GENEVA – A Credit Suisse Group unit has lost its appeal of a US$607 million (S$821 million) bill in damages for failing to rein in a rogue banker who defrauded Georgia’s former prime minister.

While the Bermuda appeals court upheld the award that Credit Suisse Life (Bermuda), or CS Life, must pay to Mr Bidzina Ivanishvili, it dismissed his claim of fraudulent misrepresentation against the unit. The tribunal in the nation’s capital Hamilton asked both sides to make some submissions to determine what costs CS Life might get back.

The life insurance unit was initially ordered to make the payout to Mr Ivanishvili after a Bermuda judge in March 2022 ruled that it had “turned a ‘blind eye’” to Patrice Lescaudron’s fraud. The Frenchman was convicted in 2018 for a scheme he ran to recoup client losses and then skim some off the top for himself. He later killed himself.

“Mr Ivanishvili did not authorise any of the transactions – hence Lescaudron’s forgery of instructions,” according to Friday’s ruling. “Lescaudron, who was a wholesale fraudster... (should) not have executed any of them.”

Credit Suisse said in a statement it is pleased with the decision to overturn the misrepresentation claim, but that it is disappointed the court “has not accepted CS Life’s arguments that it had not breached the contract with its client”.

“The decision is not final, and CS Life intends to vigorously pursue an appeal to the Privy Council,” said the bank, which has always maintained that Lescaudron was a lone wolf who hid his deceit from colleagues and supervisors.

A spokesman for Mr Ivanishvili said it is the third time in 15 months a court has ruled against the bank in the case.

“The fraud perpetrated against our clients and its concealment spanned almost a decade,” he said. “The time has come for Credit Suisse to take responsibility for the crimes committed by its personnel, accept the rulings and repay in full the damages awarded by the courts.”

Any final damages award will likely reflect an element of double counting because Mr Ivanishvili also had investments with another Credit Suisse unit in Singapore. The Georgian billionaire sued Credit Suisse Trust there, too, over the Lescaudron fraud and, in May, a Singapore court assessed damages of US$926 million, an amount that the judge said would be reduced further to ensure there is no double recovery.

Credit Suisse, which was recently bought by larger rival UBS Group in a government-brokered rescue, called that judgment “wrong” and one that it will appeal. BLOOMBERG