Deutsche Bank AG agreed to pay more than $130 million to resolve the U.S. government's investigation into violations of the Foreign Corrupt Practices Act and a separate investigation into a commodities fraud scheme.
The charges arise out of a scheme to conceal corrupt payments and bribes made to third-party intermediaries by falsely recording them on the bank's books and records, as well as related internal accounting control violations, according to a news release from the U.S. Department of Justice. The charges also involve a separate scheme to engage in fraudulent and manipulative commodities trading practices involving publicly traded precious metals futures contracts.
Deutsche Bank entered into a three-year deferred prosecution agreement with the Criminal Division's Fraud Section and Money Laundering and Asset Recovery Section and with the U.S. Attorney's Office for the Eastern District of New York. The criminal information was filed Jan. 8 in the Eastern District of New York charging the bank with one count of conspiracy to violate the books and records and internal accounting controls provisions of the FCPA and one count of conspiracy to commit wire fraud affecting a financial institution in relation to the commodities conduct.
As part of the agreement, Deutsche Bank will pay a total criminal penalty of approximately $79.6 million in connection with the FCPA scheme.
In a related matter with the SEC, the bank agreed to a cease and desist order and to disgorge approximately $35.1 million with prejudgment interest of $8.2 million.
The SEC order disclosed that from at least 2009 to 2016, Deutsche Bank engaged foreign officials, their relatives and their associates as third-party intermediaries, business development consultants and finders to obtain and retain global business. Based on the regulator's findings, the bank lacked sufficient internal accounting controls related to the use and payment of such intermediaries, resulting in approximately $7 million in bribe payments or payments for "unknown, undocumented, or unauthorized services." Additionally, these payments were inaccurately recorded as legitimate business expenses and involved invoices and documentation falsified by Deutsche Bank employees, according to a separate news release from the SEC.
The SEC order finds that Deutsche Bank violated the books and records and internal accounting controls provisions of the Securities Exchange Act of 1934.
In relation to the commodities fraud case, Deutsche Bank agreed to pay a total criminal amount of approximately $7.5 million.
Citing admissions and court documents, the Justice Department said in its news release that between 2008 and 2013, Deutsche Bank precious metals traders engaged in a scheme to defraud other traders on the New York Mercantile Exchange Inc. and Commodity Exchange Inc. On "numerous" occasions, traders on Deutsche Bank's precious metals desk in New York, Singapore and London placed orders to buy and sell precious metals futures contracts with the intent to cancel those orders before execution, including in an attempt to profit by deceiving other market participants through injecting false and misleading information concerning the existence of genuine supply and demand for precious metals futures contracts.
