Credit Suisse settles ‘princeling program’ FCPA offenses for $76.7 million
Thursday, July 5, 2018 at 10:58AM
Richard L. Cassin in BNY Mellon, China, Credit Suisse, Hiring, Hong Kong, JPMorgan Chase, Qualcomm Inc.

Credit Suisse Group AG and its Hong Kong unit agreed Thursday to pay the DOJ and SEC $76.7 million for a referral hiring scheme that violated the Foreign Corrupt Practices Act.

The DOJ said Credit Suisse (Hong Kong) Limited will pay a $47 million criminal penalty for "awarding employment to friends and family of Chinese officials" to win banking business.

The Zurich-based parent, Credit Suisse Group AG, settled Thursday with the SEC. The firm agreed to disgorge almost $24.9 million of profits and more than $4.8 million in prejudgment interest.

In an apparent reflection of the feds' new no-piling on policy, the SEC said it didn't impose a civil penalty "based upon the imposition of a $47 million criminal fine" by the DOJ.

The Hong Kong unit entered into a non-prosecution agreement (pdf) with the DOJ. The NPA requires the subsidiary and Credit Suisse AG "to continue to cooperate with the [DOJ] in any ongoing investigations" and enhance their compliance programs.

Credit Suisse first disclosed the DOJ and SEC investigations in February this year. Last month the Hong Kong unit announced the DOJ settlement but didn't mention the SEC action.

The SEC resolved the case through an internal administrative order (pdf) and didn't go to court. The order said Credit Suisse Group AG violated the FCPA's anti-bribery and internal accounting controls provisions.

Over a seven-year period, Credit Suisse Hong Kong hired more than 100 employees at the request of foreign officials, the SEC said.

Charles Cain, chief of the SEC's FCPA unit, said: "Bribery can take many forms, including granting employment to friends and relatives of government officials."

The DOJ said Credit Suisse Hong Kong "did not voluntarily and timely disclose the conduct at issue."

But the DOJ gave the Hong Kong subsidiary "partial credit for its and its parent company’s cooperation with the criminal investigation."

The bank made foreign-based employees available for interviews in the United States and produced documents from foreign countries "in ways that did not implicate foreign data privacy laws," the DOJ said. 

"However, [Credit Suisse Hong Kong] did not receive additional cooperation credit because its cooperation was reactive and not proactive," according to the DOJ. 

The Hong Kong unit also failed to sufficiently discipline employees involved in the misconduct. 

"Based on these considerations, the company received a non-prosecution agreement and an aggregate discount of 15 percent off the bottom of the U.S. Sentencing Guidelines fine range," the DOJ said.

The FBI's William Sweeney said, “In the banking industry, not every undertaking is fair game.”

“Trading employment opportunities for less-than-qualified individuals in exchange for lucrative business deals is an example of nepotism at its finest," Sweeney said.

In 2016, JPMorgan Chase paid $264 million in penalties for awarding jobs to relatives and friends of Chinese government officials to win banking deals. The FCPA enforcement action was brought by the DOJ, SEC, and the Federal Reserve.

In 2015, BNY Mellon paid $14.8 million to the SEC to resolve FCPA offenses for providing internships to family members of officials connected to a Middle Eastern sovereign wealth fund.

In 2016, mobile chipmaker Qualcomm Inc. paid the SEC $7.5 million to settle FCPA offenses for hiring relatives of Chinese government officials. The officials were deciding whether to select the company’s mobile technology products, the SEC said.

Other banks that have disclosed FCPA-related investigations based on hiring practices include Citigroup Inc., Barclays PLC, Deutsche Bank, HSBC Holdings plc, and Goldman Sachs Group, Inc., according to data provided by FCPA Tracker.


Richard L. Cassin is the publisher and editor of the FCPA Blog.

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