29 Jan 2020
Deutsche Bank’s Switzerland-based wealth management division paid $1.1 million to secure lucrative business arrangements with a senior member of the Saudi royal family, the Financial Times reported Sunday, citing the findings of an internal probe conducted by the bank.
The funds, which were offered in tandem with an internship and a trip to a Swiss ski resort, were sent in four installments through an offshore company in the British Virgin Islands that was owned by the wife of the Saudi royal’s financial adviser and created by Deutsche Bank’s subsidiary in Mauritius, the newspaper said. Deutsche employees misleadingly recorded one of the transfers as an “exceptional retrocession payment” and sought to justify another as a “goodwill payment,” according to the FT.
From 2010 to 2016, the unnamed Saudi royal brought up to €500m in assets to the wealth management division, the FT said.
The violations of bank policies and potential criminal infractions were first identified by Deutsche Bank as part of an internal investigation between 2014 and 2016 into whether its employees had attempted to retain high-value clients and win additional bonuses through so-called “relationship hires”, or the practice of hiring family members and associates of wealthy clients, the newspaper said. Last year, the German lender agreed to a $16.2-million settlement with US authorities to resolve civil allegations that it had offered sinecures to the relatives of Chinese and Russian officials in exchange for valuable financial relationships.
Following the conclusion of the internal investigation, six employees involved with the Saudi payments left the bank, some of whom went on to take senior roles at Barclays, UniCredit and Union Bancaire Privée, the newspaper reported. Deutsche Bank suspended bonuses for 12 staff and reported two unnamed, former Germany-based employees to criminal prosecutors in Frankfurt for suspected bribery and embezzlement.
The two individuals reported to German prosecutors subsequently challenged their dismissals in court. One of the individuals won the case and the other settled with the bank, the FT said.
Prosecutors told the Financial Times that the criminal probe was ongoing.
A lawyer for Serene El Masri, who formerly headed Deutsche’s wealth management efforts in the Middle East and Africa and now serves of the head of Union Bancaire Privée’s Monaco branch, confirmed that she left left the German bank following the investigation but denied that El Masri had committed fraud. Danny Bower, who left his position as the head of business strategy and development at Deutsche Bank Suisse following the probe, has since become the chief risk officer at Barclay’s Private Bank in Switzerland, the FT said.
Deutsche Bank significantly cut the 2015 bonus of Marco Bizzozero, then head of wealth management for Europe, the Middle East and Africa, as a result of the probe but decided not to pursue disciplinary action against him. Bizzozero, who left Deutsche Bank in the months following the probe’s conclusion, is now UniCredit’s chief executive of group wealth management, according to the report.
“This was an action by a small number of individuals who acted in breach of the bank’s policies,” the German bank told the Financial Times. “We caught it, reported it ourselves to regulators and the affected clients, dealt appropriately with the individuals, and made improvements to avoid something similar happening again.”
Read the full report here
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