According to a statement released on 5 July by the Department of Justice, Credit Suisse Hong Kong (CSHK) admitted that, between 2007 and 2013, several senior managers in the Asia Pacific region hired, promoted and retained candidates referred by, or related to, government officials and executives of clients that were state-owned entities (SOEs).
$47m criminal penalty
The employment of these “relationship hires” or “referral hires” was part of a scheme that helped CSHK bankers win business. Employees of other subsidiaries of the Credit Suisse Group were allegedly aware of the referral hires and facilitated the conduct.
CSHK admitted to the Department of Justice that the scheme netted at least $46m in profits from business mandates with Chinese SOEs.
The investment bank agreed to pay a $47m criminal fine and enter a non-prosecution agreement under a settlement with the Depart of Justice.
$30m settlement
In addition to the $47m, Credit Suisse has also agreed to pay almost $30m to settle related claims by the SEC.
Charles Cain, chief of the SEC enforcement division’s Foreign Corrupt Practices Act (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,” he said.
Under the SEC order, Credit Suisse was found to have breached anti-bribery and international accounting controls provisions.
To settle the breach the bank agreed to pay $24.9m plus $4.8m in interest.
Government officials
Acting assistant attorney general John Cronan said: “CSHK engaged in a corrupt scheme to win business with Chinese state-owned entities by hiring friends and family of Chinese government officials, generating the bank at least $46m in profits.
“These ‘relationship hires’ often lacked necessary technical skills, and offered fewer qualifications and significantly less relevant banking experience than other candidates for the jobs,” Cronan said.
“The Department of Justice remains steadfast in our commitment to combatting bribery and corruption in all its many forms, including where companies engage in corrupt hiring practices to gain the favour of foreign officials to generate improper business advantages and increase profits,” Cronan said.
Further, as part of the agreement, CSHK and its parent company Credit Suisse also agreed to continue to cooperate with the Department of Justice in any ongoing investigations and prosecutions relating to the conduct.
