Friday, July 06, 2018

Credit Suisse to pay $30 million for Asia-Pacific region FCPA violations

By Rodney F. Tonkovic, J.D.

Credit Suisse Group AG will pay almost $30 million in disgorgement and interest to resolve charges that it violated the FCPA. The SEC charged the company with seeking to win business in the Asia-Pacific region by hiring and promoting individuals connected to government officials. Over a seven-year period, Credit Suisse hired over such employees, at the request of foreign government officials, gaining millions of dollars in business revenue as a quid pro quo (In the Matter of Credit Suisse Group AG, Release No. 34-83593, July 5, 2018).

According to the Commission, Credit Suisse, a multinational financial services holding company, hired the relatives and friends of certain foreign government officials in the Asia-Pacific region as a personal benefit to those officials in order to obtain in return investment banking business or other benefits. Many of Credit Suisse's clients were state-owned entities (SOEs), and the individuals requesting employment for friends and relatives were executives of the SOE's or government ministers. As a result, this referral hiring practice resulted in multiple deals and substantial profits for Credit Suisse.

Credit Suisse recognized the risks in hiring relatives of foreign government officials and specifically prohibited doing so if done for the purpose of securing a business advantage. Senior managers in Hong Kong were aware of these policies, but took steps to hire SOE referrals without the proper scrutiny, including using in sham practices intended to give the appearance of the regular hiring process being followed. Between 2007 and 2013, multiple friends and relatives of government and SOE officials were hired, despite their lack of technical skills, qualifications, and experience. After these hires, Credit Suisse Hong Kong was awarded lucrative business opportunities and other favorable treatment from various Chinese SOEs and government ministries.

The Commission found that Credit Suisse violated the FCPA and the internal controls provisions of Section 13(b)(2)(B). In addition to a cease and desist order, Credit Suisse will pay disgorgement of $24,989,843 and prejudgment interest of $4,833,961, for a total of $29,823,804. A civil penalty was not imposed due to a $47 million fine paid as part of Credit Suisse's settlement with the U.S. Department of Justice.

Charles Cain, Chief of the SEC Enforcement Division’s FCPA Unit, said: "Bribery can take many forms, including granting employment to friends and relatives of government officials. Credit Suisse’s practice of engaging in these hiring practices violated the law, and it is now being held to account for having done so."

The release is No. 34-83593.