The Securities and Exchange Commission (SEC) announced on Thursday that Credit Suisse Group AG will pay $77 million in fines to the regulator and the US Department of Justice (DOJ). The Zurich-based bank has been charged with obtaining business in the Asia-Pacific region by hiring people connected to influential Chinese officials.
The charges against Credit Suisse are in violation of the Foreign Corrupt Practices Act (FCPA). The bank will have to pay $24.9 million plus $4.8 million in interest to the SEC and a $47 million criminal penalty to the DOJ.
Prosecutors said that several managers from Credit Suisse in the Asia-Pacific admitted that between 2007 and 2013 they hired job candidates that were referred by power Chinese government officials. It was the understanding, that if the bank hired these referrals, it would result in lucrative new deals. This resulted in millions of dollars in business revenue, SEC found.
Referrals given special treatment
According to the statement, the referred candidates were not subjected to the firm’s normal hiring process. Emails in court filings that accompanied the case show that managers from the bank warned each other not to subject the referrals to an overly thorough interview process. In one email exchange, bank employees referred to a well-connected referral as a “princess” and discussed “giving her the offer letter asap.”
The emails also show that once the candidates were hired, they also received special treatment. This included some exemptions from performance reviews.
KVB PRIME Gains Key UK Influence by Sponsoring Major Finance ConferenceGo to article >>
Commenting on the charges Charles Cain, Chief of the SEC Enforcement Division’s FCPA Unit said: “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.”
The SEC’s order finds that Credit Suisse violated the anti-bribery and internal accounting controls provisions of the Securities Exchange Act of 1934. As part of the settlement, Credit Suisse acknowledged its actions violated the FCPA act.
Another firm caught
Credit Suisse is the latest in a long line of Wall Street firms and US companies to be caught breaching the anti-bribery law in its Chinese hiring practices. In 2016, JP Morgan Chase was fined $264 million by authorities after finding the bank had a spreadsheet which linked particular hires to increased revenue.
In 2016, Finance Magnates reported that the SEC and DOJ fined US-based technology company PTC, Inc and its two Chinese subsidiaries $28 million after it was charged with providing non-business related travel and improper payments to various Chinese officials.
Credit Suisse is also no stranger to fines. Earlier this year, Hong Kong regulator the Securities and Futures Commission, fined the bank and its Hong Kong subsidiaries a collective $39.3 million for multiple regulatory breaches.