Rep. Carolyn B. Maloney, D-N.Y., and Rep. Stephen F. Lynch, D-Mass., penned a letter to Credit Suisse CEO Thomas Gottstein on Monday, noting that Credit Suisse reportedly instructed investors to "destroy and permanently erase" certain information related to its $2 billion portfolio of loans backed by clients' yachts and private jets. The lawmakers said those could include the assets of sanctioned Russian oligarchs with ties to President Vladimir Putin.
Maloney, who is chairwoman of the oversight committee, and Lynch, who is chairman of the subcommittee on national security, said in the letter that the allegations raise "significant concerns about Credit Suisse's compliance with the severe sanctions imposed by United States and its allies and partners on the architects and enablers of Russia's brutal and unprovoked invasion of Ukraine, including Russian President Vladimir Putin and oligarchs in his inner circle."
According to a statement from the lawmakers, Credit Suisse sold off risk related to that $2 billion portfolio of loans in late 2021, as part of an $80 million "synthetic securitization" deal. That means the bank purchased credit protection on the portfolio of loans, which were backed by yachts, private jets and other assets owned by the bank's wealthiest clients, the representatives said.
"In an investor presentation, Credit Suisse disclosed that in prior years, borrowers defaulted on these loans due to 'U.S. sanctions against Russian oligarchs,' an apparent reference to Russian oligarchs Oleg Deripaska and Arkady and Boris Rotenberg, who were forced to sell their jets as a result of U.S. sanctions," they said in the statement.
Credit Suisse sent a letter to hedge fund managers and other investors, telling them to destroy any confidential information they were provided in relation to that deal, the lawmakers said, citing a story published by the Financial Times. That directive allegedly coincided with Switzerland's announcement that it would join the United States, the European Union and other countries in imposing economic sanctions against Russia.
In Monday's letter, Maloney and Lynch acknowledged that the bank has said it's merely engaging in "good housekeeping" that has no connection to the Russian sanctions or the war in Ukraine. However, the timing is suspect, they said.
They asked the company to provide information on the deal by April 11. Specifically, they requested all "communications relating to the storage, retention, safe handling, disposition or destruction of confidential information related to loans backed by yachts and private jets." That information should include any correspondences about the Feb. 28 letter purportedly instructing the funds to destroy confidential information, according to the letter.
They're also seeking a list of all investors who participated in the securitization deal, all "Know Your Customer and Customer Due Diligence" documents related to the loans, documents related to Credit Suisse's compliance with sanctions, and all documents, information and investor presentations provided to investors related to the loans.
"Given the timing of this request and its subject matter, Credit Suisse's action raises significant concerns that it may be concealing information about whether participants in the securitization deal, including both Credit Suisse and investors, as well as owners of underlying assets, such as yachts and private jets, may be evading sanctions imposed by the United States and the international community in response to Russia's unprovoked and unjustified invasion of Ukraine," the lawmakers wrote in the letter.
Credit Suisse pointed to a statement issued earlier this month in which the bank said it's entitled to ask non-participating investors to destroy documents related to the transaction, "as is market practice."
"Documents shared with investors did not contain any client names and/or asset identifiers by the blind pool nature of the transaction," Credit Suisse said. "They contained portfolio statistics and performance modelling related to the underlying balance sheet positions."
It added that reminding parties to destroy confidential information is "good housekeeping and good data hygiene" and had nothing to do with the war in Ukraine.
--Editing by Emily Kokoll.
Update: This story has been updated to include comment from Credit Suisse.
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