Deutsche Bank today agreed to pay $16 million (£13 million) after US authorities accused the lender of hiring relatives of government officials to win business in Russia and China.
The bank agreed the civil settlement with the US Securities and Exchange Commission in the latest so-called princelings scandal.
It didn’t admit or deny allegations it violated corruption laws.
The SEC alleges that, from 2006 to 2014, the German lender gave jobs to the children of officials “in order to improperly influence them to assist the bank in obtaining and retaining business”.
The commission’s report details a string of allegations.
In one case, it says, Deutsche Bankhired a Russian “deputy minister’s” daughter as an intern in Moscow but the bank’s chief country officer there said “it is NOT politically correct to have her in Moscow!” to his supervisors.
The report adds that she was subsequently transferred to London and then, after initially struggling to win business in Russia, “Deutsche Bank received a request for a proposal signed by [her] father regarding a €2 billion (£1.8 billion) eurobond issuance”. The banker later went on holiday with the minister and his family in a trip which “lacked any legitimate business purpose and was comprised solely of leisure activities including hunting, helicopter rides and fishing”, said the SEC.
The commission added that the trip was listed as a “legitimate business expense”.
The eurobond transaction followed, the report says.
In another case the son of an executive at a Russian state-owned entity was employed in Moscow and moved to London, it is claimed.
He was recommended to be fired two months later after he “failed to come to work, cheated on an exam, and was a liability to the reputation of the programme, if not the firm,” the SEC said.
Another accusation relates to China and a Deutsche banker asking the bank to hire a prospective IPO client’s chairman’s son to win the float.
A Deutsche Bankspokesman said it had “provided substantial co-operation to the SEC in its inquiry and has implemented numerous remedial measures to improve the bank’s hiring practices”.
Several global banks have been embroiledin similar nepotism scandals, including JPMorgan and Credit Suisse. The former paid $264 million in a 2016 settlement with the SEC and US Department of Justice over the hiring of well-connect Chinese “princelings” and the later $77 million last year. Several global banks have been embroiled in similar nepotism scandals including Credit Suisse and JPMorgan.