Risk Management

Credit Suisse Settles Foreign Bribery Investigations

The SEC said ‘relationship hires’ allowed the bank to win millions in business in the Asia-Pacific region.
William SprouseJuly 5, 2018
Credit Suisse Settles Foreign Bribery Investigations

Credit Suisse Group has agreed to pay $77 million to settle with the Securities and Exchange Commission and the U.S. Department of Justice over violations of the Foreign Corrupt Practices Act (FCPA). The agreement includes a $30 million settlement with the SEC and a $47 million criminal penalty to the DOJ.

According to the SEC, the bank illegally won investment banking business in the Asia-Pacific region by hiring and promoting individuals connected to government officials as part of quid pro quo arrangements. Over seven years, the bank hired more than 100 employees at the request of foreign government officials, the regulator said.

Senior Credit Suisse managers in the Asia-Pacific region even tracked the success of some of the bank’s “relationship hires” in generating business through the use of spreadsheets that linked particular referral hires to specific business deals for the firm.

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In a statement, Acting Assistant Attorney General John Cronan said, “These ‘relationship hires’ often lacked necessary technical skills, and offered fewer qualifications and significantly less relevant banking experience, than other candidates for the jobs.”

Employees in other bank subsidiaries were aware of the practice, the SEC said. The SEC said that Credit Suisse had written policies beginning in at least 2007 that prohibited the hiring of candidates referred by or related to officials from state-owned entities or government ministries in order to obtain or retain business. However, those policies were not meaningfully enforced.

In a statement last month, the bank said Credit Suisse Hong Kong had reached a non-prosecution agreement with the DOJ to resolve the investigation. It said the $47 million payment would have no material impact on its second-quarter financial results.

Credit Suisse called the settlement a “legacy matter” that did not impact the services provided to any clients, investors, or counterparties. The bank also said it had upgraded its internal compliance procedures and controls.

“Bribery can take many forms, including granting employment to friends and relatives of government officials. Credit Suisse’s practice of engaging in these hiring practices violated the law, and it is now being held to account for having done so,” said Charles Cain, chief of the SEC enforcement division’s FCPA Unit.

The SEC settlement includes disgorgement of $24.9 million plus $4.8 million in interest.

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