The Credit Suisse Group AG wealth manager at the heart of a trading scandal told prosecutors in interviews that he took clients’ money and moved it into personal accounts in Monaco and Dubai, according to four people with knowledge of the investigation.
The banker, who can only be identified as “L” under Swiss law, moved $1.5 million into his wife’s account at a bank in Monaco in 2008, said two of the people, who asked not to be identified because the proceedings are ongoing. A second transfer of $2 million was made three years later into the account of a Dubai firm that he controlled, the people said.
For months after L’s initial confession to prosecutors last September that he was moving clients’ money around to cover investment losses, the 52-year-old maintained he never profited from the falsified transactions, the people said.
The money was taken from the accounts of top clients: Bidzina Ivanishvili, a billionaire and former prime minister of Georgia; Vitaly Malkin, a former Russian senator; and two more wealthy Russian patrons of the Zurich-based bank.
L’s lawyer, Simon Ntah, said the transfers went both ways. The banker did move money into accounts he controlled alone or with others that he had made from profitable trades. But at other times, he also used his own money to help clients cover losses, Ntah said.
Wine Cellar Auction
“The clients complain about money they lost but aren’t saying anything about the money that my client made for them,” Ntah said. L has given permission for many of his belongings, including the contents of his wine cellar, to be sold at auction to raise money to compensate his clients, according to the people.
L, a French citizen, has been held in a Geneva prison hospital since his arrest in January because he is considered a flight risk. The banker’s home in the hills above Lake Geneva is less than 10 kilometers from the border with France, which doesn’t usually extradite its own citizens.
Credit Suisse has said that the banker engaged in criminal acts to “deceive the bank’s control system” and concealed his actions from colleagues.
“The former relationship manager concealed his deceptions from colleagues and this is to the best of our knowledge an individual case,” Anna Sexton, a spokeswoman for the bank, said in an e-mail. A spokesman for Geneva prosecutors declined to comment on the investigation.
Clients pulled 1.5 billion Swiss francs ($1.5 billion) in the fourth quarter in funds that were connected to Ivanishvili’s claims, people familiar with the situation said earlier this year. The bank has also set aside 250 million Swiss francs in provisions, understood to be for litigation related to the case.
Four clients including Ivanishvili and Malkin have already filed criminal complaints against the banker and have accused Credit Suisse of money laundering for failing to have controls in place to prevent the wrongdoing.
The Georgian, who is worth an estimated $5.4 billion, won a ruling last week granting his investment firm Wellminstone SA victim status in the probe, which will allow his lawyers to see company documents, e-mails and other evidence. A Swiss court threw out an appeal by Credit Suisse, which argued it was the only injured party because it physically held the funds. The bank declined to comment on the decision.