Intellinews – Russia Today
June 1, 2016 Wednesday
Pavel Teplukhin, chief country officer for Deutsche Bank Russia, is to “retire” in August as the lender’s Moscow office struggles to shake off accusations of money laundering and bribe-taking by senior staff members.
Teplukhin, 52, will leave following the closure of Deutsche Bank’s investment banking operation in Moscow and the loss of at least 300 jobs amid a money-laundering probe involving suspicious trades worth as much as $10bn.
The banker is not believed to be implicated in the alleged money laundering and told US media that his departure “is connected to the reduction” of Deutsche Bank’s presence in Moscow.
A former senior executive at Troika Dialog, Teplukhin was a surprise appointment in 2012 as his predecessors tended to be insiders. He will remain on the bank’s supervisory board in Russia while his duties will be transferred to Annett Viehweg, chair of the board of the local unit and a Deutsche lifer, according to a statement from the bank.
Ashok Aram, chief executive officer for Europe (excluding Germany and UK), Middle East & Africa, said Teplukhin had in his four years “contributed substantially” to the development of Deutsche Bank Russia’s business and has navigated the franchise through “very challenging times”.
“We thank him for his contribution to improving the efficiency of the bank in Russia and enhancing the quality of our client base,” Akram said.
A co-founder of Troika Dialog, Teplukhin left in 2010 after 19 years at Moscow’s oldest brokerage. He had been managing director and head of its asset management division. Troika Dialog was subsquently acquired by Sberbank in 2011.
An architect of the country’s federal law on mutual funds, Teplukhin told this journalist in 2008 that 30% of the Forbes Russia rich list were his clients. He is believed to be independently wealthy from the sale of his stake in Troika to Sberbank, Russia’s biggest lender.
Critical deficiencies
It emerged in April that the bank ignored its own red flags to do with possible money laundering after its own probe discovered “systemic” failure in its Russian trading activities.
Critical deficiencies, as the bank referred to them, allowed a “suspected money-laundering pattern” to channel as much as $10bn out of Russia from 2012 through 2014, it said in a report.
Deutsche Bank hiked its litigation reserves by $1.3bn in the third quarter mainly to cover alleged violations at the lender’s Russian unit.
A Russian investigation found no significant abuse of anti-laundering controls connected with so-called mirror trades between Moscow and London, and fined Deutsche Bank a nominal amount for largely technical shortcomings, Bloomberg reported earlier, citing unidentified sources.
But the impartiality of Russian probes has long been questioned. By contrast, the Frankfurt-based lender can expect far harsher treatment from US and UK market watchdogs, which in the last four years haven’t hesitated to slap huge penalties on major investment banks. Sources close to the Deutsche Bank Moscow probe said they expect the resultant fines to run into the billions of dollars.
In the wake of the scandal, Deutsche Bank took the decision to close its investment bank in Moscow in September last year as US and European regulators turned the heat up into so-called “mirror-trading”, which may have enabled the lender’s clients to shift money offshore without alerting the relevant authorities over a period of four years.
Deustche Bank admitted in October it had discovered abuses of internal policies during an investigation. Tim Wiswell, the bank’s head of Russian equities, lost his job last year after 12 years at the lender amid the probe. He has denied any wrongdoing.
Some of the first warnings were ignored and others were dismissed. It wasn’t until early 2015, when Russian authorities began interviewing bank employees in Moscow, that senior executives in Frankfurt were alerted and the bank began a full-scale internal probe.
According to Bloomberg, some funds moved out of Russia belonged to close associates of President Vladimir Putin, including an unnamed relative of the Russian leader and two of his longtime friends, Arkady and Boris Rotenberg.
Banking insiders told bne IntelliNews that Deutsche Bank was forced to shut down the Moscow business after the Central Bank of Russia threatened to revoke its main banking license amid the furore over allegations. Only the intervention by a senior German politician, believed to be Finance Minister Wolfgang Schaeuble, and a pledge to wind down the operation averted that course of action, according to a senior Moscow banker familiar with the central bank’s dealings. Deutsche Bank rejected this version as untrue after it was reported.
A report by bne IntelliNews on April 7 showed that Deutsche Bank has started to transfer its Russian custody clients to VTB as it downsizes its operations in Moscow. A picture obtained by bne IntelliNews shows rows of Bloomberg terminals ripped out.