Deutsche Bank under pressure over Trump dealings as US president is ordered to publish returns
Moves to have the president’s tax returns published follow the lender being fined for its Jeffrey Epstein ties, writes Lucy Burton
Donald Trump’s long-time lender Deutsche Bank knows all the US president’s closely held secrets. So when Democratic-led House of Representatives committees and a prosecutor in New York last year ordered the bank to hand over his financial records, his family retaliated by trying to stop bankers complying.
Trump’s lawyers appealed to the Supreme Court, arguing that as president he has immunity. One even argued that Trump could shoot someone in the middle of New York and not be prosecuted until he left office, echoing a boast he made during his 2016 presidential campaign.
Now, in the midst of the 2020 election campaign, Supreme Court judges have decided that Manhattan prosecutors can obtain Trump’s tax records, rejecting immunity arguments. But the case is returning to a lower court, and any documents obtained are unlikely to be released before the November election.
Nevertheless, the ruling is a blow to Trump, the first president since Richard Nixon not to make his tax returns public. If they are released, the documents could also shine a light on Deutsche Bank, which only days ago was fined $150m (£119m) for allowing the late billionaire sex offender Jeffrey Epstein to make a string of suspicious payments to women without proper checks.
As interest in Trump’s finances grows, so does scrutiny of his long relationship with the German bank. It says it will abide by a final decision by the courts and has shown “full respect for the US legal process” and remained neutral throughout.
The relationship began two decades ago, when Deutsche was one of the few willing to lend to the property developer despite a string of defaults. According to The New York Times, he exaggerated his wealth, and promised to reward bankers with weekends at his Mar-a-lago resort in Florida to secure loans. By the time he entered the White House in January 2017, he owed the bank about $350m, Reuters has reported.
Trump has always insisted he had plenty of options on Wall Street, however, tweeting last year that the “badly written about” and “maligned” Deutsche was once one of the most powerful banks in the world, and one of “many” after his business.
But while Deutsche bankers enjoyed huge pay packets and trips on private jets during its heyday, by 2018 the once mighty institution was under such pressure to cut costs that even the free office fruit was axed. Probes into money laundering, sanctions violations and Libor-rigging since the financial crisis has cost it billions in fines and settlements, and the bank is in the process of cutting 18,000 jobs.
Trump even mocked his bankers for losing money in his 2007 book Think Big and Kick Ass in Business and Life. A line from the book, used by Deutsche’s lawyers in a 2008 court case against Trump, states: “I figured it was the bank’s problem, not mine. What the hell did I care? I actually told one bank, ‘I told you you shouldn’t have loaned me that money. I told you the goddamn deal was no good’.”
Yet, the relationship continued. According to The New York Times, in late 2011, the bank debated whether to continue lending to Trump after his 2008 defaults, but the relationship was given the go-ahead by then chief executive, Josef Ackermann (who later said he did not recall the conversation), and then again by Anshu Jain, his successor.
By 2016, an internal report exploring how the bank had become so embroiled with Trump flagged a broader cultural problem that valued getting deals done and winning over the super-rich no matter what the cost, sources who read the report told the newspaper.
Past misconduct and scrutiny over the bank’s relationship with Trump continued to plague Deutsche in the years that followed.
Last year, it emerged that the FBI was scrutinising the bank for a range of potential anti-money laundering lapses, reportedly including a review of potentially problematic transactions linked to Trump’s son-in-law, Jared Kushner. A spokesman for Kushner’s company said at the time that any allegation involving money laundering was “completely made up and totally false”.
Tammy Mcfadden, a former Deutsche specialist who reviewed some of the transactions, told The New York Times that at the bank “you present them with everything, and you give them a recommendation, and nothing happens. It’s the DB way. They are prone to discounting everything”.
That oversight was laid bare this week when the New York Department of Financial Services said that the bank failed to step in when Epstein was wiring money to co-conspirators, Russian models and women “with Eastern European surnames” and did not question the fact that he was withdrawing hundreds of thousands of dollars in cash for “tipping and household expenses”.
Rather than carrying out detailed scrutiny, the DFS said that Deutsche’s compliance workers simply looked online to check that the women paid by Epstein were over the age of 18.
Following the $150m fine, which also covered compliance failures related to Danske Bank Estonia and FBME Bank, Christian Sewing, Deutsche’s chief executive, told staff: “We all have to help ensure that this kind of thing does not happen again.
“It is our duty and our social responsibility to ensure that our banking services are used only for legitimate purposes.”
Sewing also said bringing in Epstein as a client in 2013 was a “critical mistake and should never have happened”.