Deutsche Bank shamed again as employees are charged with fraud

Germany’s largest bank suffers fresh reputational blow after huge fine for Libor-rigging

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The Independent Online

The shredding of the reputation of Germany’s biggest bank has continued as seven Deutsche Bank employees were charged in Frankfurt with evading VAT in carbon market trades.

The employees included corporate customer representatives and a member of the bank’s tax department. All have been suspended from their jobs.

Deutsche Bank sources stressed that no one on its management board is implicated. Yet the indictments are the latest blow to the bank’s reputation for probity.

In April, Deutsche Bank was fined $2.5bn (£1.6bn) by US and UK regulators for the involvement of its employees in rigging the Libor interest rate. It is also still under investigation by regulators around the world for rigging foreign exchange markets, manipulating the prices of commodities and breaching American sanctions.

In June the bank’s co-chief executives, Anshu Jain and Jürgen Fitschen, both announced their resignations after losing the confidence of the board.

Mr Fitschen and four other former Deutsche Bank board members were charged last year with attempted fraud relating to their testimony in a 2011 civil court case involving the heirs of the Kirch publishing empire.

Although German prosecutors did not name the financial institution in question, it was soon confirmed to be Deutsche Bank.

The bank was raided by German police in 2012 as part of an investigation into tax evasion in Europe’s carbon-emission certificate market. Under German law, a court must now decide whether to hear the case.

The European Union’s “cap and trade” carbon market fell pray to “carousel” dealings in 2009 and 2010, when traders imported carbon-emission permits in one member country without paying VAT, the added VAT to the price and pocketed tax refunds.

Fourteen people have been jailed in three countries so far for their involvement. The European police agency Europol has estimated that such crime has cost taxpayers more than €5bn (£3.6bn) in lost revenue since 2008.

The British banker John Cryan was appointed chief executive of Deutsche Bank, which is the largest in the eurozone by assets, in June.

Despite the charges the company’s share price was up 1.5 per cent. But the stock has gone sideways since the global financial crisis and trades at around half its book value.

“Our investigation into the C02 [carbon trading] situation is continuing. We are co-operating with authorities,” Deutsche Bank said in a statement.  According to the Frankfurt prosecutors, the bank has already paid back €220m of tax refunds that were uncovered during the investigation.

In May Deutsche Bank became the seventh global financial institution to be fined for rigging Libor. It paid £227m to the UK’s Financial Conduct Authority (FCA), $775m to the US Justice Department, $800m to the Commodity Futures Trading Commission and $600m to the New York Department of Financial Services.

The FCA accused Deutsche Bank of “repeatedly misleading us” during the investigation.