Deutsche Bank Agrees to $130 Million Settlement Over Claims of Bribery, Market Manipulation

    Deutsche Bank recently agreed to pay over $130 million in a settlement involving two separate claims—that Deutsche Bank paid bribes for overseas business and that it was involved in the manipulation of metal markets. The settlement’s terms also include a three-year deferred prosecution agreement.

    Allegations Against Deutsche Bank

     The allegations of bribery against Deutsche Bank dates back to 2019 when the New York Times reported that the bank had been involved in bribes given to politically influential people in China—including a $4,254 wine. Other outlets also reported claims that Deutsche Bank paid bribes in Saudi Arabia disguised as “referral fees” and in Abu Dhabi as “consultancy” fees. Following an investigation by the U.S. government, Deutsche Bank was found to be in violation of the Foreign Corrupt Practices Act (FCPA) for its dealings in several foreign locations. The settlement includes $123 million in fines, payable to the U.S. Justice Department and the Securities and Exchange Commission (SEC) to settle these FCPA claims. In a statement from the Justice Department, the government further explains Deutsche Bank faced allegations that it hired consultants to manage the bank’s bribes to various foreign officials—the purpose of which was to secure various business projects. The bank then attempted to cover up the purpose of the payments to those consultants, says the DOJ.

    Deutsche Bank is also responsible for paying an additional $1.9 million in fines to the Justice Department, relating to a claim that the bank was involved in fraudulent activity in the metals markets. This payment was reduced in part due to the bank’s “substantial cooperation and remediation” with the Commodity Futures Trading Commission (CFTC) regarding the spoofing claim. The CFTC found that between 2008 and 2014, Deutsche Bank “engaged in a scheme to manipulate the price of precious metals futures contracts by utilizing a variety of manual spoofing techniques with respect to precious metals futures contracts traded on the Commodity Exchange, Inc. (COMEX), and by trading in a manner to trigger customer stop-loss orders.”

    Deutsche Bank’s Previous Settlement Activity

     This settlement is not the first that Deutsche Bank has agreed to pay. In 2015, for instance, Deutsche Bank agreed to pay $2.5 billion to settle claims that it, along with other banks, had worked to manipulate the London Interbank Offered Rate (LIBOR) benchmark.

    Again, in 2017, Deutsche Bank agreed to a $7.2 billion settlement in the face of allegations that the bank misled investors during its sales of residential mortgage-backed securities, contributing to the 2008 financial crisis. A spokesperson for the bank has since explained that Deutsche Bank has spent approximately $1.22 billion on controls and training to ensure similar issues do not happen again.

    Deutsche Bank’s track record of settlement payments is not limited to agreements reached with federal authorities. In July 2020, the bank paid a $150 million penalty to the New York State Department of Financial Services Covers for alleged failures to oversee its dealings with Jeffrey Epstein.

    Effects on Deutsche Bank and Future Bank Activities

     The most recent settlement agreement comes at a time when Deutsche Bank is already working to restore its profitability after five years of losses. The bank has taken several steps to reduce its losses, including withdrawing from work in some business areas and laying off approximately 18,000 workers.

    This settlement agreement is one of several Deutsche Bank has entered in the years following the 2008 recession. Collectively, these fines and settlements have cost the bank billions of dollars, further exacerbating concerns about its profitability. In addition, the bank currently faces image issues, particularly surrounding investigations related to the business dealings of President Donald Trump.

    Deutsche Bank is not the only bank to face fines and other penalties for its role in the 2008 financial crisis, nor is it the only financial institution forced to reconsider its approach to business in the wake of that recession. How Deutsche Bank will handle this current situation, however, remains to be seen.