Deutsche Bank Aktiengesellschaft (Deutsche Bank or the company) has agreed to pay more than $ 130 million to solve the government’s investigation into breaches of the Foreign Corrupt Practices Act (FCPA) and a separate investigation into a commodity fraud scheme.
The resolution contains criminal fines of $ 85,186,206, criminal fines of $ 681,480, victim compensation of $ 1,223,738 and $ 43,329,622 to be paid in a coordinated resolution to the U.S. Securities & Exchange Commission.
Deutsche Bank is a multinational financial services company headquartered in Frankfurt, Germany. The charges arise as a result of a scheme to conceal corrupt payments and bribes from third-party intermediaries by falsely recording them in Deutsche Bank’s books and records, as well as related breaches of internal accounting control, and a separate scheme to tackle fraudulent and manipulative commodities. trading practices that publicly trade futures contracts with precious metals.
Deutsche Bank has entered into a three-year deferred prosecution agreement (DPA) with the Fraud and Money Laundering and Recovery Division (MLARS) and the U.S. Attorney’s Office for the Eastern District of New York. The criminal information was filed today in the Eastern District of New York and charged Deutsche Bank with one conspiracy to violate the books and records, and the provisions of the internal accounting control of the FCPA and one conspiracy to commit wire fraud involving a financial institution with respect to the to the commodity conduct.
“Deutsche Bank has embarked on a seven-year career, failing to implement a system of internal accounting controls regarding the use of company funds and falsifying its books and records to conceal corrupt and improper payments,” the acting deputy assistant said General Robert Zink of the crime department of the justice department. ‘Separately, Deutsche Bank traders on three continents have been trying for five years to manipulate our public financial markets through fraud. This resolution illustrates the commitment of the department to help ensure that publicly traded companies set up and implement appropriate and appropriate systems for internal accounting controls and maintain accurate and truthful corporate documentation. It is also an example of the department’s efforts to police the US public markets so that everyone can trust and rely on the integrity of our public financial systems. ”
“Deutsche Bank was engaged in a criminal scheme to conceal payments to so-called consultants worldwide, who served as bribes for foreign officials and others so that they could unfairly obtain and retain lucrative business projects,” said acting U.S. Attorney Seth D. DuCharme of the Eastern District of New York. “This office will continue to hold responsible financial institutions operating in the United States and practicing criminal activities to increase their profits.”
“The U.S. Postal Inspectorate is proud to investigate complex fraud and corruption cases affecting U.S. investors,” said Delany De Léon-Colón, inspector of the U.S. Postal Inspectorate’s criminal investigation team. ‘This type of fraudulent activity can cause immeasurable economic losses to competitive markets around the world. The joint efforts of our partners at the FBI and the Department of Justice have helped bring about the important action of today that illustrates our efforts to protect the United States and the international market. ”
The FCPA case
According to acknowledgments and court documents, between 2009 and 2016, through its employees and agents, including high-level managing directors and regional managers, Deutsche Bank knowingly and willfully conspired to keep, among other things, false books, records and accounts to hide. things, payments to a business development consultant (BDC) who acted as proxy for a foreign official and payments to a BDC who paid bribes to a decision maker for a client to obtain profitable business for the bank. In some cases, Deutsche Bank has made payments to BDCs that are not provided by invoices or proof of services. In other cases, Deutsche Bank employees created or helped create false justification for payments.
With regard to a Saudi Arabian BDC, Deutsche Bank has admitted that its employees conspired to enter into a contract with a company owned by the wife of a client decision-maker to pay bribes of more than $ 1 million to the decision-maker facilitated. Deutsche Bank approved the BDC relationship despite Deutsche Bank employees knowing about the relationship between the Saudi Arabian BDC and the decision maker, and approving the corrupt payments, although Deutsche Bank employees openly discussed the need to Saudi Arabia to pay BDC to encourage her husband to keep doing. business with Deutsche Bank. In the request for approval of one payment, Deutsche Bank employees warned that the “customer and [the Saudi BDC] is intimately linked and. . . any cessation of payment to the [the Saudi BDC] will definitely have a significant outflow of [business]”From the customer.
Deutsche Bank also contracted with an Abu Dhabi BDC to obtain a lucrative transaction, despite Deutsche Bank employees knowing that the BDC in Abu Dhabi did not have a BDC qualification other than its family relationship with the customer decision maker, and that the Abu Dhabi BDC was in fact acting as a proxy for the customer decision maker. Deutsche Bank paid the Abu Dhabi BDC more than $ 3 million without invoices.
By agreeing to misrepresent the purpose of payments to BDCs and falsely characterizing payments to BDCs as payments to BDCs, Deutsche Bank employees conspired to falsify Deutsche Bank’s books, records and accounts, contrary to the FCPA. In addition, Deutsche Bank employees knowingly conspired not to implement accounting controls, which were contrary to the FCPA, by failing, inter alia, to exercise due diligence with respect to BDCs, and to make payments to certain BDCs that do not comply with Deutsche Bank was not under contract at the time, and the payment of certain BDCs without invoices or adequate documentation of the alleged services.
Deutsche Bank pays a total penalty of $ 79,561,206 in connection with the FCPA scheme. In a related matter with the U.S. Securities & Exchange Commission, Deutsche Bank will also pay $ 43,329,622 in installments and bribes.
The case for trade fraud
According to acknowledgments and court documents, between 2008 and 2013 Deutsche Bank had a plan to defraud other traders on the New York Mercantile Exchange Inc. and Commodity Exchange Inc., which is traded by CME Group Inc. On several occasions, traders on Deutsche Bank’s desk for precious metals in New York, Singapore and London placed orders to buy and sell futures contracts for precious metals with the aim of canceling the orders before execution, among other things in an attempt to profit make by misleading other market participants. by injecting false and misleading information about the existence of real supply and demand for futures contracts for precious metals.
On September 25, 2020, a federal jury in Chicago found two former Deutsche Bank dealers in precious metals, James Vorley (42) from the United Kingdom, and Cedric Chanu (40), France and the United Arab Emirates, guilty of wire fraud that ‘ a financial institution for their respective roles in the commodity scheme. A third former Deutsche Bank trader, David Liew, 35, of Singapore, pleaded guilty on June 1, 2017 to conspiracy to commit wire fraud that affected and defrauded a financial institution. A fourth former Deutsche Bank trader, Edward Bases (58) of New Canaan, Connecticut, was charged in a third indictment on November 12, 2020, awaiting trial on charges of fraud and conspiracy. A charge is only an allegation and all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
Deutsche Bank has agreed to pay a total criminal amount of $ 7,530,218 in connection with the commodity scheme. This amount includes a criminal waiver of $ 681,480, a victim compensation of $ 1,223,738 and a criminal fine of $ 5,625,000, which are fully credited to Deutsche Bank’s payment of a $ 30 million civil fine to the U.S. Commodity Forward Trading Commission. in January 2018 in connection with essentially the same commodity behavior.
The department reached this decision with Deutsche Bank based on a number of factors, including the company’s failure to disclose the conduct voluntarily to the department and the nature and seriousness of the offense, which includes corrupt payments, intentional violations of the FCPA accounting provisions, and commodity violations in three countries. Deutsche Bank received full credit for its cooperation with the department’s investigations and for the significant recovery. Fines related to the FCPA and conspiracies with wire fraud reflect a 25 per cent cut in the middle of the otherwise applicable US sentencing guidelines to set off Deutsche Bank’s 2015 resolution in connection with the manipulation of the London Interbank rate.
The FCPA investigation is being conducted by the U.S. Postal Inspection Service and is being pursued by the Department of Crime and the Money Laundering and Asset Recovery Division, and the U.S. Attorney’s Office for the Eastern District of New York. Trial attorneys Katherine Nielsen, Elizabeth S. Boison and Nikhila Raj, and Assistant U.S. Attorneys Alixandra Smith and Whitman Knapp. The office of the Department of Justice assisted in this matter.
The case for goods is being investigated by the FBI’s field office in New York and is being prosecuted by the Fraud Division. Deputy Chief Brian R. Young, Assistant Chief Avi Perry, and Trial Attorney Leslie S. Garthwaite of the Fraud Division prosecuted the case.
The Fraud Division is responsible for investigating and prosecuting all FCPA matters. Additional information on the Justice Department’s FCPA enforcement efforts can be found at www.justice.gov/criminal-fraud/foreign-corrupt-practices-act.
MLARS’s Banking Integrity Unit investigates and prosecutes banks and other financial institutions, including their officials, managers and employees, whose actions threaten the integrity of the individual institution or the wider financial system.
Persons who believe they may be a victim in the goods case should visit the website of the Fraud Division’s Victim Witness website for more information.