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Credit Suisse’s former global head of asset management was accused by a board member of the now-defunct bank of giving a “false picture” of its funds tied to Greensill Capital, London’s High Court has heard.
Eric Varvel, who left Credit Suisse in 2022 after more than 30 years, was accused by Andreas Gottschling, the former chair of the bank’s risk committee, of misrepresenting the findings of a report into funds linked to Greensill Capital, the supply-chain finance firm that collapsed in scandal.
The allegation was revealed on Wednesday during Varvel’s testimony on the fifth day of trial between an investment fund of Credit Suisse and Japanese technology firm SoftBank. A Greensill Capital subsidiary is also a defendant.
Varvel, who is now a partner of BlackRock’s Global Infrastructure Partners, had commissioned McKinsey to produce a report on the Swiss bank’s asset management division in 2020, the court heard. One area of focus for the consultancy firm was the bank’s controversial funds linked to Greensill.
Gottschling later said that Varvel gave “unrepresentative excerpts” of the McKinsey report to the bank’s audit committee. Gottschling added that Varvel’s summary gave a “completely false picture” of its findings, the court heard.
Varvel told the High Court on Wednesday that the statement was taken “out of context” and was potentially “goal-seeking”, as Gottschling had made it in an interview long after Greensill Capital collapsed.
The 62-year-old American acknowledged that Gottschling’s account was recorded in a report into Credit Suisse’s failings over Greensill commissioned by Finma, the Swiss financial regulator.
Finma found in February 2023 that there had been a “serious breach of Swiss supervisory law” in the bank’s management of its dealings with Greensill Capital and its founder Lex Greensill. Weeks later, UBS had to rescue its longtime rival Credit Suisse.
While Finma has never publicly released its full findings, extracts from reports it commissioned were introduced as evidence into the London trial, which relates to $440mn Credit Suisse’s clients lost due to investments linked to SoftBank-backed Greensill Capital.
Mr Justice Miles, who is presiding over the case, has ordered the release of a report prepared for Finma by an external law firm, and a copy of Finma’s ruling based on this report, after requests from the Financial Times and other media organisations.
The High Court was shown evidence that executives at Credit Suisse discussed the possibility of taking an equity stake in Greensill Capital in early 2021, in exchange for giving the firm more time to arrange repayment of the $440mn now under dispute.
One of Varvel’s subordinates, Michel Degen, agreed a deal over email with Lex Greensill — the Australian financier who founded his eponymous group — that granted Credit Suisse a share option over a possible stake in the firm worth $150mn. Varvel was then informed of the deal.
Varvel was presented in court with an email he sent in early January regarding Greensill Capital’s troubles in which he stated “sometimes when there is a crisis there is an opportunity”.
Varvel told the court that he had spent time in Indonesia during the Asian financial crisis with the recipient of the email, Credit Suisse’s then Asia Pacific chief Helman Sitohang, and it referred to an observation the two men had often shared as a result of their time in Jakarta together.
Tom Smith KC, acting for SoftBank, dismissed this account as “complete nonsense”, however, alleging that Varvel saw an opportunity to gain a “benefit” from Lex Greensill, given his firm’s difficulties. Varvel denied this was the “intention” of his statement.
The trial continues.
