06 July 2018

Credit Suisse fined $77 million over Asia-Pacific corrupt hires

The Swiss bank had hired 'princelings' to win regional business and got caught up in US investigation leading to a $77 million settlement.

Credit Suisse has been fined $77 million over ‘relationship hires’ in Asia, after taking hiring friends and family of Chinese officials, known as princelings, between 2007 and 2013 to win business. The bank has become the latest big bank to be caught up in an investigation by US authorities over the practice, which helped its Hong Kong subsidiary secure business, in violation of the Foreign Corrupt Practices Act.

A quid pro quo

The $77 million penalty comprises a US$47.03 million criminal fine and to enter a non-prosecution agreement under a settlement with the US Department of Justice, along with $29.82 million to settle related claims by the US Securities and Exchange Commission. The US authorities accused Credit Suisse of violating the Foreign Corrupt Practices Act, an anti-bribery law, by hiring and promoting people linked to government officials between 2007 and 2013 in an effort to win business. According to the SEC’s order, several senior Credit Suisse managers in the Asia-Pacific region sought to win business by hiring and promoting individuals connected to government officials as part of a quid pro quo arrangement.  While the practice of hiring client referrals bypassed the firm’s normal hiring process, employees in other Credit Suisse subsidiaries and affiliates were aware of it and in some instances approved these “relationship hires” or “referral hires.” 

Bribery’s many forms

The SEC’s order found that in a six-year period, Credit Suisse offered to hire more than 100 individuals referred by or connected to foreign government officials, resulting in millions of dollars of business revenue. ‘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’s order finds that Credit Suisse violated the anti-bribery and internal accounting controls provisions of the Securities Exchange Act of 1934.  Credit Suisse agreed to pay disgorgement of $24.9 million plus $4.8 million in interest to settle the SEC’s case.  Credit Suisse said it was pleased to settle, and has upgraded its internal compliance procedures and controls.