Credit Suisse CEO Exonerated Second Time as Bouee Takes Fall
Credit Suisse Group AG blamed an ousted executive for a second spying scandal that’s shaken the bank, again painting former Chief Operating Officer Pierre-Olivier Bouee as a rogue operative who kept all executives and directors in the dark about his activities.
Bouee, who was allowed to resign in October, has now been declared having been fired for cause, according to a Credit Suisse statement on Monday. He stands to lose about 4 million Swiss francs ($4.1 million) in stock as a result.
The former executive, once a confidante of Chief Executive Officer Tidjane Thiam, used a contractor to spy on former human resources head Peter Goerke and concealed evidence of the surveillance, the statement said. There was “no indication” other members of the board knew about the spying.
Credit Suisse is struggling to emerge from the embarrassing episode that highlighted infighting among its top brass and the methods used by the bank to protect its business. The surveillance of former international wealth management head Iqbal Khan led to a confrontation in downtown Zurich between him and his pursuers. That led to the exposure of the personal rift between Thiam and Khan.
In the aftermath of the Khan incident, Credit Suisse hired Homburger, a blue-chip Swiss law firm, to investigate the spying and said that Bouee had acted alone in what Thiam at the time called an isolated event. Chairman Urs Rohner told the public that staff surveillance was not “part of our toolbox.”
It now turns out, the “responsible individuals” didn’t answer truthfully when asked about additional surveillance and didn’t disclose the shadowing of Goerke, according to Credit Suisse’s latest account.
Bouee didn’t immediately respond to a message sent to him on LinkedIn.
In the meantime, others have stepped forward to say they also have been followed. Colleen Graham, who headed up a joint venture between Credit Suisse and Palantir Technologies Inc., has also alleged the bank took retaliatory measures against her — including surveillance — after she had refused to sign off on how revenue from the joint-venture would be booked.
In a Sept. 25 email to Thiam and Rohner, which also went to board member John Tiner and was seen by Bloomberg, Graham — whose case dates from 2017 — describes being followed in the U.S. from the “lobby of my lawyer’s office into a pharmacy several blocks away and to the building where I was interviewing” at BlackRock Inc. Graham spotted the same woman, she wrote, in a black Range Rover on Long Island. Her obvious presence indicated “the woman wanted me to know she was following me.”
Graham was not mentioned anywhere in Credit Suisse’s Monday’s statement. However, the 20-year veteran of Credit Suisse wrote to Switzerland’s finance regulator in October asking for an interview with Finma, after she said the bank and Homburger snubbed her requests to consider her information, according to a copy of the correspondence seen by Bloomberg.
“How is it that the very same men who were just informed of my surveillance were comfortable publicly announcing that the Iqbal Khan event was an isolated event?,” she wrote to Finma chief Mark Branson. “This is cultural failure at the very least and this is a pattern of behavior.”
Finma said on Friday that it would hire an independent auditor to look into Credit Suisse’s surveillance activities, which “raise various compliance issues.”
A Finma spokesman declined to say whether Graham’s case is included in their new review, reiterating only that it’s focused on “relevant corporate governance questions, particularly in relation to the observation activities, the handling of information in this context and the use of electronic communications.”
Credit Suisse has rejected her allegations as “baseless,” which it says it will continue to fight. U.S. Department of Labor investigators looked at her allegations and dismissed the claims in April, the bank said.
Credit Suisse shares fell about 0.9% as of 10:31 a.m. in Zurich and are up about 24% this year.
In following Khan, Credit Suisse was probably concerned that he may take hard-to-replace wealth managers with him to his new employer UBS Group AG. The reasons for the surveillance of Goerke seem less clear. The executive was followed for a period of several days in February with the help of a contractor. Credit Suisse has apologized.
“The observation of Peter Goerke, which has now been confirmed, is inexcusable,” Rohner said in the statement. “We are aware that the observations of Iqbal Khan and Peter Goerke have damaged the reputation of our bank.”
In a press conference following the Khan investigation, Rohner said that Thiam still enjoyed the backing of the bank’s board. He may face further tough questions after he allowed a personal dispute to escalate into a scandal that damaged the reputation of Credit Suisse and Swiss banking. Rohner personally negotiated Khan’s exit and took control of the investigation, while Thiam has lost a trusted ally in Bouee.
The controversy overshadowed the conclusion of Thiam’s painful three-year turnaround of the bank, which was finally starting to bear fruit. However, Credit Suisse cut its main profitability target for this year and next earlier in December, as trade tensions and negative interest rates clouded the outlook.
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