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August 27, 2019

Deutsche Bank pays out $16m to settle FCPA charges

The Securities and Exchange Commission (SEC) revealed on 22 August that Deutsche Bank AG will pay more than $16 million to settle charges that it violated the the Foreign Corrupt Practices Act of 1977 (FCPA) by hiring relatives of foreign government officials in order to improperly influence them in connection with investment banking business.

According to the SEC’s order, Deutsche Bank employees hired relatives at the request of foreign officials in both the Asia-Pacific region and Russia to obtain or retain business or other benefits.  These ‘Referral Hires’ bypassed Deutsche Bank’s highly competitive and merit-based hiring process and were often less qualified than applicants hired through the bank’s formal hiring process.

The SEC’s order found that Deutsche Bank violated the books and records and internal accounting controls provisions of the Securities Exchange Act of 1934.  Without admitting or denying the findings, the bank agreed to pay disgorgement of $10,785,900, prejudgment interest of $2,392,950 and a $3 million civil penalty.  The SEC considered the bank’s remedial acts and its cooperation with the investigation when determining whether to accept Deutsche Bank’s offer of settlement.

The case concerned violations of the books and records and internal accounting controls provisions of the FCPA by Deutsche Bank between at least 2006 and 2014. The bank provided valuable employment to the relatives of foreign government officials in various parts of the world as a personal benefit to the officials in order to improperly influence them to assist the bank in obtaining or retaining business or other benefits.

The SEC said Deutsche Bank employees created false books and records that concealed corrupt hiring practices and failed to accurately document and record certain related expenses, adding that Deutsche Bank failed to devise and maintain a system of internal accounting controls around its hiring practices sufficient to provide reasonable assurances that its employees did not bribe foreign government officials.

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