Deutsche Bank to Pay $16 Million for Improper Hiring Practices
August 23 2019 - 3:20PM
Dow Jones News
By Dylan Tokar
Deutsche Bank AG has agreed to pay $16 million to settle charges
by the Securities and Exchange Commission that it violated U.S.
foreign bribery law by hiring relatives of foreign government
officials.
Deutsche Bank settled the Foreign Corrupt Practices Act charges
without admitting to or denying the SEC's findings in an
administrative settlement Thursday. The bank had hired relatives of
foreign officials in China and Russia to obtain business, the
regulator 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," a spokesman for Deutsche Bank
said in a statement.
In one of five cases highlighted by the SEC, Deutsche Bank hired
the daughter of the chairman of a state-owned company in China,
despite the candidate being unqualified for the position, the
agency said. The bank went on to carry out two transactions with
the Chinese company, according to the regulator.
The employees of state-owned enterprises qualify as government
officials under the FCPA, regulators have said. Running afoul of
the U.S. law is especially easy in China, where even doctors at
state-owned hospitals are viewed as government officials.
In another case, Deutsche Bank hired the son of an executive of
another state-owned company in China, even though his résumé
contained grammatical errors and typos, the SEC said.
The executive's son was given a "cheat sheet" by a banker for an
interview with Deutsche Bank, but still performed poorly, the
regulator said. The bank's interviewers thought he was one of the
worst candidates they interviewed according to notes taken at the
time, the SEC said.
The referral hires occurred despite a written policy Deutsche
Bank put in place in 2010 in the Asia-Pacific region to detect and
prevent corrupt hiring practices, the SEC said. The bank failed to
implement global policies to address the risk until 2015, the
agency said.
Deutsche Bank's hiring practices had violated the FCPA's books
and records and internal controls provisions, according to the
settlement. The SEC fine included a $3 million civil penalty, and
$10.8 million in disgorgement, which the agency said represented
the amount of profit Deutsche Bank accrued from the referral hires,
plus $2.4 million in interest.
Other financial institutions also have come under scrutiny for
hiring the relatives of connected Chinese business executives and
Communist Party officials, often referred to as princelings.
JPMorgan in 2016 agreed to pay $264 million to the SEC, U.S.
Justice Department and Federal Reserve to settle charges it
corruptly influenced officials in China and other countries in Asia
by giving jobs and internships to their relatives and friends.
Credit Suisse settled similar charges in 2018.
Write to Dylan Tokar at dylan.tokar@wsj.com
(END) Dow Jones Newswires
August 23, 2019 15:05 ET (19:05 GMT)
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