In­ves­ti­ga­tions dog Deutsche Bank

Com­pany al­legedly hired of­fi­cials’ kids to gain their fa­vor

The Morning Call - - BUSINESS CYCLE - By Re­nae Merle

Deutsche Bank had re­peat­edly failed to secure work with a Rus­sian gov­ern­ment en­tity when it was ap­proached with a pro­posal: hire the daugh­ter of a high-rank­ing of­fi­cial at the or­ga­ni­za­tion.

“We must do it!” a se­nior Deutsche Bank of­fi­cial said, ac­cord­ing to the Se­cu­ri­ties and Ex­change Com­mis­sion. “We should have her in London as it is NOT po­lit­i­cally cor­rect to have her in Moscow!”

The woman was hired with a prom­ise of a per­ma­nent po­si­tion in London, ac­cord­ing to al­le­ga­tions de­tailed in an SEC set­tle­ment agree­ment. Ten days af­ter the move was com­plete, the new em­ployee’s fa­ther sent Deutsche Bank a re­quest for a pro­posal on a bond deal worth more than $2 bil­lion, a deal the bank ul­ti­mately won.

The SEC or­der out­lines nu­mer­ous al­leged vi­o­la­tions by the bank of the 1977 For­eign Cor­rupt Prac­tices Act by pro­vid­ing jobs to rel­a­tives of for­eign gov­ern­ment of­fi­cials in an at­tempt to in­flu­ence the of­fi­cials to steer business to the bank. Deutsche Bank agreed to set­tle the SEC’s al­le­ga­tions re­cently by pay­ing $16 mil­lion, though it did not ad­mit wrong­do­ing.

In an­other case, a se­nior ex­ec­u­tive at a Rus­sian sta­te­owned en­tity asked the bank to hire his son, who also wanted to work in Deutsche’s London of­fices, ac­cord­ing to the SEC. A London-based Deutsche hu­man re­sources em­ployee flagged the move as “the clas­sic nepo sit­u­a­tion that we have every year” but was over­ruled.

Af­ter two months, the hu­man re­sources ex­ec­u­tive wanted the son fired despite his fa­ther’s po­si­tion. He had failed to come to work, failed an exam and was “a li­a­bil­ity to the pro­gram, if not the firm,” the Deutsche em­ployee said.

In­stead, the son was trans­ferred back to Moscow, where he con­tin­ued to work for an­other two months, ac­cord­ing to the SEC doc­u­ment.

The episodes are among sev­eral con­tro­ver­sies haunt­ing Deutsche. The Ger­man bank is also go­ing through a ma­jor re­or­ga­ni­za­tion and faces in­tense scru­tiny of its re­la­tion­ship with Pres­i­dent Don­ald Trump and his busi­nesses.

Once a global pow­er­house, ca­ter­ing to the U.S. elite from a tower on Wall Street, Deutsche Bank’s for­tunes have waned in re­cent years, and in July it an­nounced a sweep­ing re­struc­tur­ing, in­clud­ing gut­ting its stock and bond trad­ing business and re­duc­ing other in­vest­ment bank op­er­a­tions.

The over­haul will mean as many as 18,000 job cuts by 2022 out of its 90,000 work­ers.

Ham­per­ing its ef­forts to re­bound have been var­i­ous in­ves­ti­ga­tions into the bank’s con­duct. It’s at the cen­ter of one of the largest money-laun­der­ing cases in his­tory, in­volv­ing Danske, Den­mark’s largest bank.

In Au­gust, Deutsche Bank set­tled the SEC charges that it vi­o­lated for­eign bribery laws be­tween 2006 and 2014 by pro­vid­ing valu­able jobs to the rel­a­tives of for­eign gov­ern­ment of­fi­cials it wanted to work with. In ad­di­tion to the cases in­volv­ing Rus­sian en­ti­ties, the SEC also out­lined sev­eral cases in­volv­ing China.

In one case, a Deutsche em­ployee re­vised the re­sume of the son of a com­pany ex­ec­u­tive it hoped to work with. The orig­i­nal re­sume was full of ty­pos and gram­mat­i­cal er­rors, ac­cord­ing to the SEC set­tle­ment.

In an­other, the bank hired the son of the chair­man of a Chi­nese state-owned en­ter­prise.

The ex­ec­u­tive’s son was re­jected for the job twice be­fore a high-level Deutsche ex­ec­u­tive weighed in, the SEC set­tle­ment agree­ment said.

“Deutsche Bank pro­vided sub­stan­tial co­op­er­a­tion to the SEC in its in­quiry and has im­ple­mented nu­mer­ous re­me­dial mea­sures to im­prove the bank’s hir­ing prac­tices,” the bank said in a state­ment.

In­ves­ti­ga­tions by two House com­mit­tees into Rus­sian money-laun­der­ing al­le­ga­tions and the pres­i­dent’s fi­nances could in­ten­sify the fo­cus on Deutsche’s work with for­eign gov­ern­ments. Deutsche Bank has said it is co­op­er­at­ing with all in­ves­ti­ga­tions, in­clud­ing the two House com­mit­tees.

Trump is ap­peal­ing a lower court rul­ing that cleared the way for Deutsche Bank and Cap­i­tal One to turn over years of fi­nan­cial records from the pres­i­dent, his three el­dest chil­dren and the pres­i­dent’s com­pa­nies to the House In­tel­li­gence and Fi­nan­cial Ser­vices com­mit­tees.

Trump’s com­pany has taken out about $364 mil­lion in loans from Deutsche Bank since 2012, ac­cord­ing to pub­lic fil­ings. The loans in­cluded two worth $125 mil­lion to buy and ren­o­vate the Do­ral golf re­sort in Florida, a $170 mil­lion loan to ren­o­vate a Washington build­ing into a Trump ho­tel, and a $69 mil­lion loan to re­fi­nance an ex­ist­ing Trump ho­tel in Chicago.

“You have a sit­u­a­tion where Mr. Trump is go­ing to Deutsche Bank ask­ing for very large loans when no other bank ap­par­ently will touch him,” Dou­glas Let­ter, gen­eral coun­sel for the House, told the ap­peals court. “For ob­vi­ous rea­sons both com­mit­tees here want to know why is it that Deutsche Bank would be will­ing to lend a large amount of money” to Trump.

Trump’s at­tor­ney Pa­trick Straw­bridge told the court that the com­mit­tees were push­ing the bound­aries of their pow­ers to tar­get and em­bar­rass the pres­i­dent.

Trump also is fight­ing ef­forts to ac­cess his tax re­turns and other de­tailed fi­nan­cial in­for­ma­tion in courts across the coun­try.


Deutsche Bank is go­ing through a big re­or­ga­ni­za­tion and faces scru­tiny of its re­la­tion­ship with Pres­i­dent Don­ald Trump.

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