Business World

Monday 10 December 2018

Deutsche HQ searched in money-laundering probe

Headache: Deutsche Bank CEO Christian Sewing
Headache: Deutsche Bank CEO Christian Sewing

Karin Matussek and Nicholas Comfort

THE activities at Deutsche Bank that prompted a police raid on its headquarters took place as recently as this year, according to authorities.

While money-laundering suspicions stem from the 2016 disclosures known as the Panama Papers, the investigation covers a period from 2013 to 2018, a spokeswoman for Frankfurt prosecutors said.

The main suspects in the probe focused on a unit in the British Virgin Islands that processed €311m in 2016 alone were two bank employees who were not identified beyond their ages - 50 and 46.

For the beleaguered German lender, the raid adds to a panoply of headaches - commercial, regulatory and legal - facing CEO Christian Sewing, who took over in April, and Paul Achleitner, chairman since 2012. The stock has lost almost half its value this year, after sliding more than 3pc on Thursday. The cost of insuring its junior debt against losses jumped 12 basis points to 384 basis points, the highest in two years.

"This must be associated with criminal behaviour and not just a trivial offense," said Stefan Mueller, CEO of DGWA, an investment advisory boutique based in Frankfurt.

He believes the bank will now be paralyzed for months until it becomes clear how it will be affected by new potential fines. "Maybe this time, Achleitner will fall. The bank needs fresh blood to make a radical cut at its management."

The Panama Papers refer to a collection of documents leaked in 2016 from Mossack Fonseca, a Panama-based law firm that created shell companies to facilitate tax avoidance. At the time, Deutsche Bank severed ties with a Cypriot lender partly owned by VTB Group that was identified in the reporting.

Subsequent investigations exposed evidence Deutsche Bank helped clients set up off-shore accounts, prosecutors said. The officials said the raid yesterday wasn't related to its role as a correspondent bank for money laundering at Denmark's Danske Bank.

Authorities seized documents and electronic files after more than six police vehicles, blue lights flashing, pulled up to Deutsche Bank's main offices shortly before 9am in an operation involving about 170 officers.

The German lender may have helped clients in setting up offshore companies in tax havens. Money obtained illegally may have been transferred to accounts at Deutsche Bank, which failed to report the suspicions that the accounts may have been used to launder money, Frankfurt prosecutors said.

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