Corporate Finance

Deutsche Bank fined £88m for FCPA violations

According to the SEC, Deutsche Bank used a combination of foreign officials, their relatives, and their associates as ‘third-party intermediaries’, business development consultants and finders to obtain and retain global business

The Securities and Exchange Commission (SEC) has announced charges against Deutsche Bank AG for violations of the Foreign Corrupt Practices Act (FCPA) which has resulted in the bank paying more than $120m (£88m) to settle the charges.

According to the SEC, Deutsche Bank used a combination of foreign officials, their relatives, and their associates as “third-party intermediaries”, business development consultants and finders to obtain and retain global business.

Deutsche Bank has reportedly agreed to a cease-and-desist order and will pay “disgorgement” of $35m (£25.9m) with a “prejudgment interest” of $8m (£5.9m) to settle the action.

The order found that the bank lacked sufficient internal accounting controls related to the use and payment of such intermediaries, which resulted in approximately $7m (£5m) in bribe payments or payments for unknown, undocumented, or unauthorised services.

Additionally, the SEC revealed that these payments were “inaccurately recorded” as legitimate business expenses and involved invoices and documentation were “falsified” by Deutsche Bank employees.

Charles Cain, chief of the enforcement division’s FCPA Unit at SEC, said: “While third parties can assist in legitimate business development activities, it is critical that companies have sufficient internal accounting controls in place to prevent payments to third parties in furtherance of improper purposes.”

The SEC’s order reported that Deutsche Bank violated the books and records and internal accounting controls provisions of the Securities Exchange Act of 1934.

In a response statement, the Deutsche Bank said: “While we cannot comment on the specifics of the resolutions, we take responsibility for these past actions, which took place between 2008 and 2017.

“Our thorough internal investigations, and full cooperation with the DOJ and SEC investigations of these matters, reflect our transparency and determination to put these matters firmly in the past. As recognised in the resolutions, we have taken significant remedial actions in response to these issues.”

It added: “As a broader matter, in the years since these issues occurred, we have invested more than €1bn in data, technology, and controls, as well as improved our training and operational processes. We have increased our anti-financial crime team to more than 1,600 people globally, and we’ll continue to invest significantly in technology this year and in the future, particularly as it relates to anti-financial crime compliance.”

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