23 August 2019
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Deutsche Bank has agreed to pay more than $16m to the US Securities and Exchange Commission to settle charges that it hired "poorly or unqualified" relatives of foreign officials in Asia and Russia.
The Securities and Exchange Commission (SEC) alleged that Germany's largest lender had hired relatives of foreign government officials in order to win or retain business in Asia and Russia at their request, in violation of the Foreign Corrupt Practices Act.
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.
The breakdown of the $16.2m settlement amount included: $3m in civil penalty, $10.8m in disgorgement and $2.4m in interest. Under the settlement, Deutsche Bank did not admit or deny the findings, the SEC added, but has since taken "extensive remedial measures" to fix internal controls.
According to the SEC, between at least 2006 and 2014, Deutsche Bank employed poorly or unqualified relatives of executives working at state-owned enterprises, with the "primary goal" of generating business for the company, such as initial public offerings.
The SEC also found that Deutsche Bank employees created false books and records that concealed corrupt hiring practices and failed to accurately document and record certain related expenses, violating books and records and internal accounting controls rules.
In one case, a Russian hired by the bank's London office performed so poorly that a human resource employee called him "a liability to the reputation of the program, if not the firm," the regulator quoted.
US authorities have made various charges against bank's hiring malpractices of relatives of Asian officials, especially the children of senior Chinese politicians or 'princelings' which have resulted in fines far exceeding Deutsche Bank's latest figure.
In 2018, Credit Suisse was fined $77m for such charges and in 2016, J.P. Morgan was slapped with a $264m.
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