UBS AG (UBSN) sought in a Singapore lawsuit to recoup $12.6 million that it claims former client Scott Francis Tyne and his Telesto Investments Ltd. owe, after Tyne sued the bank in Australia, Bloomberg reported.
UBS alleged Tyne breached an understanding not to sue. Tyne claims UBS breached its duty when it sold Kazakhstan bank bonds to Telesto, according to a filing at Singapore High Court. A closed hearing is scheduled for tomorrow.
BTA Bank, Kazakhstan's biggest lender before its collapse, Alliance Bank, AO Astana Finance and Temirbank, then controlled by BTA, defaulted in 2009. BTA, Temirbank and Alliance reached restructuring deals with creditors that allowed them to write off about $11 billion of debt.
"These bonds were missold to me and all of UBS's retail clients," Tyne, 46, said in a phone interview today. "I was told that there was a certainty the government would stand behind the banks when, in fact, there was massive internal fraud by the banks' management."
Kazakh prosecutors had issued international arrest warrants for BTA's former chairman Mukhtar Ablyazov and his associates over claims they embezzled as much as $4 billion. Ablyazov had fled to London and claims the bank was nationalized because he opposed President Nursultan Nazarbayev.
Telesto borrowed $60 million from Zurich-based UBS and had a $28.2 million shortfall in its account in October 2008 when the value of its investments fell in the midst of the global financial crisis, UBS said in its lawsuit. Tyne was the personal guarantor for the loan.
Standstill
UBS had agreed to a standstill with Telesto, including not liquidating the firm's collateral or making further margin calls until March 31, Switzerland's biggest bank said in its filing. Telesto, a trust company registered in Jersey, the Channel Islands, waived its claims against the bank, UBS said.
Julie Yeo, a Singapore-based spokeswoman at UBS, declined to comment.
The Swiss bank ended the standstill agreement in October, claiming Telesto broke the understanding with claims against the bank, according to the Singapore lawsuit. UBS demanded Telesto and Tyne pay the $12.6 million owed, according to the bank. Tyne said he's appealing a Singapore court order for the Australian lawsuit to be halted.
No Understanding
The agreed standstill between UBS and Telesto didn't amount to an understanding that Tyne wouldn't make claims against the bank, the Australian investor said in his Singapore court filing.
There were "definitely contentions of lack of authority and misrepresentations" by UBS in Telesto's Kazakhstan bond investment, Tyne said in court papers.
Tyne has also sued AXA Asia Pacific Holdings Ltd. in Victoria, Australia, claiming he and a partner lost as much as A$1.9 billion ($1.9 billion) when the insurer canceled a contract that gave them special terms for investing, which allowed for risk-free arbitrage.
The case is UBS AG v. Telesto Investments Ltd. & Scott Francis Tyne S801/2010 in the Singapore High Court.
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