Ex-Deutsche Bank Official Talks Expense Padding in Bribe Lawsuit

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(Bloomberg) --

“Overpriced” sushi, “bubbly” wine and differing accounts of how many people ate a $1,520 meal at a Michelin-starred restaurant: A former senior Deutsche Bank AG executive offered an insight into the bank’s client entertainment as he testified in a bribery lawsuit against the lender.

Hakan Wohlin, the bank’s former global head of debt origination, said there was nothing wrong with the way the firm entertained Marcel De Vries, treasury and control manager of Stichting Vestia, a Dutch housing company that was a client of the bank. Vestia claims the lavish entertainment amounted to bribing De Vries.

But he also offered an insight into how the bank handled large expense claims for entertainment, saying it “wasn’t uncommon” for the bank’s employees to add extra names to expense reports to make it look like more people were present.

“It’s perhaps not correct but it was common that it happened,” he said. The bank’s London office seems to have had a spending limit of 100 pounds ($127) per person spending limit, Vestia said in its filings for the case.

His comments came on the latest day of a London trial in which Vestia -- which nearly collapsed as a result of 2 billion euros ($2.3 billion) in derivatives losses, much of which came from trades handled by Deutsche Bank -- claims the bank is responsible for bribery, which it says invalidates the loss-making trades.

The bank “lavished excessive hospitality” on De Vries, which amounts to bribery, Vestia said in its filings for the case. In a separate part of the same case, it claims the bank paid 3.5 million euros in fees to a middleman who later admitted he’d shared that money with De Vries -- and the lender didn’t do enough to stop the improper arrangement.

No one at Deutsche Bank knew about the improper payments to De Vries, the bank said in its filings. De Vries’ lawyer declined to immediately comment.

“Vestia’s allegations are without basis and we deny them in the strongest terms,” a Deutsche Bank spokeswoman said.

Wohlin, the most senior Deutsche Bank executive to testify at the London trial, has now left the bank and is based in New York as the founder and managing partner of KingsRock Global Investment Partners. He isn’t a defendant in the case.

‘Social Animals’

“Humans are social animals, if that requires a bit of bubbly wine so be it,” Wohlin said when questioned in court about the bank’s entertainment of De Vries. “I don’t think that’s a crime.”

In 2008, Wohlin filed an expense claim for 1,199.59 pounds for dinner with De Vries and others at Parkheuvel, a Michelin-starred restaurant in Rotterdam, according to Vestia’s evidence in the case. That expense claim said 12 people were present, but a reservation document from the restaurant said the booking was for four, Vestia lawyer Rhodri Davies said as he cross-examined Wohlin on Wednesday.

“What I suggest is there were four of you, you spent about 400 euros per head and the expense claim was falsified,” Davies said. Wohlin denied that, saying he could remember the evening and that there had been a large table for a “lot of people,” possibly eight to ten.

Though he didn’t say it had happened in this case, Wohlin said it “wasn’t uncommon” for “a name or two” to be added to expense records to make it look like the total amount spent covered more people. It wasn’t serious, because the bank was adding names to “secretarial expense reports” rather than formal records of meetings, Wohlin said, and the 100-pound policy was a “guideline” that was able to be overruled.

The entertainment wasn’t enough to force De Vries to trade with the bank, Wohlin said. If the lender hadn’t provided him with good products and had instead just “entertained him with bubbly wine” then he would have gone to a competitor, Wohlin said. De Vries was a “social character” who “enjoyed being taken out for lunch and dinner,” but the entertainment the bank provided wasn’t unusual, Wohlin said in his witness statement for the trial.

In moments during Wednesday’s hearing, testimony took a lighter turn.

When Davies said Wohlin had taken De Vries to the Japanese dining spot Nobu, saying it’s “not a cheap restaurant,” Wohlin replied: “I agree, it’s overpriced sushi.”

When Davies said De Vries liked “expensive wine,” Wohlin countered that he actually liked good wine -- and “there’s plenty of good wines that are not expensive.”

‘Kickbacks’

Wohlin was also questioned on what he knew about the improper payments that Arjan Greeven -- an intermediary whose firm was paid by the bank to help arrange trades between the bank and Vestia -- later told Dutch authorities that he’d made to De Vries.

Greeven was sentenced to 30 months in jail in July 2018 after being convicted of bribery and tax fraud in relation to those payments. De Vries was convicted of bribery and sentenced to three years. Both men are appealing their cases in the Netherlands.

Wohlin had raised the issue of “kickbacks” with Greeven during a 2009 meeting, and this was a sign he was worried that De Vries may be receiving improper payments, Davies said.

Wohlin said Davies’ argument was a “heck of a leap.” All he’d done was to state “a fact that kickbacks would not be tolerated and any misuse of money would not be tolerated.” Wohlin said that he was doing his “job, telling them what the ground rules are,” and that doesn’t mean he suspected wrongdoing.

“If we had had the suspicion on that” and not reported it to legal and compliance teams, “it would’ve been a fireable offense,” Wohlin said. “It’s just simply not conceivable anyone would have that suspicion without reporting it.”

The case is Stichting Vestia v. Deutsche Bank Aktiengesellschaft, High Court of Justice, Case No. FL-2016-000018

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