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Deutsche Bank top executive resigns amid allegations over fraudulent ESG funds

June 1, 2022, 1:16 PM UTC

Deutsche Bank’s senior executive for asset management agreed to step down from his post less than a year into his new contract amid allegations his unit misled clients by “greenwashing” certain securities. 

The Frankfurt headquarters of Deutsche and its mutual fund business DWS were searched by German law enforcement officials on Tuesday on suspicions the latter may have fraudulently advertised investments as being particularly sustainable when they were not.

“Asoka Wöhrmann announced his resignation, in agreement with the company, as Chief Executive Officer of DWS Group,” the lender said in a statement published in the early hours of Wednesday

The German national took over as CEO in late 2018, and his contract was extended last March for three more years through the end of October 2024.

Following the conclusion of DWS’ annual shareholder meeting on June 9, Wöhrmann will be replaced by Stefan Hoops, both as CEO of DWS and as the operational head responsible for asset management on Deutsche’s Group Management Committee.

Currently the Frankfurt public prosecutor’s office is investigating DWS for misleading investors over its environmental, social, and governance (ESG) fund products. A spokesman told Fortune on Tuesday the probe had no specific targets in its crosshairs at present, meaning Wöhrmann is not a suspect.

DWS has denied the claims leveled by its former head of sustainability, Desiree Fixler, a position it reiterated on Tuesday following the raid.

Marred by scandals

Although DWS is a stock-exchange-listed company in its own right, it remains under the control of Deutsche, its 80%-majority owner. 

The allegations around the ESG funds in question risk tarnishing the reputation of CEO Christian Sewing, who has been on a crusade to get Deutsche out of the headlines since taking over the reins in April 2018. 

His predecessors—including ex–Merrill Lynch investment banker Anshu Jain—presided over numerous scandals, wiping tens of billions off its market cap over the years.

The chairman of DWS and president of Deutsche Bank, Karl von Rohr, thanked his outgoing CEO for playing a “major role” in the success of the lender’s asset management operations as well as Wöhrmann’s contributions in previous stations, including his term as head of the private client business in Germany.

“Under his leadership, DWS has expanded its market position and performed well in a recently challenging environment,” von Rohr said.

In Germany, statements regarding major changes at the top of an organization are routinely scrutinized for the tone of their comments and any expressions of gratitude, which are customary except in cases where an exit occurs under a cloud.

By praising Wöhrmann’s accomplishments, Deutsche is putting its reputation in a potentially precarious position, should the prosecutor’s office later decide there is enough evidence to press charges. 

Even Sewing explicitly expressed personal support for his outgoing subordinate and referred to him by his first name, an informality that typically must be extended in Germany’s rigid and conservative business culture.

“I also want to thank Asoka for his impressive work and performance for DWS and Deutsche Bank,” the group’s CEO said. 

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