Credit Suisse: “Serious violations of supervisory law” in the shading scandal

Credit Suisse

The bank has accepted a settlement in the US and UK.

(Photo: Reuters)

Zurich For Tidjane Thiam, the affair meant the end of his career in Switzerland: In February 2020, Thiam had to resign as CEO of Credit Suisse after it became known that the major Swiss bank had hired private detectives to target the former top manager Iqbal Khan.

The Swiss financial regulator Finma has now completed its investigation into the spying affair – and Credit Suisse has certified serious omissions. As Finma announced on Tuesday evening, the bank had “serious organizational deficiencies in connection with surveillance activities.”

The supervisors found that the shadowing affair at the bank had assumed greater proportions than previously known. Between 2016 and 2019, a total of seven people were shadowed, including two top managers, other employees and third parties – including abroad. One of the people under surveillance was Iqbal Khan, a former star manager at Credit Suisse and now head of asset management at competitor UBS. The bank wanted to find out if Khan took clients with him after he moved to UBS. The scandal culminated in the suicide of a private detective involved.

Finma is now stating that the observations were largely organized by the bank’s security service. But they were known to the top management floor. Thiam had denied at the time that he knew about the spies. However, the Finma report raises doubts about this presentation: “Statements made publicly and by the bank to Finma subsequently turned out to be partially incomplete or even inaccurate.”

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The supervisors attested that the managers involved had major deficiencies in corporate management. “In most cases, the decision about the observation was made informally and without comprehensible reasons,” says the Finma announcement. The shading had been disguised, invoices for costs incurred were subsequently manipulated. “As a result, Credit Suisse did not have an appropriate organization in the security area in accordance with the Swiss Banking Act,” concluded Finma.

Although the investigation is over, the affair is not over for the bank and the protagonists involved. Credit Suisse has already taken organizational measures to prevent such scandals in the future, but Finma has “ordered additional measures”. In addition, a so-called enforcement procedure is to be initiated against three managers in order to examine their responsibilities in more detail. Two managers got away with a reprimand. However, Finma did not mention any names.

Credit Suisse does away with old legal cases

Credit Suisse announced that it condemned “all unjustified observations”. In addition, the bank regrets “that it was initially unable to ensure that all the relevant information was immediately available and thus fully made available to the supervisory authority.”

Credit Suisse also got rid of another legacy on Tuesday: the money house had accepted fines totaling around 475 million dollars (408 million euros) in the United States and Great Britain in a settlement, the US Department of Justice and the SEC announced on Tuesday in Washington. Credit Suisse said it was satisfied with the comparison.

The authorities accuse the bank of being involved in a comprehensive bribery plot between 2013 and 2016. Specifically, it is about state-guaranteed large loans and bonds, with which allegedly, among other things, a fishing project in Mozambique should be financed. In fact, according to the US Department of Justice, corrupt government officials of the Southeast African state were bribed with the money; In addition, Credit Suisse investment bankers are said to have enriched themselves.

The prosecutors accuse the Swiss financial group of having violated the anti-corruption law “Foreign Corrupt Practices Act”, with which the US pursues allegations of bribery beyond its own national borders. The US Securities and Exchange Commission also accuses Credit Suisse of misleading investors and a lack of internal controls. Almost $ 100 million of the fines went to the SEC, around 175 million to the US Department of Justice and 200 million to the British financial regulator FCA.
With agency material

More: Investigations by the bank into the collapse of multi-billion dollar funds are taking longer than hoped. Switzerland is also increasing the pressure on the bank.

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