Deutsche Bank will pay $125 million over bribery violations

For nearly seven years it seemed like a good way to drum up business for Deutsche Bank: pay millions of dollars to consultants in countries like Saudi Arabia, the United Arab Emirates, Italy and China.

But federal authorities in the United States said those payments — often listed as “referral fees” in the bank’s records — were actually bribes to politically connected fixers that gave the scandal-marred German bank access to foreign officials. And Friday, Deutsche Bank agreed to pay more than $125 million to resolve criminal and civil investigations into those and other practices.

The investigation by the Justice Department and the

Securities and Exchange Commission found that Deutsche Bank had made about $7 million in improper payments to foreign fixers between 2009 and 2016, earning about $35 million from the deals that resulted.

The bank avoided having to plead guilty in the criminal component of the investigation by entering into a deferred prosecution agreement with the Justice Department at a hearing in Brooklyn federal court. The fine also resolved the civil component of the investigation by the SEC.

“We take responsibility for these past actions, which took place between 2008 and 2017,” said Dan Hunter, a Deutsche Bank spokesperson. “Our thorough internal investigations, and full cooperation with the DOJ and SEC investigations of these matters, reflect our transparency and determination to put these matters firmly in the past.”

Authorities said the bank failed to closely monitor the arrangements it had made with the consultants to determine if they had close ties to foreign officials, even though the bank had identified problems with its use of consultants in 2009.

As a result, the SEC said in an administrative settlement, Deutsche Bank paid consultants “where no invoices were submitted and where invoices contained insufficient documentation to detail what services were performed.” Others were paid in excess of what their contracts called for, or were paid even though they had no contract at the time.

Prosecutors said that, for example, in an effort to win business from the family office of an unidentified Saudi official, Deutsche Bank had entered into a contract with a corporate entity owned by the wife of the person who made investment decisions for the family office. The bank then paid fees to that company — describing them in the bank’s records as “referral fees.” Describing the bribes that way was a violation of the accounting provisions of the federal Foreign Corrupt Practices Act, prosecutors said.

In Italy, the bank struck up a business development relationship with a judge, according federal authorities. And in China, where Deutsche Bank wanted to set up an energy fund with a government entity, the bank found a consultant who was a close friend of a government official, according to the SEC.

The bank’s agreement with federal prosecutors also resolved allegations arising from an investigation into manipulative commodities trading by some at the bank. Prosecutors said numerous Deutsche traders had engaged in a practice known as “spoofing” — placing an order to buy or sell commodities with the intent of canceling it before the trade can be completed. This can allow the traders to profit when others are deceived into making trades based on the misleading information.