Deutsche Bank to pay US$16.2m in 'princeling' bribery case

New York

DEUTSCHE Bank will pay US$16.2 million to settle a US regulator's allegations that it hired relatives of overseas government officials to win business, making it the latest firm ensnared in a scandal that rocked Wall Street and sparked years-long investigations.

The hiring, which lasted from at least 2006 through 2014 in the Asia-Pacific region and Russia, violated US laws including the Foreign Corrupt Practices Act, the Securities and Exchange Commission (SEC) said in a Thursday order.

The Frankfurt-based bank agreed to settle the case without admitting or denying wrongdoing, the SEC said.

Deutsche Bank employees created false books and records that concealed corrupt hiring practices, according to the SEC.

Individuals who were offered jobs typically bypassed the bank's highly competitive and merit-based process, which required that they have high grades in school and went through multiple rounds of interviews.

One Russian hire who worked in London performed so badly that a human resources employee deemed him "a liability to the reputation of the program, if not their firm", the SEC said.

The company agreed to pay a US$3 million fine and more than US$13 million disgorgement and interest, an amount that the SEC said reflects its level of cooperation.

"Deutsche Bank provided substantial cooperation to the SEC in its inquiry and has implemented numerous remedial measures to improve the bank's hiring practices," bank spokesman Troy Gravitt said in a statement.

The SEC and US Justice Department have, in the past decade, made enforcing anti-bribery laws a priority, specifically scrutinising how financial firms had awarded internships.

The industry-wide investigations were referred to as princeling probes, because they often focused on individuals with connections to the Communist Party in China and prominent business people.

Deutsche Bank's SEC sanction is small when compared with other banks accused of similar misconduct. JPMorgan Chase was penalised about US$264 million in November 2016, while Credit Suisse agreed to pay US$77 million in July 2018. The JPMorgan and Credit Suisse cases also resolved Justice Department allegations. BLOOMBERG