Credit Suisse to Borrow from Khan Playbook in Latest Scandal
Credit Suisse’s board are meeting this weekend to discuss the most recent events and decide on its response.
(Bloomberg) -- Credit Suisse Group AG’s second investigation into a spying crisis may conclude exactly the same way as the first: with the bank saying a rogue operative acted alone without the board or chief executive’s consent in ordering the surveillance of former executives.
The Zurich-based bank is set to report on Monday the results of a probe into claims it spied on ex-human resources head Peter Goerke. It’s leaning toward the conclusion that the office of former chief operating officer Pierre-Olivier Bouee acted alone in ordering the surveillance, according to people with knowledge of the matter.
The ‘Striking Blond’ Joins Spies Still Haunting Credit Suisse
The revelations of the further incidents of spying -- including that of a former employee in the U.S. -- are an unwelcome turn of events for chairman Urs Rohner and CEO Tidjane Thiam after the bank said that the surveillance on international wealth management head Iqbal Khan was an isolated event that ran contrary to the bank’s culture and values.
In the aftermath of that incident, Bouee took the fall and was determined to have acted alone in having Khan followed. He and his security chief resigned. He was seen as a close confidante of Thiam, having worked with his boss at other companies before joining Credit Suisse. It prompted some analysts to question why he would have taken this action alone.
Open Secret
The Khan incident gripped financial circles. A rising star, he tussled with men sent to spy on him in downtown Zurich after he announced his departure to become co-head of wealth management at UBS. The scandal shone a light on his and Thiam’s acrimonious relationship -- something that had been an open secret among the city’s bankers for months.
Credit Suisse’s board are meeting this weekend to discuss the most recent events and decide on its response, according to one of the people.
Thiam said in a memo to employees after the Khan incident that the surveillance “was strictly an isolated event and full accountability has been taken by the individuals concerned,” while Rohner said staff surveillance was not “part of our toolbox.”
Goerke was spied upon from Feb. 20 to Feb. 22, Swiss paper NZZ reported, saying the reason for the alleged operation was unclear. Credit Suisse probably ordered the observation via a middleman, the newspaper said. Goerke left the bank’s executive committee in late February.
The most recent revelations have prompted the Swiss financial markets regulator Finma to step up its investigation into Credit Suisse, according to a statement late Friday. The probe will be heightened with the help of an independent auditor, the body said, adding that the “observation activities carried out by Credit Suisse raise various compliance issues.”
Neighbors
Khan had enjoyed a rapid rise through the ranks of Credit Suisse, and was promoted by Thiam to lead a key unit. But their relationship soured after an argument at a house party in early 2019, and following several months of tension Khan left the bank.
Credit Suisse may have had Khan followed out of fears he would have sought to recruit difficult-to-replace top wealth managers with him to UBS. The reasons for Goerke’s surveillance have been less clear.
Colleen Graham, who headed up a joint venture between Credit Suisse and Palantir Technologies Inc., has also alleged the bank took retaliatory measures against her -- including surveillance -- after she had refused to sign off on how revenue from the joint-venture would be booked.
Credit Suisse said in a statement that it had conducted a “thorough and comprehensive internal investigations into every one of Ms. Graham’s claims and found them to be entirely baseless.” At the same time, Department of Labor investigators “looked at her allegations for more than a year, found that there was no basis for the matter to proceed, and dismissed her claims entirely,” it said.
Swiss newspaper SonntagsZeitung said on Sunday preliminary results also show no evidence that Thiam knew about the surveillance.
To contact the reporters on this story: Jan-Henrik Förster in Zurich at jforster20@bloomberg.net;Patrick Winters in Zurich at pwinters3@bloomberg.net
To contact the editor responsible for this story: Dale Crofts at dcrofts@bloomberg.net
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