Deutsche Bank's small arrangements with its Chinese "friends"

Château-Lafite fine wines, Vuitton bags, trips to Las Vegas, a $ 15,000 crystal tiger, and high-end televisions. Internal documents obtained by the German daily Süddeutsche Zeitung detail the extent of the efforts undertaken by Deutsche Bank to curry favor with the Chinese authorities.

Between 2002 and 2014, the German banking institution spent about $ 200,000 on gifts to senior officials of the Chinese regime, according to a survey by the Bavarian newspaper published on Tuesday (October 15th). The Deutsche Bank has aimed high, by making available to its largesse the former secretary general of the Chinese Communist Party (CCP) Jiang Zemin (1993-2003), or the former Prime Minister Wen Jiabao (2003-2013). The latter received a crystal horse in reference to his astrological sign in the Chinese horoscope.

Son and daughters of ...

But Deutsche Bank did not just spend money. She also hired the children of senior officials and Chinese business leaders with whom she wanted to do business. In all, she has employed more than a hundred, paid internship or under contract. This vein of "sons and daughters" was so important in the eyes of German bankers, that they were ready, in 2010, to send employees "if necessary" to make room for the offshoot of a Chinese oil tycoon, according to an e-mail consulted by the Süddeutsche Zeitung.

The German bank is not the first to get caught in the bag of small arrangements with Chinese "friends". In 2013, the US bank JP Morgan was at the center of a similar scandal. A trainee recruited from China was then internally qualified as "the worst candidate in JP Morgan's history". He had missed his admission tests and had been judged by one of the interview managers as "immature, irresponsible and unreliable", which had not stopped him from landing the job.

After a corruption investigation, the US bank agreed in 2016 to pay a $ 264 million fine for the case. For similar events, Credit Suisse had to pay $ 47 million to US authorities in 2018, and Barclays paid a $ 6.3 million fine last September.

The practice has therefore been part of the ba-ba business in the Chinese financial sector. But the revelations of the Süddeutsche Zeitung unveil, for the first time, behind the scenes of the massive seduction business of a major bank to gain a foothold in the largest Asian market.

Aggressive practices

In the early 2000s, "Deutsche Bank set itself the ambition to become a world leader and saw China as one of its priorities to achieve it, but it was late for its competitors," says New York Times, who also had access to the internal documents of the bank. JP Morgan and Goldman Sachs had already made their nest in China and the German establishment had to redouble its efforts, flirting dangerously with illegality, to upgrade.

These aggressive practices seem to have pushed competitors to boost their own dubious practices. In 2009, JP Morgan began hiring even more children of dignitaries after losing a contract to Deutsche Bank, "who recruited the daughter of the CEO of the Chinese company concerned by the contract," said established US authorities during their investigation of JP Morgan in China.

The architect of the rise of Deutsche Bank in China is a former Goldman Sachs in Beijing. Lee Zhang was lured by the German bank in 2001 to help him set foot in a country that had just opened economically in the world. From facilitator, Lee Zhang progressively rose to the post of Director of Deutsche Bank in China.

It must be said that his interpersonal skills and his personal relations with those close to the power allowed Deutsche Bank to become, in 2011, the favorite bank of Chinese companies to organize their IPO, reported the Bloomberg economic site.

Deutsche Bank's "Sir China"

But Lee Zhang's methods to achieve this have not failed to arouse criticism within Deutsche Bank. As early as 2004, employees told their bosses "to be scared by the way Lee Zhang was doing business and to wonder if there was no money circulating in envelopes," according to internal communications. consulted by the Süddeutsche Zeitung.

One of the first feats of the "Sir China" of the German bank was to organize in 2002 the meeting between Josef Ackermann, then spokesperson of the board of Deutsche Bank and future CEO of the group, and Jiang Zemin , the secretary general of the CCP. To achieve this, Lee Zhang paid $ 100,000 to a mysterious consulting firm that no one had ever heard of, raising suspicions of corruption.

In 2004, he had also paid several million dollars for an "intermediary" suspected of being the straw man of a regime executive. He is also alleged to have pocketed $ 3 million from his employer through a screen company registered in his wife's name.

In light of his revelations, the $ 16 million paid in 2014 by Deutsche Bank to US authorities to close a corruption investigation seems derisory. The internal documents prove that the bank was expecting worse: an external audit firm had concluded that the penalty could be between 84 million and 252 million dollars.