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Swiss police raided Credit Suisse’s offices and seized documents related to the collapse of its $ 10 billion fund series linked to Greensill Capital.
The police investigations were carried out earlier this week at the request of the cantonal public prosecutor of Zurich.
The prosecutor has launched a criminal investigation into Greensill’s activities and the way in which Credit Suisse funds that funded the UK firm’s controversial lending schemes have been managed and marketed, according to two people familiar with the investigation.
Credit Suisse has confirmed that its offices have been raided, but said the bank is not currently a party to the investigation.
‘In the course of an official proceeding not directed against Credit Suisse, data was collected. Credit Suisse is fully cooperating with the authorities and will not make any further statements on this for the time being, as it is an ongoing investigation, ‘the bank said in a statement.
The prosecutor’s office in Zurich did not respond to a request for comment.
News of the raids and investigation was first reported Sunday by the Swiss NZZ.
The investigation was opened following a complaint from the Swiss government.
The State Secretariat for Economic Affairs in Bern has submitted a dossier to the Zurich prosecutor alleging that the federal law on unfair competition could be violated.
The complaint is directed against “unknown persons”, which means that the prosecutor’s investigation can at any stage be extended to institutions or individuals not yet specifically mentioned.
The Credit Suisse supply chain financing funds – which consist of invoices that Greensill owed to the company’s borrowers, packaged in investment products – were marketed to investors as low-risk financial products.
Their collapse was a great embarrassment to the Swiss bank, which they presented to some of its most prestigious and valuable customers.
While about $ 7 billion has been recovered so far, Credit Suisse has told investors that of the outstanding funds, at least $ 2.3 billion will be harder to return.
A number of class actions have already been filed by angry investors. Criminal charges by the Swiss authorities will be an important complement to their legal efforts, which have raised questions about the close relationship between Credit Suisse and Greensill and the extent of the bank’s prudence.
The extremely aggressive lending practices of Greensill have not been properly disclosed to investors, lawyers of clients of the funds said.
Of particular concern was the relationship between Greensill and Credit Suisse and the vast metal forging empire, GFG Alliance, of Sanjeev Gupta.
The UK Office for Serious Fraud has also investigated in the financial transactions between Gupta and Greensill.
The Financial Times previously reported on the suspicious nature of invoices to Gupta’s businesses in which the Credit Suisse funds invested.
Gupta has not set foot on British soil since the SFO investigation was opened.
Thousands of British employees of Liberty Steel – part of the Gupta conglomerate – face an uncertain future as the viability of the business hangs in the balance.
The FT reported on Friday that Gupta spent last weekend celebrates its 50th anniversary lavishly on the Greek island of Mykonos.