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Deutsche Bank In $16.2 Mln Settlement With SEC Over Corruption Charges

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German banking major Deutsche Bank AG (DB) agreed to pay $16.2 million to the U.S. Securities and Exchange Commission or SEC to resolve charges that it hired relatives of government officials in Russia and China to win business in those countries.

The SEC ordered the bank to pay disgorgement of $10.79 million, pre-judgment interest of $2.39 million and a civil money penalty of $3 million to the SEC.

The federal regulator noted that between at least 2006 and 2014, Deutsche Bank provided jobs 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 charged Deutsche Bank with violating the books and records as well as internal accounting control provisions of the FCPA.

According to the agency, although aware of corruption risks in its referral hiring practices, the bank failed to implement global policies sufficiently to address this risk until 2015. The SEC cited various examples of FCPA violations by the bank.

Since at least 2006, Deutsche Bank's Asia-Pacific or APAC operations engaged in a pattern and practice of providing employment to relatives at the request of State Owned Enterprises or SOE executives that the bank was seeking business from, the SEC noted.

According to the agency, the "referral hires" or "relationship hires" as the client referrals were primarily known, bypassed Deutsche Bank's highly competitive and merit-based hiring process. In many instances, they were less qualified than the employees hired through Deutsche Bank's formal hiring process.

Similar hiring practices by Deutsche Bank took place in Russia too from 2009 to 2012.

Deutsche Bank becomes the latest lender to settle allegations related to violations of Foreign Corrupt Practices Act or FCPA. In 2018, Swiss lender Credit Suisse Group AG had agreed to pay $77 million to settle similar allegations, while JPMorgan Chase & Co. paid $264 million in penalties in 2016.

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