Deutsche Bank - Spying Scandal

Spying Scandal

From as late as 2001 to at least 2007, the Bank engaged in covert espionage on its critics. The bank has admitted to episodes of spying in 2001 and 2007 directed by its corporate security department, although characterizing them as "isolated." According to the Wall Street Journal's page one report, Deutsche Bank had prepared a list of names of 20 people who it wished investigated for criticism of the bank, including Michael Bohndorf (an activist investor in the bank) and Leo Kirch (a former media executive in litigation with bank). Also targeted was the Munich law firm of Bub Gauweiler & Partner, which represents Kirch. According to the Wall Street Journal, the bank's legal department was involved in the scheme along with its corporate security department. The bank has since hired Cleary Gottlieb Steen & Hamilton, a New York law firm, to investigate the incidents on its behalf. The Cleary firm has concluded its investigation and submitted its report, which however has not been made public. According to the Wall Street Journal, the Cleary firm uncovered a plan by which Deutsche Bank was to infiltrate the Bub Gauweiler firm by having a bank "mole" hired as an intern at the Bub Gauweiler firm. The plan was allegedly cancelled after the intern was hired but before she started work. Peter Gauweiler, a principal at the targeted law firm, was quoted as saying "I expect the appropriate authorities including state prosecutors and the bank's oversight agencies will conduct a full investigation."

In May 2009 Deutsche Bank informed the public that the executive management learned about possible violations which occurred in past years of the bank's internal procedures or legal requirements in connection with activities involving the bank's corporate security department. Deutsche Bank immediately retained the law firm Cleary Gottlieb Steen & Hamilton in Frankfurt to conduct an independent investigation and informed the German Federal Financial Supervisory Authority (BaFin). The principal findings by the law firm, published in July 2009, are as follows: Four incidents that raise legal issues such as data protection or privacy concerns have been identified. In all incidents, the activities arose out of certain mandates performed by external service providers on behalf of the Bank's Corporate Security Department. The incidents were isolated and no systemic misbehaviour has been found. And there is no indication that present members of the Management Board have been involved in any activity that raise legal issues or have had any knowledge of such activities. This has been confirmed by the Public Prosecutor’s Office in Frankfurt in October 2009. Deutsche Bank has informed all persons affected by the aforementioned activities and expressed its sincere regrets. BaFin found deficiencies in operations within Deutsche Bank’s security unit in Germany but found no systemic misconduct by the bank. The Bank has initiated steps to strengthen controls for the mandating of external service providers by its Corporate Security Department and their activities.