Deutsche Bank AG entered a pair of agreements with the U.S. Department of Justice and the U.S. Securities and Exchange Commission last week to resolve two separate bribery and commodities fraud schemes. The German bank will have to forfeit more than $130 million
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As part of the deferred prosecution agreement reached with the DOJ, Deutsche will pay criminal penalties of $79.5 million for Foreign Corrupt Practices Act violations involving bribes to consultants in Saudi Arabia, Abu Dhabi and Italy in an effort to secure business there.
In addition to the criminal penalties it owes for bribery offenses, Deutsche will surrender another $5.6 million to the DOJ for allegedly manipulating the precious metals market, which will be credited toward a $30 million civil fine previously imposed by the U.S. Commodity Futures Trading Commission.
It will also pay over $43 million in disgorgement and prejudgment interest in a parallel civil matter with the SEC. The commission alleges that Deutsche fraudulently recorded $7 million in bribes as legitimate expenses. The SEC claims that, along with illicit payments made to the consultants identified in the criminal case, Deutsche bribed a consultant in China as well.
These bribes were made to middlemen who were referred to as “Business Development Consultants” or BDCs. These third-party intermediaries were proxies that gave the bank access to foreign officials or the decision makers for potential business ventures, court records show.
Internally recorded as referral fees, the criminal information shows the bank profited by about $35.3 million from the business it secured through some of these BDCs.
The government says Deutsche received credit for cooperating with the DOJ’s investigation into FCPA violations and commodities fraud but it noted the bank did not self-disclose its misdeeds. Deutsche spokesman, Dan Hunter, stated the organization has taken extensive measures to beef up its compliance, training and operational processes.
“While we cannot comment on the specifics of the resolutions, we take responsibility for these past actions, which took place between 2008 and 2017,” Hunter said. “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.”
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