Deutsche Bank pays $16m to settle corrupt hiring allegations

Deutsche Bank will pay more than $16m (£13m) in the US to settle allegations that it hired relatives of overseas government officials and business people to win business in the latest punishment linked to the long-running "princeling" scandal.

The Securities and Exchange Commission said Deutsche agreed to pay a $3m fine and more than $13m in disgorgement and interest linked to alleged corrupt hiring. The bank ignored its own procedures to employ people in Asia and Russia from around 2006 to secure business and other benefits, the SEC said. Deutsche did not address problems caused by the "referral hiring" programme until 2015.

A Russian hire who worked in London was so bad at his job that a human resources employee said he was "a liability to the reputation of the programme, if not the firm". In China the Deutsche banker seeking work on a share offer recommended the bank employ the son of the client's chairman after he was asked to hire him.

"From the outset, the primary goal of referral hiring was to generate business for Deutsche Bank by extending personal favours to clients, including government officials, through hiring their relatives," the SEC said. "Referral hires did not compete against other candidates based on merit or academic qualification and, in many instances, were less qualified than those employees hired through Deutsche Bank’s formal hiring process."

Deutsche Bank is trying to overhaul its business and clean up its practices after a series of scandals from the period when it sought to compete with Wall Street banks. The SEC said the fines reflected a high level of cooperation from the bank's current management.

Germany's biggest lender is one of several banks that have been punished in the SEC's princeling probe into the awarding of employment contracts. The corrupt appointments often involved individuals with links to the Chinese communist party and prominent business figures.

JP Morgan paid $264m in 2016 and Credit Suisse was charged $77m in 2018.