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Harry Cassin Publisher and Editor

Andy Spalding Senior Editor

Jessica Tillipman Senior Editor

Richard L. Cassin Editor at Large

Elizabeth K. Spahn Editor Emeritus 

Cody Worthington Contributing Editor

Julie DiMauro Contributing Editor

Thomas Fox Contributing Editor

Marc Alain Bohn Contributing Editor

Bill Waite Contributing Editor

Shruti J. Shah Contributing Editor

Russell A. Stamets Contributing Editor

Richard Bistrong Contributing Editor 

Eric Carlson Contributing Editor

Bill Steinman Contributing Editor

Aarti Maharaj Contributing Editor


FCPA Blog Daily News

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Thursday
Aug222019

Deutsche Bank pays SEC $16 million to settle ‘referral hiring’ FCPA violations 

Deutsche Bank paid the SEC $16 million Thursday to settle FCPA offenses related to its hiring of relatives of public officials in China and Russia. 

The German bank disgorged $10.7 million and paid a $3 million penalty to the SEC, plus pre-judgment interest of $2.4 million. 

Deutsche Bank first disclosed the FCPA-related investigation in an SEC filing in March 2015.

In an internal administrative order (pdf), the SEC charged  Deutsche Bank with violating the FCPA's books and records and internal accounting controls provisions.

From at least 2006, Deutsche Bank’s APAC operations engaged in a pattern and practice of providing employment to relatives at the request of State Owned Enterprises (SOE) executives that the bank was seeking business from, the SEC said. 

According to the SEC, Deutsche Bank’s Chairman of APAC Corporate Finance instructed that the daughter of an SOE's chairman be hired despite headcount restrictions being in effect. The CEO of the the bank's JV told Deutsche Bank that she was "an average-level candidate based on the interviews but failed two tests which means she is not good at analysis" and recommended she not be hired. 

Shortly after, an executive at the SOE contacted the bank and the daughter was hired. Deutsche Bank closed one deal for the SOE and earned $3.75 million from the transaction. 

Similar hiring practices took place in Russia from 2009 to 2012. One of the Russian corrupt hires in London performed so poorly that he was deemed "a liability to the reputation of the program, if not the firm…” by a Deutsche Bank human resource employee.

"While Deutsche Bank had defined 'anything of value' in 2009 to specifically include job offers and enacted the APAC Hiring Policy in 2010, it did not implement a global hiring policy with this effect until October 2015," the SEC said. 

 Deutsche Bank currently has about 91,000 employees worldwide.

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In mid 2018, Credit Suisse Group AG agreed to pay a $47 million penalty to the Justice Department to end an FCPA investigation into hiring practices in Asia.

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, HSBC Holdings plc, and Goldman Sachs Group, Inc., according to documents published on FCPA Tracker.

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Harry Cassin is the publisher and editor of the FCPA Blog.

Reader Comments (2)

After reading through the list of monetary settlements it makes one wonder if any of these large financial institutions or industries will ever learn to follow best practices or their own corporate policies regarding Nepotism, Bribery and Protection of their Proprietary Information.

I still don't believe collecting fines from companies is solely sufficient.

Individual perpetrators should be held accountable for each action and convictions (prison time) should be applied to the culprit and senior corporate leader(s) over that area. Additionally, all involved should be barred for life from future participation in their field or area of endeavor, without acception.
August 23, 2019 | Unregistered CommenterJames Long
Hi James,
Regarding your comment about holding individual perpetrators liable: That would need to come from the DOJ, the agency that can bring about criminal charges against individual persons. This was an enforcement action brought by the SEC, which can only impose civil penalties (which it did, US$3M worth of civil money penalties). Prosecution of individual wrongdoing in FCPA cases is still a relatively new development, only since the 2015 Yates Memo. Hope this sheds a little bit of light on the subject for you.
August 26, 2019 | Unregistered CommenterDonald Kaufhold
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