Deutsche Bank agreed to pay more than $130 million to settle the U.S. government’s allegations that it engaged in corrupt practices and fraudulent commodities trading practices to obtain a lucrative business deal in Saudi Arabia.
On Friday, the U.S. Department of Justice (DOJ) filed a criminal information against Deutsche Bank in the Easter District Court of New York. The charges included one count of conspiracy to violate the books and records and internal accounting control provisions of the Foreign Corrupt Practices Act (FCPA) and one count of conspiracy to commit wire fraud.
The German bank decided to resolve the matter by entering into a three-year DPA with the DOJ Criminal Division’s Fraud Section and Money Laundering and Asset Recovery Section (MLARS) and with the U.S. Attorney’s Office for the Eastern District of New York.
Under the DPA, Deutsche bank will pay $85,186,206 in criminal penalties, $681,480 in criminal disgorgement, $1,223,738 in victim compensation payments, and $43,329,622 to the U.S. Securities & Exchange Commission (SEC) as part of the coordinated resolution.
Details of the charges against Deutsche Bank
According to court documents, the German bank through its agents and employees including managing directors and senior regional executives allegedly “knowingly and willfully” conspired to pay bribes to a foreign official, a decision maker who was being represented by a business development consultant (BDC) in Saudi Arabia and Abu Dhabi.
Deutsche Bank paid bribes of more than $1 million to the Saudi BDC for the decision maker in exchange for a lucrative business deal. The bribery occurred between 2009 and 2016.
The German Bank’s agents and employees also allegedly conspired to maintain false books, records, and accounts to conceal payments to the BDC, who is a wife of the decision maker.
Additionally, Deutsche Bank allegedly entered into a contract with an Abu Dhabi BDC to obtain a lucrative business transaction. It alleged paid more than $3 million to the Abu Dhabi BDC without invoices.
Furthermore, the German Bank’s precious metals traders allegedly engaged in a scheme to defraud other traders on the New York Stock Mercantile Exchange and Commodity Exchange.
Its traders allegedly placed orders to buy and sell precious metals future contracts with the intention to cancel the orders before execution. Their fraudulent scheme involved inserting false and misleading information regarding he existence of genuine supply and demand for precious metals futures contracts. Their fraudulent scheme happened between 2008 and 2013.
On September 25 last year, a federal jury in Chicago found two former Deutsche Bank precious metals traders, James Vorley and Cedric Chanu guilty of wire fraud affecting a financial institution for their involvements in the fraudulent commodities scheme.
On June 1, 2017, another former Deutsche Bank trader, David Liew pleaded guilty to spoofing and to commit wire fraud affecting a financial institution.
On November 12, 2020, the Justice Department charged in a superseding indictment a fourth Deutsche Bank trader, Edward Bases for engaging in fraud and conspiracy.
In a statement, DOJ Criminal Division Acting Deputy Assistant Attorney Robert Zink said, “Deutsche Bank engaged in a seven-year course of conduct, during which it failed to implement a system of internal accounting controls regarding the use of company funds and falsified its books and records to conceal corrupt and improper payments.”
He added that the German Bank’s traders “sought to manipulate our public financial markets through fraud for five years.”
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