Spies and Threats Set Stage for Credit Suisse’s Big Decision
Spies and Threats Set Stage for Credit Suisse’s Big Decision
(Bloomberg) -- Credit Suisse Group AG is approaching a crucial decision on management that could shape its path for years, after a week of tumult exposed a deep rift at the top of the second-largest Swiss bank.
Chairman Urs Rohner is set to decide by early next week on the fate of executives implicated in the surveillance of former wealth-management head Iqbal Khan. Rohner will determine who ordered and knew about the spying, which took place after Khan decided to move to UBS Group AG, and whether policies were violated.
The future of Chief Executive Officer Tidjane Thiam is at stake, though it’s also possible that another executive close to him, Chief Operating Officer Pierre-Olivier Bouee, could take the fall.
The bank ordered that Khan be monitored on concern he might poach Credit Suisse staff. The former head of international wealth management departed in early July after falling out with Thiam. A leading Credit Suisse investor has defended the CEO, saying his ouster would be damaging following the successful completion of a three-year turnaround.
Bouee is a longtime associate of Thiam’s. He was named his chief of staff in 2015 and later became chief operating officer, responsible for global operations, IT and security. Because of that role, he could take responsibility for the botched surveillance operation.
Here’s a timeline of the scandal and details of the bitter personal dispute at the top of Credit Suisse that shook Swiss financial circles.
Friday, Sept. 20
Swiss media break the news that police have arrested several people suspected of following Khan after he filed a complaint. Zurich prosecutors confirm to Bloomberg that they are probing whether Khan was threatened.
Saturday, Sept. 21
Swiss media report that Credit Suisse had Khan watched. The banker was driving with his wife in Zurich on Tuesday, Sept. 17 when he noticed three men following him, according to these reports. He stopped to take photos of them, which prompted an altercation when they tried to take his phone from him, in these accounts.
Sunday, Sept. 22
Khan was followed by detectives trying to establish if he was attempting to poach Credit Suisse colleagues to join him at the world’s top wealth manager, several people familiar with the situation tell Bloomberg.
Monday, Sept. 23
Credit Suisse acts to contain the crisis by saying its board of directors is starting a detailed inquiry into the matter. The bank also says in a memo seen by Bloomberg that media coverage of the Khan incidents contained inaccuracies and “sensationalized both facts and events.” The investigation will report to Rohner, the chairman.
Tuesday, Sept. 24
Bloomberg obtains a report sent to the bank by a private investigator which provides a slightly more nuanced version of how Khan was shadowed. The private security firm said its employee was acting alone and “defensively,” contradicting earlier accounts that several private detectives followed Khan and tried to snatch his phone. The company was asked not to break the law, for example by trespassing.
Wednesday, Sept. 25
- A Swiss daily reports that Thiam and Khan had an altercation at a January party at the CEO’s house, prompting Khan to complain to the board. Citing unidentified people close to Thiam, the newspaper said the argument had been “a personal thing” and not related to the bank. People close to Khan were quoted as saying that the CEO had grown increasingly exasperated with the younger executive’s success and the fact that he had taken on the role of “crown prince” in a possible succession.
- Separately, a person familiar with the matter tells Bloomberg that Credit Suisse plans to finish its probe this week.
- UBS also makes its first public comments on the matter: Chairman Axel Weber says the bank ran due diligence checks on Khan as recently as Wednesday.
- Rohner will move swiftly to take punitive action against the institution’s senior officials if they’re found to be responsible, a person familiar with the matter tells Bloomberg.
- Oswald Gruebel, who led both Credit Suisse and UBS, tells a Swiss publication that Thiam should be fired if it turns out that the scandal indeed had its roots in the personal conflict between the CEO and Khan, as some reports have suggested.
Thursday, Sept. 26
- Homburger, a Swiss law firm, is in the final stages of a probe into the spying operation, people familiar with the matter tell Bloomberg. The firm interviewed bank officials and was reviewing if the surveillance was justified, legal and ethical, the people said. It’s also probing whether a rift between Khan and Thiam harmed the bank’s reputation.
- Credit Suisse’s top shareholder expresses alarm at the prospect of ousting top executives over the surveillance of Khan. David Herro, deputy chairman of Harris Associates, says his firm is fully supportive of management “taking any legal steps necessary to protect the company” and thinks it would be “damaging to CS and its stakeholders to lose any member of senior management over this issue.”
Friday, Sept. 27
Credit Suisse shares, down about 6% since the affair came to light, closed 0.6% lower going into the weekend.
To contact the reporter on this story: Nicholas Comfort in Frankfurt at ncomfort1@bloomberg.net
To contact the editors responsible for this story: Dale Crofts at dcrofts@bloomberg.net, Christian Baumgaertel, Paul Sillitoe
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