of the criminal case Patrice Lescaudron, which was able to see Forbes. After almost 10 years after the first meeting with the Georgian billionaire former Manager Credit Suisse has been in custody in Geneva and give testimony. Lawyers for Ivanishvili, his former partner Vitaly Malkin and two other Credit Suisse clients (their names are first found out Forbes — Zurab Lysov and Sergey Egorov) to periodically visit the interrogations Lescaudron, which is the Geneva Prosecutor Yves Bertossa. The interrogations began in February of 2016, only three months after his arrest Lescaudron, because the first thing he was placed in the prison psychiatric ward Curabilis (Swiss newspaper Le Temps wrote that the prisoner suffers from depression). No terrible disease the doctors had not found, and Lescaudron from the hospital were discharged.
Bertossa Swiss legislation does not have the right to comment on the details of the investigation. According to a source familiar with the investigation, has identified multiple and systematic wrongful acts Lescaudron — abuse of customer trust, improper performance of official duties, misappropriation of funds (prisoner transferred client money to personal accounts until the accounts of his wife), fraud, opening accounts without the knowledge of customers, trading operations on the securities market without the knowledge of customers with specially opened sub-accounts, embezzlement of customer funds, overstatement of the volume of trading operations for the sake of additional fees, falsification of documents, etc.
As Lescaudron has been able to deceive the participants of the Forbes list and stay uncaught for so many years?
Financial maneuvers
Patrice Lescaudron was born in 1963. I graduated from Saint-Nazaire, and in 1986 he obtained a diploma in management Higher school of Commerce in Lyon. He moved to Paris, before 1990, made his career in consulting firms Peat Marwick (became part of KPMG) and Ernst & Young, then moved to the pharmaceutical distribution company OCP Repartition. And in 1994 Lescaudron began to work on the cosmetics producer Yves Rocher. In 1999 he was appointed General Director of LLC “Yves Rocher Vostok” and was sent to Moscow where he learned Russian.
Employees of the company Lescaudron remembered as a very level-headed and cautious leader. The new Director opened the first office of the French brand in Russia — prior to this there existed only a legal entity with a small number of staff members who occasionally met on the collections in the flagship store on Tverskaya, 4. The Affairs of the company the Director studied closely, personally inspected everything, even the warehouses were visited.
In 2003, he briefly headed the Russian division of the French discounter Tati, which soon closed due to the bankruptcy of the parent company. It is not known what the fate of it after that brought in Credit Suisse, but the moment to switch to private banking Lescaudron chose well, said a friend with him, a source in the Swiss banking circles, “Then emerging markets are growing so rapidly! While many in Russia to that time there were people with money who never saw a Swiss banker… Just untilled field for work”.
Aspiring portfolio Manager and quickly settled on a new place. According to Wright Simonian, former Chairman of the Board of Directors of UBS in Russia, this is not surprising: “In private banking often are people from other industries who know how to communicate well with customers. Then that person can attract professionals who are directly involved in investment products”. However, Lescaudron, according to his Swiss friend, was also a good head and great instincts.
Bloomberg in March 2016 reported that two years after beginning work in Credit Suisse Lescaudron administered a portfolio of $1.6 billion. the largest customer was Ivanishvili, according to the materials of the criminal case, the maximum value of its portfolio reached $1 billion By 2010, according to the Forbes source, under control of Lescaudron could be the means of at least two dozen clients. In the year he was brought to the Bank not less than 30 million Swiss francs in commissions and had to get at least 1 million in the form of a bonus at an annual salary of about 300 000 francs. After-tax from Patrice, as suggested by the interlocutor Forbes, has left about 800 000-900 000 Swiss francs. Sufficient income to own two houses in Geneva (this, according to the source, knew colleagues Lescaudron) and play the stock market with their money.
Interlocutor Forbes says that there are cases when the portfolio Manager trades in the stock market in the interests of the client and adds to it the millions your hundreds of thousands. This happens for example when a Manager sees a good market opportunity but is unable to reach the client: “the Manager can throw their $200, 000 on account and give the order to the trader of purchase of the shares, say, $50.2 million And then to warn the trader that when you close this position, the proceeds from the sale of shares, purchased at $200,000, was not translated into the client account, and on its own.” Later, when they reach the customer, the Manager tells him about the transaction performed, and it usually does not protest such transaction confirms the confidence of the portfolio Manager in its actions, because he risks his money. Interlocutor Forbes admits that Lescaudron have made such transactions.
In addition to all Lescaudron, according to his friend, was almost unique in the private banking division for Russia and the CIS who are versed in options trading in the OTC market. In the standard investment strategy of Credit Suisse that the Bank offered to the customers with trust licenses, options as high risk instruments was not included.
“The work of Patrice on the market — it really was the aerobatics. So if he had a good relationship with the clients they could trust him license not to prescribe, but simply for the words to say: I say, trust how you work — suggests the source. — Probably, at some point, Patrice felt that grabbed God by the beard, and began to abuse these practices”.
Lescaudron of hussars volatile
Ivanishvili and Malkin refused to comment for this article. But those close to him, sources confirmed to Forbes that the relationship of billionaires with their portfolio Manager is really built on trust. Especially, perhaps, Malkin, who in 2010 opened his family office, and through him began to audited reports Credit Suisse. The audit, according to the source, was regularly identified wrongly assessed the fee that Credit Suisse after the intervention counselors Malkin regularly he returned. Before Malkin, who became a client of Credit Suisse in about 2005, I could not even imagine that the Western Bank is able to put their interests above the client.
Vitaly Malkin fully trusted Patrice Lescaudron, and now is suing him in two cases.
Ivanishvili in early 2016, told Forbes that four years ago, occupying the post of Prime Minister of Georgia, transferred funds in trust for Credit Suisse and gave Lescaudron shared the task with his money. Recommendations boiled down to the conservative investment strategy of purchasing the reliable American and European shares. Reports Lescaudron billionaire personally did not study — they looked at his Manager in Georgia. He became suspicious after discovering in the fall of 2015 a lot of margin calls on positions, the opening of which Lescaudron first announced.
Bidzina Ivanishvili, former Prime Minister of Georgia, was the largest customer Lescaudron with a portfolio of $1 billion.
According to the March publication Bloomberg, it was about the shares of U.S. biotechnology company Raptor Pharmaceutical that Lescaudron actively offered its customers since 2012. Ivanishvili followed this advice along with other customers and had to stay happy in 2013, shares of Raptor rose in two and a half times. However, from the text of an internal investigation at Credit Suisse, seen by Bloomberg, it follows that Lescaudron bought millions of shares of Raptor Pharmaceutical without approval of the customers of the loans taken in the Bank on their behalf. For several years, he recorded the part of the profit and invested in Raptor all new money. This pyramid collapsed on 14 September 2015, when the Raptor reported the unsuccessful clinical trials of a new drug from liver disease in children. Shares immediately fell by 37%. Loss Ivanishvili only one unknown to him deal with papers Raptor totaled $128 million in a few days, the Manager confessed to the colleagues from Credit Suisse and the Bank in December filed a complaint against him to the Prosecutor’s office of Geneva.
Lescaudron during the internal investigation claimed that it did not receive personal profit for uncoordinated operations. Evidence to the contrary, Credit Suisse has not found, but to exclude such variant of development of events was not. The Geneva Prosecutor’s office, as found Forbes, Lescaudron recounts how they made the cheating of clients. To this end, he, for example, in the Bank took margin loans on behalf of their clients, what they didn’t know in this part of the funds received were transferred to himself personally.
His actions, the Manager motivated by a desire to open his own business after retiring from Credit Suisse. For this he created the offshore company, including the name of the wife, and transferred to their accounts funds stolen from customers or earned on positions held open without their knowledge. He had accounts in European banks — Lescaudron admitted that he expected eventually to pay taxes on their secret savings.
To assess the damage caused actions Lescaudron his clients is not yet possible — the investigation is ongoing. Ivanishvili in conversation with Forbes in early 2016 imagined that his loss could be more than $100 million Former Manager admitted that from 2012 to 2015 brought to their accounts of approximately $15 million of hidden fees, and also established several funds to the money derived from the management at Credit Suisse, is the total amount of them was not less than €35 million.
Bank secrecy
Did the Bank of fraud Lescaudron that brought great Commission is not only to themselves but also to the employer? Forbes has received from Credit Suisse official comment: “the Dismissed Manager to work with clients violated the internal rules for the Credit Suisse and Swiss law and had committed criminal acts to bypass the compliance systems of the Bank. The dismissed Manager to work with clients concealed their fraudulent activities from colleagues, and based on all available information, this situation is an exceptional case in our practice. Credit Suisse adheres to the zero tolerance approach to violations of the internal rules of the organization and legislation of countries where we conduct business.”
Lescaudron so explained the Geneva Prosecutor’s office of its subtlety: one of the chiefs sat with him in the same room, heard his phone conversations and therefore was able to guess what Lescaudron. However, he did not pay attention to it because it had problems with alcohol. Forbes source in banking circles and Wright Simonyan doubt that this would be possible. The banker believes that speech can go about Basile Samaria, the head of private banking in Russia and the CIS in 2006-2010, which Lescaudron do while sitting in the same room, but he could do that to a drink during working hours, like many other bankers. “You from all sides Shine, you each client and each transaction are so many people that it almost can not go unnoticed. An alcoholic will keep on working,” confirms Simonyan. Samarin on request Forbes did not answer.
Lescaudron was arrested in December 2015. Shortly before that, as it became known Forbes, adviser to one of the affected customers met with the Bank Manager. It was the annual routine meeting, nothing special in the behavior of the banker was not. Shortly thereafter, Lescaudron resigned, the Bank firing him does not advertise, but a complaint to the Prosecutor, it filed the first — and the cause is also called. As affected customers complained to the Prosecutor’s office, Credit Suisse filed an appeal against the recognition by the participants of the process (the complainers), not to allow them to familiarize with the case materials. Moreover, customer complaints were appealed both the Bank and Lescaudron. The sources of first publication in Le Temps about the case Lescaudron were private detectives and a lawyer hired by two of its Russian clients, close to “Gazprom”.
The names of these “Russian businessmen having Affairs with the gas giant “Gazprom” (quoted by Le Temps), the press still did not appear. As found Forbes, in the case among the clients Lescaudron featured some of Egorov and Lysov. In SPARK these names occur in the list of founders of the Moscow OOO “Oukhtagasstroymat”. The CEO of the company Zurab Lysov in 2002, owned 50% of the capital, Sergey Egorov — 25%, now the share of each of them was reduced to 10%. Egorov also mentioned in the SPARK as the former co-owner and/or operator of six companies in Ukhta and Usinsk (Komi Republic), including Severgazles, OOO”. Lawyers Lysova and Yegorov told Forbes that reviews from their clients will not.
Zurab Lysov is a hunting club Ragozin Safaris (member of this club is also Deputy Prime Minister Dmitry Rogozin).
A native of Ukhta Sergey Egorov from 1993 to 2003 he was General Director of “Severgazles” — “granddaughter” of “Gazprom”, and then worked for five years as the CEO of JSC “Sevzaptransstroy” and supervised the construction of the North European gas pipeline. In the March publication Bloomberg said that Lescaudron estimated total assets of the two customers, close to “Gazprom” no more than $200 million But it was one of the first customers, which he drew on their own, they always demanded high results from Lescaudron and would not tolerate losses. Meanwhile, talking to media the lawyer of Egorov and Lysova (the names of his clients, he never called) Giorgio Campa, in 2007-2008 their losses on the stock of Austrian Meinl European Land totaled at least $17 million Then Lescaudron took out profit from inconsistent with Ivanishvili operations of $60 million and transferred the money to demanding customers. They didn’t notice as the internal service of Credit Suisse, he said during the internal investigation. In Meinl have been made and tens of millions of dollars Malkin — again without his knowledge.
Sergei Yegorov, a former General Director of “Severgazles” and “Sevzappromstroy”, subsidiaries of “Gazprom”.
With Meinl in the history Lescaudron is some remarkable turns. As can be seen from the case materials, in 2007, he met with Michael Naked, a Manager for this company, investing in real estate — Naga conducted in Credit Suisse’s presentation of its stock. In July 2007, the shares of Meinl European Land has fallen sharply (the owner Meinl Bank, the heir to the Austrian Empire coffee Julius Meinl was arrested one and a half years for defrauding the investors in his Bank secretly bought in the market shares of Meinl European Land, to keep them from falling, and hid his affiliation with the company). Naked in 2008 left and Meinl was founded in Vienna investment company Centris Capital together with Monika Mandl. Thus, according to the testimony Lescaudron, Monika Mandl was familiar with his chief Babak Dastmalchi, managing Director of Credit Suisse in Russia, Central and Eastern Europe. In 2013-2015 Lescaudron invested affected customers in hedge funds through this Centris Capital, although he could and had to do it directly through Credit Suisse.
And again Lescaudron and Credit Suisse
Recently Lescaudron became involved in another case in France a few years ago, at the suit of the same Malkin. Then the former Senator lied to Pierre Grotz, Trustee Malkin in Luxembourg, — persuaded him to buy for €18.6 million piece of land on the island of Corsica, where, as it turned out, it is forbidden to build something.
“It’s a beautiful site on the sea, and sold it to me as the land on which to build. For that the letter was forged the local mayor, created the architectural design, etc., ” said Malkin Forbes in 2013. — He just stole my money to buy and an even greater amount was stolen under the pretext of development of these lands.”
The plot on the island of Corsica in the commune of Bonifacio, which Malkin bought on the advice of Pierre Grotta, stretches along the sea between lake Balestra and Kanatu.
As it turned out, the payment transaction went through the same Lescaudron, who did not check to whom the money goes. The consequence on this business goes in France, but now it’s not just fraud, but fraud committed by a group of persons with the subsequent laundering of the stolen funds. In addition to France, the investigation involving Switzerland, Luxembourg, San Marino and the Bahamas.
On all questions of Credit Suisse limited to the official review above. According to the Forbes source in Swiss banks, Credit Suisse is trying to hush up the story to save face: “After 2014, the Bank had to pay US fines of $2.6 billion for helping American clients in tax evasion at Credit Ie all blown into the water. And now this!” “For the Bank it is incredible puncture, but from time to time they happen at many banks. If you made some professional mistake, then you can pull anything, ” says Wright Simonyan. — This will depend on the degree of aggressiveness and professionalism of the people who suffered, their willingness to incur litigation costs and the quality of legal support.”
Your money to yourself
I, of course, they [Ivanishvili and Malkin] sorry, but your money in private banking never in my life did not give anyone, although many times I was tempted by the portfolio managers of different companies. Personal money, which we in the form of dividends or bonuses received for many years, I kept on Deposit, and in first-rate banks. Alfa-Bank — for life in Russia, first-class Western banks — to the life outside of Russia. And that’s all.
I take enough risk with their money, who are in the business, and the money that are outside of business, I’d risk not wanted. This money is for personal consumption and I have no desire to watch that as portfolio managers they manage.
I do not believe in the efficacy of large companies. I have a good idea how they work, as the member of a relatively large structure. It is impossible to fully monitor the activities of Junior staff managers, which can, of course, to abuse the trust of clients and employers.
