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Deutsche Settles With SEC Over Wall Street Hiring Methods

Editorial Staff, August 23, 2019

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The settlement settles civil claims alleging that the bank hired relatives of government officials to secure business in China and Russia. Other banks have also reached settlements.

(Updates with quotes from Deutsche, SEC statement)

Deutsche Bank has agreed to pay $16.2 million to settle civil allegations that for years it hired the relatives of government officials in order to win business in China and Russia.

The Frankfurt-listed bank is the latest bank to settle with the US Securities and Exchange Commission over Wall Street hiring practices. JP Morgan and Credit Suisse have also settled with US authorities over these matters. JP Morgan agreed to pay $264 million and Credit Suisse paid $77 million.

From 2006 to 2014, Deutsche Bank gave jobs to the children of rich and powerful officials “as a personal benefit to the officials in order to improperly influence them to assist the bank in obtaining or retaining business”, the SEC alleged yesterday.

"Deutsche Bank recognized that hiring relatives of foreign government officials and other clients in exchange for business could violate anti-bribery laws, including the FCPA. In 2010, Deutsche Bank enacted a written hiring policy in the Asia-Pacific region (“APAC”) to detect and prevent its employees from offering temporary employment to candidates referred by current or potential clients to detect and prevent corrupt hiring practices. This hiring policy was not effectively enforced and did not apply to all categories of hires. Additionally, Deutsche Bank, although aware of corruption risks in its referral hiring practices, failed to implement global policies sufficiently to address this risk until 2015," the SEC said in a statement emailed to this publication. 

"Deutsche Bank employees created false books and records that concealed corrupt hiring practices and failed to accurately document and record certain related expenses and Deutsche Bank failed to devise and maintain a system of internal accounting controls around its hiring practices sufficient to provide reasonable assurances that its employees did not bribe foreign government officials," the regulator said.

When asked about the matter, a spokesperson for Deutsche Bank told this news service: “Deutsche Bank provided substantial cooperation to the SEC in its inquiry and has implemented numerous remedial measures to improve the bank’s hiring practices.”

Reports said that Deutsche Bank neither admitted nor denied the allegations that it had violated the Foreign Corrupt Practices Act, according to the SEC, which said the lender received credit for its co-operation and remedial efforts.

 




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