ZURICH, Switzerland: Credit Suisse offices were raided last week by the Swiss police, who seized documents related to the failure of the bank’s $10 billion supply chain finance (SCF) funds linked to Softbank-backed Greensill.
Police carried out the raids after the Zurich public prosecutor’s office launched criminal proceedings into Greensill, amidst allegations of fraud and a lobbying scandal involving former UK Prime Minister David Cameron.
The proceedings followed a criminal complaint by the Swiss government’s Economic Affairs Secretariat for alleged violations of the law against unfair competition.
First reported by the Swiss newspaper NZZ am Sonntag, the investigation focuses on Credit Suisse’s management and marketing of funds that financed Greensill’s controversial lending schemes.
However, Credit Suisse told City AM that the investigation was not directed at the bank itself.
“In the course of an official procedure that is not directed against Credit Suisse, data was collected. Credit Suisse fully cooperates with the authorities, but will not make any further statements at this time as this is an ongoing investigation,” the bank said.
As officials filed a complaint against “persons unknown,” the prosecutor’s investigation can be extended at any time to unnamed individuals and companies.
Although the Swiss lender has now retrieved some $7 billion of the fund’s assets, it previously estimated around $2.3 billion remains at risk.
Credit Suisse recently angered clients already dealing with billions of dollars in losses from failed supply chain finance funds by planning to charge them another $145 million this year, some of which would be used to support Greensill Capital.
Because of the terms of its insurance policy, Credit Suisse must ensure Greensill does not declare bankruptcy so it can claim non-payment of invoices and recover the $2.3 billion.
Investors in the failed funds were convinced the company’s popular SCF funds were among the lowest risk investments offered, as the loans they held were fully insured against losses and backed by invoices that were usually paid in a few weeks.
But as the funds rose to $10 billion, considerable sums of the money were then lent through Greensill and against invoices for future sales that were just predicted and had not been completed.