Deutsche Bank Disclosure Lapse in CO2 Case Blamed on IBM Staff

Deutsche Bank AG’s failure to turn over e-mails in a tax probe that led to the arrest last year of five employees may have been caused by errors at International Business Machines Corp., which managed the bank’s data storage.

The December 2012 arrests were based on prosecutors’ claims that Deutsche Bank withheld e-mails from the last week of April 2010 in the accounts of employees suspected of participating in a tax scheme related to carbon emission certificates.

A month after the arrests, an IBM employee said in a letter to prosecutors that staff at the computer services company mixed up the dates of its monthly data-storage operations. The confusion may have meant the e-mails from the last week of the month were left out of documents turned over to investigators, according to a copy of the letter obtained by Bloomberg News.

Police arrested the five employees, who included the bank’s then head of litigation, in a raid on the lender’s office a year ago this month. Four of the employees spent more than a week in prison and were released days before Christmas, when prosecutors said there was no longer a risk of evidence tampering.

The data is an element of a probe by Frankfurt prosecutors into tax declarations for carbon-emission certificates at Deutsche Bank. Co-Chief Executive Officer Juergen Fitschen and Chief Financial Officer Stefan Krause, who signed tax returns, are also being looked at as part of the investigation.

Alexander Badle, a spokesman for Frankfurt prosecutors, declined to comment because the probe is ongoing. Christian Streckert, a Deutsche Bank spokesman, also declined to comment on the case as did Marie-Ann Maushart, a spokeswoman for IBM in Germany.

Regulatory Investigations

The bank is also grappling with escalating regulatory investigations and litigation stretching from alleged rigging of interbank lending rates to misrepresentation of products tied to U.S. mortgages.

The carbon emission tax issue dates back to April 2010, when Deutsche Bank was first raided in the case. The fact that e-mails from around that time were missing was used as evidence to obtain a second search warrant and arrest warrants at the end of 2012.

The IBM employee who wrote the letter to prosecutors in January of this year helped Deutsche Bank staff compile e-mails when prosecutors raided the bank in 2010.

Missing E-Mails

When questioned by investigators over the issue in October 2012, the IBM employee said the e-mail back up took place over the first weekend in May 2010 while in fact the operation was conducted a week earlier, on April 24 and 25, 2010.

That confusion covers the period of missing e-mails from April 26 to 29, 2010, which prosecutors later cited to obtain arrest warrants.

The allegations of obstruction of justice were also based on the fact that Deutsche Bank had been informed before the April 2010 raids that prosecutors planned to search the bank and that a member of the legal department discussed it with one of the suspects. Prosecutors also claimed that Internet chat protocols weren’t properly disclosed by the bank and that recordings of traders’ phone calls were deleted.

At a July 3 meeting this year with Frankfurt prosecutors, IBM staff told investigators that another “glitch” caused the loss of additional data from a period in 2012. The data sought by prosecutors had been deleted because various archival requests -- including some by Deutsche Bank -- were mingled and one folder was deleted at IBM, according to a copy of a memo written by Frankfurt tax investigators.

As a result, prosecutors asked IBM for a written report on the July issue and the names of the people who deleted the data, according to the document.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE