Deutsche Bank to pay $16.2m fine in corrupt hiring practices case
2019-11-08 13:06 Friday
Following high-profile allegations from regulators in the U.S., Deutsche Bank will settle a case relating to improper hiring practices by paying a U.S.$ 16.2 million fine, according to the latest report.
The regulator accuses the Frankfurt-based bank of hiring the relatives of foreign government officials in order to win business. It is the latest firm to be ensnared in the scandal, which has sent tremors throughout Wall Street and triggered several lengthy investigations.
The hiring, which lasted from around 2006 to 2014 in Russia and the Asia-Pacific region, violated U.S. laws including the Foreign Corrupt Practices Act, said the Securities and Exchange Commission (SEC).
Deutsche Bank agreed to settle the case without denying or admitting wrongdoing. Employees of the firm created false books and records that concealed the hiring practices, according to the regulator.
Staff who were offered jobs routinely bypassed the highly competitive and merit-based process of applying, which required candidates to have high grades in school. Applicants normally had to go through multiple rounds of interviews.
One hire from Russian who worked in London performed so poorly that a HR team member deemed him a "liability to the firm", according to one statement.
A contender for another job was described as an average-level candidate at an interview, but failed two tests which meant she was not good at analysis. She was hired nevertheless. Her father was known to be the chairman of a big Chinese state-owned corporation.
One candidate's resume was full of grammatical errors and typos before a bank employee helped fix them. Even so, interviewers said the candidate was "one of the worst" applicants, showing "very little interest or understanding." He was hired anyway, and later promoted. His mother was an executive at a Chinese state-owned enterprise.
A further applicant, in Moscow, was described by an employee of the bank as "the classic nepocratic situation that we have every year." He, too, was given a job.
The Commission found that since at least 2006, Deutsche Bank gave jobs to relatives of executives at state-owned enterprises with the "main goal" of generating business for the bank.
Though the firm enacted policies to crack down on such corruption in hiring practices, the SEC said they were selectively enforced and not implemented internationally until four years ago.
The company agreed to pay a U.S.$ 3 million fine and more than U.S.$ 13 million "disgorgement and interest", which was considered to reflect the level of cooperation.
A bank spokesman said in a statement: "Deutsche Bank provided substantial cooperation to the SEC in its inquiry and has implemented numerous remedial measures to improve the bank's hiring practices."
The SEC and the U.S. Justice Department have, in the past 10 years, made enforcing anti-bribery laws a priority. They have given specific scrutiny to how financial firms award internships.
The industry-wide investigations have been referred to as "princeling probes", because they often focused on individuals with connections to the Chinese Communist Party and prominent business figures.