As highlighted here and here, in July 2018 Credit Suisse resolved a $77 million Foreign Corrupt Practices Act enforcement action concerning its internship and hiring practices involving family members of alleged Chinese “foreign officials.”
As highlighted here, the DOJ recently unsealed criminal charges against former Credit Suisse bankers (Andrew Pearse, Surjan Singh, and Detelina Subeva) in connection with financing various maritime deals in Mozambique.
The question thus arises: what does this mean for Credit Suisse?
In the indictment, the DOJ clearly asserts respondeat superior allegations. In other words, that “Pearse, Singh and Subeva were agents acting within the scope of their employment on behalf of [Credit Suisse], with intent, at least in part, to benefit [Credit Suisse].”
On the other hand, per the DOJ’s own allegations, Pearse, Singh and Subeva knowingly and willfully circumvented Credit Suisse’s internal controls and took various steps to conceal their conduct from others at Credit Suisse including the compliance department.
For instance, the indictment alleges among other things:
- “while conducting due diligence on the Proindicus transaction as required by [Credit Suisse’s] internal controls, the defendants withheld information about the likelihood of corruption connected to the Proindicus transaction”
- the defendants “secretly selected a due diligence firm … to research the transaction and pre-screen the individuals as directors of Proindicus to secure the approval by [Credit Suisse’s] compliance department;
- the defendants “used personal e-mail accounts” to conceal their involvement and “remov[ed] all references to themselves from documents they had prepared,” and created fake documents in connection with certain deals.
Moreover, the DOJ alleges that Pearse, Singh and Subeva personally enriched themselves through their improper conduct. Specifically, the indictment alleges:
“Pearse “received over $45 million in bribe and kickback payments from Privinvest in connection with the Mozambican maritime projects. Many of these bribe and kickback payments were paid through a correspondent bank account in New York City …”
Singh received bribe and kickback payments totaling approximately $4.5 million from Privinvest. At least one bribe and kickback payment from Privinvest was paid through a correspondent account in New York City …
Subeva received bribe and kickback payments of at least $2.2 million from Pearse.”
The above DOJ allegations should matter, both as a matter of law and policy, when it comes to any potential enforcement action against Credit Suisse.
But then again, there have been several FCPA enforcement actions (see here and here for instance) against companies based on the conduct of employees who circumvent existing internal controls, conceal their conduct from others at the company, and personally enrich themselves.
In a statement, Credit Suisse noted:
“The indictment alleges that the former employees worked to defeat the bank’s internal controls, acted out of a motive of personal profit, and sought to hide these activities from the bank.”
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