Freshfields sweats on Citibank reprieve

A new development in the complex litigation in Brunei has sparked hopes at Freshfields Bruckhaus Deringer that the firm will get another crack at Citibank as a client.
Freshfields lost Citibank as a client two years ago when the firm – acting for the Brunei government and the Brunei Investment Agency (BIA) – questioned the bank as part of its investigation into the misappropriation of funds in Brunei.
The problems in Brunei arose out of the discovery that billions of dollars of BIA funds had been misused, some of which had been used to fund Amedeo Development Corporation (ADC). ADC subsequently collapsed with debts of around $700m (£478.3m). BIA and Prince Jefri both maintained accounts at Citibank.
But the news last week that some 250 creditors of ADC are to accept offers of settlement has marked a watershed in the complex Brunei litigation. A source said: “If the ADC liquidation is resolved, it's an important step.
“Citibank remains a live issue. Sooner or later the client will decide what it wants to do. There may be a feeling in Brunei to put the past behind [them] and go forward. There must at least be the possibility that it's nearing the end of its natural life.”
Another source said: “It would be a benefit and rather a relief.”
Prior to the Brunei job, Citibank was worth nearly £10m in fees to Freshfields and was one of the finance department's major standalone clients.
A source close to the process told The Lawyer that the firm believed it had covered itself by obtaining a waiver from its then client. The source said: “At the start, because of the close relationship we had with Citibank, it was recognised as an issue and we needed to seek a waiver. Most banks require that you don't act against them, so we got a waiver right at the start.”
Despite the waiver, the bank's fury at being questioned by its own panel firm in the Brunei litigation was such that Freshfields was blacklisted, although it has maintained relations with other Citigroup subsidiaries such as Schroders.
Freshfields is still being retained on matters relating to the implementation of the settlement with Prince Jefri, who is being advised by a team led by Lovells partner Christopher Grierson.