Credit Suisse Called Client ‘Nutcase’ and Adviser a ‘Muppet’Andrea Gerlin
A banker who worked at Credit Suisse Group AG referred to a client whom the bank was advising on the sale of a stake in an oil field as a “nutcase,” according to a London judge’s ruling in a lawsuit that the bank won.
The comment was made about Georgian diplomat-turned-oil-trader Zaur Leshkasheli by Nathan Burkey, who worked for Credit Suisse until 2008, according to U.K. High Court Judge Peter Smith’s ruling in the case on Friday. Another Credit Suisse banker, Peter Firmin, called a consultant advising Leshkasheli, Joel Steinhart of Granite Management Ltd., a “muppet” in 2007, according to Smith’s ruling.
“The bank’s attitude to Dr L does not reflect well on to the bank,” Smith wrote in his ruling. “The bank’s attitude to people did not stop of course with Dr L.,” he said. “Mr. Firmin wrote to Mr. Mahoney on 15th August 2007 describing Mr. Steinhart as a ‘muppet.’”
Credit Suisse won the lawsuit brought by Leshkasheli-owned companies in the U.K. court over the sale of his stake in the Kyurovdag oil field, Azerbaijan’s largest. Smith dismissed the claims by Leshkasheli-owned company Rosserlane Consultants Ltd. against the Zurich-based bank.
“Credit Suisse has no tolerance for this sort of language and notes for the record that the alleged statements were made in 2007 by former employees,” the company said in an e-mailed statement.
Rosserlane said in a statement it would seek to appeal the judgment.
Burkey said he was aware of the lawsuit “but had very limited involvement” before he left Credit Suisse in March 2008. He said he was Firmin’s manager in 2007 to 2008.
“I don’t have any information that could possibly generate a comment of any value,” Burkey said in an e-mail. “I have nothing to say about it. First I heard of it!”
The judge also said in his decision that Firmin, who no longer works for the bank, was “an unsatisfactory witness.” Firmin didn’t respond to an e-mail request for comment.
The judge unleashed criticism in the ruling about what he called the bank’s “disreputable conduct” when Leshkasheli’s companies ran into financial difficulties and were in a “desperate” situation in 2006 and 2007. The bank gave them a two-month extension in return for a “quite staggering” fee of $10 million, the judge said.
The bank also increased the percentage of the amount it would be entitled to from the sale of the oil field to 33 percent from 27 percent, according to the ruling. Smith criticized the bank’s conduct.
“This is the kind of disreputable conduct which is demonstrative of how the world views banks when they operate,” Smith said. “The claimants were in difficulties and the bank’s reaction was simply to extract more money.”
“I am not suggesting for one minute that this is actionable but it is reprehensible,” the judge said. “It reflects an attitude that banks seem generally to have in the modern world namely that they are indifferent to the difficulties of their customers and will simply exploit the situation as much as they can as opposed to helping them when they are in difficulties.”
Majority owner Leshkasheli had alleged the Swiss bank ignored or frustrated interest from potential buyers in Asia, Russia and the Middle East and forced a sale of the Kyurovdag oil field in 2008. Leshkasheli expected to pocket more than $500 million when he decided to sell his stake in the field, according to his lawsuit.
“I am delighted that the judge upheld my concerns, calling the bank’s conduct variously ‘disreputable’ and ‘reprehensible’,” Leshkasheli said in a statement.
The case is Rosserlane Consultants Ltd. and Swinbrook Developments Ltd. v. Credit Suisse International, case no. 12-3108, U.K. High Court of Justice, Chancery Division.