Deutsche Bank had repeatedly failed to secure work with a Russian government entity when it was approached with a proposal: Hire the daughter of a high-ranking official at the organization.
“We must do it!” a senior Deutsche Bank official said, according to the Securities and Exchange Commission . “We should have her in London as it is NOT politically correct to have her in Moscow!”
The woman was hired with a promise of a permanent position in London, according to allegations detailed in an SEC settlement agreement. Ten days after the move was complete, the new employee’s father sent Deutsche Bank a request for a proposal on a bond deal worth more than $2 billion, a deal the bank ultimately won.
The SEC order outlines numerous alleged violations by the bank of the 1977 Foreign Corrupt Practices Act, saying the bank provided jobs to relatives of foreign government officials in an attempt to influence the officials to steer business to the bank. Deutsche Bank agreed to settle the SEC’s allegations late last week by paying $16 million, though it did not admit wrongdoing.
In another case, a senior executive at a Russian state-owned entity asked the bank to hire his son, who also wanted to work in Deutsche’s London offices, according to the SEC. A London-based Deutsche human resources employee flagged the move as “the classic nepo situation that we have every year” but was overruled.
After just two months, the human resources executive wanted the son fired despite his father’s position. He had failed to come to work, failed an exam and was “a liability to the program, if not the firm,” the Deutsche employee said.
Instead the son was transferred back to Moscow, where he continued to work for two more months, according to the SEC document.
The episodes are among several controversies haunting Deutsche Bank. The German bank is also going through a major reorganization and faces intense scrutiny of its relationship with President Trump and his businesses.
A Deutsche Bank attorney appeared to frustrate a federal appeals court Friday by refusing to say whether the bank had a copy of Trump’s tax returns. The court, which was hearing evidence in a lawsuit Trump filed, gave the bank until Tuesday afternoon to respond in writing.
[ Judges surprise attorneys for Trump’s bankers by asking about his tax returns ]
Once a global powerhouse, catering to the U.S. elite from a tower on Wall Street, Deutsche Bank’s fortunes have waned in recent years, and in July it announced a sweeping restructuring, including gutting its stock and bond trading business and reducing other investment bank operations. The overhaul will mean as many as 18,000 job cuts by 2022 out of its 90,000 workers.
Hampering its efforts to rebound have been various investigations of the bank’s conduct. It’s at the center of one of the largest money-laundering cases in history, involving Danske, Denmark’s largest bank.
Last week, Deutsche Bank settled the SEC charges that it violated foreign bribery laws between 2006 and 2014 by providing valuable jobs to the relatives of foreign government officials it wanted to work with. In addition to the cases involving Russian entities, the SEC also outlined several cases involving China.
In one case, a Deutsche employee revised the résumé of the son of a company executive it hoped to work with. The original résumé was full of typos and grammatical errors, according to the SEC settlement.
In another, the bank hired the son of the chairman of a Chinese state-owned enterprise. The executive’s son was rejected for the job twice before a high-level Deutsche executive weighed in, the SEC settlement agreement said.
“Deutsche Bank provided substantial cooperation to the SEC in its inquiry and has implemented numerous remedial measures to improve the bank’s hiring practices,” the bank said in a statement.
Investigations by two House committees into Russian money-laundering allegations and the president’s finances could intensify the focus on Deutsche’s work with foreign governments. Deutsche Bank has said it is cooperating with all investigations, including those by the two House committees.
Trump is appealing a lower-court ruling that cleared the way for Deutsche Bank and Capital One to turn over years of financial records from the president, his three eldest children and the president’s companies to the House Intelligence and Financial Services committees.
At the hearing Friday, the judges asked the bank’s attorney what seemed to be a simple question: If the subpoenas were upheld, would the tax returns of the president or anyone else associated with the case be turned over?
Deutsche Bank’s attorney repeatedly refused to answer, citing “contractual obligations.” It now has until Tuesday at 4 p.m. to submit a letter to the court answering the question. It is unclear whether the response will be made public.
Trump’s company has taken out about $364 million in loans from Deutsche Bank since 2012, according to public filings. The loans included two worth $125 million to buy and renovate the Doral golf resort in Florida, a $170 million loan to turn Washington’s Old Post Office into a Trump hotel, and a $69 million loan to refinance an existing Trump hotel in Chicago.
“You have a situation where Mr. Trump is going to Deutsche Bank asking for very large loans when no other bank apparently will touch him,” Douglas Letter, general counsel for the House, told the appeals court last week. “For obvious reasons both committees here want to know why is it that Deutsche Bank would be willing to lend a large amount of money” to Trump.
Trump’s attorney, Patrick Strawbridge, told the court that the committees were pushing the boundaries of their powers to target and embarrass the president. Trump is fighting efforts to access his tax returns and other detailed financial information in courts across the country.
David A. Fahrenthold contributed to this report.