A former Deutsche Bank (DBK) AG salesman’s admission in a Japanese court that he bribed a pension fund executive with lavish entertainment could attract the attention of prosecutors in other countries.
The U.S. Department of Justice and other authorities may examine whether the practice was widespread at the bank and led to any violations of bribery laws after Shigeru Echigo testified that he acted on the instructions and encouragement of his management, U.S. and U.K. lawyers not involved in the case said.
Prosecutors say the former salesman spent about 900,000 yen ($8,800) on meals and golf outings with former Mitsui & Co. employee Yutaka Tsurisawa 15 times from April to September 2012. Echigo admitted to the charges at the start of his trial in Tokyo yesterday.
“The worry for Deutsche Bank is that Echigo’s testimony could cause DOJ to take a hard look at the bank’s relationships with Japanese government officials to find out if the same things are taking place,” said Roger A. Burlingame, a former U.S. federal prosecutor now based in London at Kobre & Kim LLP.
Deutsche Bank, based in Frankfurt, is probably already having discussions about the case with prosecutors in other jurisdictions, said Neil Swift, a criminal defense lawyer at Peters & Peters Solicitors LLP in London. The U.S. Foreign Corrupt Practices Act and U.K. Bribery Act encourage companies to self-report potential violations and doing that can reduce any penalties.
“I would strongly suspect that the moment this was initially reported internally within the bank, it was escalated right up the company,” Swift said. “I would be surprised if Deutsche Bank hadn’t already addressed this issue with the appropriate authorities in the United States.”
Armin Niedermeier, a spokesman for Deutsche Bank, declined to comment on the case. Japan’s Financial Services Agency ordered the lender to improve compliance at the Japanese unit in December, and the bank disbanded the pension sales team.
Echigo entertained Tsurisawa in return for buying 1 billion yen of investment products for Mitsui’s retirement fund, and to procure future business, prosecutors said. Tsurisawa was convicted last month and given a suspended 18-month prison sentence.
Information about the case may already have been shared by Japanese prosecutors with their counterparts in other countries where Deutsche Bank does business, the lawyers said.
Foreign prosecutors would want to know if managers were aware of Echigo’s conduct and if the practice was part of a broader pattern of using expensive entertainment in order to win business. Lawyers for the salesman showed the court evidence based on police and prosecutors’ interviews with his former bosses and colleagues that managers encouraged the spending.
“If there is evidence that this goes higher, they will start to look at it much more closely,” said Andrew Oldland, a lawyer at Michelmores Solicitors in London who advises clients on anti-bribery laws and was previously a prosecutor at the U.K.’s Serious Fraud Office.
U.S. law bans payments to government officials, which narrows any potential inquiries, while the U.K. Bribery Act covers payments to public agents and private company executives. Japanese prosecutors consider Tsurisawa to effectively be a civil servant because the money that Mitsui, his employer, oversaw included public funds.
U.K. prosecutors are unlikely to pursue Deutsche Bank over the case, even though the law covers companies with operations in Britain, regardless of where the act is committed.
“It’s unlikely the SFO would want to commit the level of resources that’s required,” said Stephen Parkinson, the head of criminal litigation at Kingsley Napley LLP in London. “They might contact the company to ask what steps it’s taking to investigate itself.”
FCPA probes typically end in settlements, with companies paying fines and admitting wrongdoing.
Simon Varcoe, a spokesman for the SFO, declined to comment. The press office for Bafin, the German finance regulator, also declined to comment.
To contact the reporter on this story: Andrea Gerlin in London at firstname.lastname@example.org