The US Securities and Exchange Commission (SEC) and Deutsche Bank entered into an amicable agreement on charges that the bank hired relatives of senior officials and top managers of state-owned companies in other countries for contracts. He did this to their “personal advantage in order to unlawfully influence them so that they help the bank get or keep the business,” the SEC statement said.
This happened "at least from 2006 to 2014," the document says. At the same time, Deutsche Bank was aware that it was violating anti-bribery laws, including the US anti-corruption law abroad. The domestic policy of the bank also required to identify cases of hiring or offers to hire relatives of officials. But Deutsche Bank, although aware of the corruption risks of such a personnel policy, did not take adequate measures to combat them in its branches until 2015, the SEC notes. He also forged documents to hide violations related to the hiring of relatives of officials and heads of state-owned companies.
Deutsche Bank will pay a $ 16.2 million fine. As usual in such amicable agreements, he did not plead guilty and did not refuse it.
The SEC document cites five examples of this practice of the bank: three in China and two in Russia (in all cases names are not given, only positions).
“It’s politically NOT correct to keep her in Moscow”
In 2009, the “Deputy Minister in the Russian Government” asked the director of the Russian office of Deutsche Bank (in the SEC document he was called Chief Country Officer - “Russia Chief”) to hire his daughter in the Moscow, London or New York office. Earlier, Deutsche Bank “repeatedly and unsuccessfully tried to get a business order from his department,” SEC said. The director of the Russian office, communicating with his London colleagues, “enthusiastically” supported this request of the official, writing to them: “We must do this! We must take her to London, because keeping her in Moscow is politically NOT correct. ”
The official’s daughter was initially hired for temporary work in Moscow “with the understanding that she would be given a permanent position in London.” Four months passed after that, but the government did not involve Deutsche Bank (DB) in the transaction in which he was trying to participate. A top manager in London wrote to the director of the Russian office: “We must get involved [in this deal]. Any tactics and political pressure should be used to avoid such embarrassment. Non-DB is a slap in the face. ” He replied that he had already "met with the deputy minister [whose daughter hired a bank], who is responsible for the process and supports DB."
A few days after that, the transfer of the official’s daughter to the British office was discussed in London. To the question of one of the managers why it should be transferred from temporary work to full-time, the other answered that her father, Deputy Minister of Finance of Russia, asked to take her to the bank and if she was not given, as promised, a full-time position, this would complicate relations with her father "and greatly undermine our relationship" with the ministry.
Several banks have come under the spotlight of US regulators who have been conducting an investigation since 2013. In 2016, JPMorgan Chase paid $ 264 million to settle allegations by the SEC and the Department of Justice that it hired the children of Chinese officials and government executives in violation of the bank’s domestic policy. New orders from Chinese government agencies were "almost linearly dependent" on the employment of officials' children, the bank said in a 2009 document. Credit Suisse paid $ 77 million in 2018 for similar violations in the United States.
Internal and external borrowing and public debt management at the time described by the SEC was supervised by Dmitry Pankin, who in 2008 became Deputy Minister of Finance. Business Petersburg published in 2016 that his daughter Elena Arkhangelskaya was working at Deutsche Bank in London. The fact that Elena Arkhangelskaya has been working with Deutsche Bank since 2009 is written in her profile on the Cbonds website; She started at the Moscow office with sales of bonds and structured loan products, and in 2011 she was transferred to London, where she began to issue debt instruments in the CEEMEA region (Central and Eastern Europe, the Middle East, Africa).
In 2018, Bloomberg wrote about the lawsuit filed by former Deutsche Bank top manager Nizar al-Bassam against the bank, where he spoke about an internal investigation into the hiring of children of two deputy finance ministers; these officials were then associated with the placement of Russian government Eurobonds. Their children are Elena Arkhangelskaya and Aleksey Storchak, the son of Deputy Minister of Finance Sergey Storchak (Alexey was taken to Deutsche Bank in 2010). Al-Bassam led Corporate Finance in CEEMEA; According to him, although his team had “some business” with the Russian government, Arkhangelskaya was a qualified specialist and other managers supported her appointment.
The man who worked at Deutsche Bank at that time said that Arkhangelskaya was a good employee and person, but he does not remember whether the issue of whose daughter she was discussed in the Moscow office was discussed.
Things went uphill
Deutsche Bank didn’t do business in Russia in 2009–2010, according to Bloomberg LEAG: Gazprom and other government agencies placed bonds for about $ 20 billion, but the bank did not participate in any of the transactions. In 2009, he was the organizer of only two issues of Russian issuers, in 2010 - four. Then the situation began to change, including due to the hiring of new employees, Bloomberg noted: in 2011–2013. the bank participated in 7, 10 and 15 transactions, respectively.
Bloomberg also wrote that Arkhangelskaya moved to London in 2011. The SEC did not write when the deputy minister’s daughter was transferred to London, but indicates that about 10 days after this, the bank received a document signed by her father asking him to submit proposals for organizing the issue of Eurobonds Russia for 2 billion euros.
Some time after that, the director of the Russian office and his wife went on vacation with the deputy minister, his wife and daughter, as well as other people. “Although this trip did not have a legitimate business purpose, and it included only leisure, including hunting, helicopter flights and fishing, Deutsche Bank illegally registered its expenses as business. Shortly after this trip, Deutsche Bank submitted a proposal for the transaction and was appointed its organizer, ”SEC reports.
Such a release in 2011 did not take place. In March 2012, Deutsche Bank arranged the placement of $ 7 billion sovereign Eurobonds, which was then the largest international issue of securities in the history of Russia, the bank’s website says. In April 2012, Deutsche Bank was among the organizers of three issues of sovereign Eurobonds: two for $ 2 billion and one for $ 3 billion.
The post of chief executive officer of Deutsche Bank Group in Russia and the CIS from 2008 to 2012 was held by Igor Lozhevsky. Find his current contacts failed. The Russian office declined to comment, passing a headquarters statement: “Deutsche Bank provided substantial assistance to the SEC in the investigation and implemented numerous measures to improve recruitment practices.”
$ 264 million
paid by JPMorgan Chase in 2016 to settle allegations by the SEC and the Department of Justice that it hired the children of Chinese officials and government executives in violation of the bank’s domestic policy. New orders from Chinese government agencies were "almost linearly dependent" on the employment of officials' children, the bank said in a 2009 document. Credit Suisse paid $ 77 million in 2018 for similar violations in the United States.
It was not possible to get comments from Pankin, who in 2011 headed the Federal Service for Financial Markets, and since 2018 works as president of the Black Sea Trade and Development Bank. The request sent to his mail indicated on the bank's website remained unanswered. His phone number, indicated on the bank’s website, did not answer on Friday and Saturday. Find contacts Arkhangelsk also failed.
The representative of the Ministry of Finance declined to comment.
Sergei Storchak told Vedomosti that his son Alexei moved to Deutsche Bank from Credit Suisse, “when I knew where”: “What kind of conflict of interest were you talking about?” From November 2007 until October 21, 2008 Sergey Storchak was in a pre-trial detention center on charges of attempted embezzlement from the budget on an especially large scale. On January 31, 2011, criminal prosecution was terminated for the absence of a crime event, and in March, Storchak, after his vacation in November 2007, went back to work at the Ministry of Finance.
Another Russian example - a top manager of one of the state-owned companies asked Deutsche Bank to hire his son. Having worked briefly in Moscow in 2010, the son asked to London. According to the personnel department in the London office, he was not suitable for the corresponding program (work with training), but, as the employee of the department said, the father of the young man is “a big shot in a state company”, and he asked the director of the Russian office to arrange a move. “The classic situation is not [t. e. nepotism, nepotism. - “Vedomosti”], we are faced with this every year, ”the employee added.
But two months later, the personnel department stated that regardless of the position of his father, the young man should be expelled from the program in London, because he does not go to work, cheats on the exam and became a "burden for the program, not to mention the bank." Two months later, in December 2011, he was returned to the Moscow office, where he worked for another two months. During the described period, Deutsche Bank conducted one transaction for this state-owned company, SEC said.