Deutsche Bank Will Pay $125 Million Over Bribery Violations

Deutsche Bank agreed on Friday to pay $125 million to settle a foreign bribery investigation by federal authorities into the bank’s attempts to win business in several countries including Saudi Arabia by making improper payments to politically connected people.

The bank avoided having to plead guilty in a criminal case by entering into a deferred prosecution agreement with Justice Department under which the charges will be dismissed in three years. The fine also resolved a related investigation by the Securities and Exchange Commission, which found that Deutsche Bank had made improper payments to politically connected people in China, according to a person familiar with the matter.

After a hearing in Brooklyn federal court, federal prosecutors released the charging document that detailed a multiyear practice at the bank of making payments to politically connected “business development consultants’’ in Saudi Arabia, Abu Dhabi and Italy. Deutsche Bank had made about $35 million from those arrangements, prosecutors said.

Prosecutors said that, for example, in an effort to win business from the family office of an unidentified Saudi official, Deutsche Bank had entered into a contract with a corporate entity owned by the wife of the person making investment decisions for the family office. The bank then paid fees to that company — describing them in the bank’s records as “referral fees.”

Describing the bribes that way was a violation of the accounting provisions of the federal Foreign Corrupt Practices Act, prosecutors said.

The agreement is the latest black eye for Deutsche Bank, which has been repeatedly penalized in recent years for its involvement with money laundering and for violating international sanctions.

The German bank in 2019 agreed to pay the Securities and Exchange Commission $16 million to resolve allegations that it used corrupt means to win business in China and Russia. And in July, the bank paid $150 million to the New York Department of Financial Services to resolve allegations it failed to prevent suspicious transactions by Jeffrey Epstein, the registered sex offender and financier who died of an apparent suicide in August 2019 while awaiting trial on federal sex trafficking charges.

“We take responsibility for these past actions, which took place between 2008 and 2017,” said Dan Hunter, a bank spokesman. “Our thorough internal investigations, and full cooperation with the D.O.J. and S.E.C. investigations of these matters, reflect our transparency and determination to put these matters firmly in the past.”

Paying bribes to foreign officials and politically connected officials appears to have been standard practice within some corners of the bank. The New York Times reported in 2019 that Deutsche Bank had for years lavished Chinese leaders with expensive gifts and paid millions of dollars to politically connected consultants as the bank tried to raise its profile and land lucrative deals in China.

As part of the deal, the criminal charges will be dismissed against the bank in three years as long as it does not violate the deferred prosecution agreement.

Deferred prosecution agreements are a common tool for federal prosecutors to resolve investigations with companies and banks. On Thursday, Boeing entered into a $2.5 billion deferred prosecution agreement with federal prosecutor stemming from an investigation into flaws in the software system used in the Max 737 aircraft, which was grounded worldwide in March 2019 after a total of 346 people were killed in crashes in Indonesia and Ethiopia.

The agreement resolves a long-running investigation just days before President Trump leaves office. The German bank has been Mr. Trump’s primary lender for the past two decades; he currently owes Deutsche Bank more than $300 million.

It is not uncommon for federal prosecutors and companies to look to deferred prosecutions to wrap up investigations especially with a change of administration.

Source link

Leave a Reply

Your email address will not be published. Required fields are marked *