Financial Services

Top Credit Suisse executive resigns after colleague spied on

Security consultant who acted as middle man reported to have taken own life

Urs Rohner, chairman of Credit Suisse. ‘I would like to apologise on behalf of Credit Suisse to our excellent employees, our shareholders, and to Iqbal Khan and his family for the consequences,’ he said at a hastily arranged press conference

Wed Oct 2 2019 - 05:45

The chief operating officer of Credit Suisse resigned on Tuesday following a corporate espionage scandal, as it emerged that a security consultant involved in the surveillance effort had taken his own life.

The suicide of the security consultant, who acted as a middle man between Credit Suisse and a private investigation firm, puts further pressure on the Zurich-based lender as it battles its worst reputational scandal in years.

Pierre-Olivier Bouée, Credit Suisse's COO, submitted his resignation after the bank's board heard details of a surveillance operation he ordered against Credit Suisse's outgoing head of wealth management, Iqbal Khan. The bank's head of security, Remo Boccali, has also resigned. Neither party will receive a pay-off, the bank said.

In a hastily arranged press conference, Urs Rohner, Credit Suisse’s chairman, said: “It was wrong to order the surveillance. The measures taken did not represent our standards. Those responsible for the observation should not be employed by the group.”

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He added: “The reputation of our bank has suffered. . .I would like to apologise on behalf of Credit Suisse to our excellent employees, our shareholders, and to Iqbal Khan and his family for the consequences.”

Mr Rohner said that an independent investigation by law firm Homburger had concluded that Mr Bouée had acted alone in ordering the surveillance and that Tidjane Thiam, the bank’s chief executive, was not involved.

He added that he did not want to preempt an official investigation by Zürich’s public prosecutor, which was opened following a complaint by Mr Khan, but said that Homburger’s investigation concluded that Mr Thiam “neither gave the order, nor was he aware of it”.

“We strongly reject any assertions that call into question the integrity of our CEO,” Mr Rohner added.

Condolences

Mr Rohner said that it was “with great sadness” that the bank had learned of the death of a security expert who worked with Credit Suisse, who is reported to have taken his own life. The security expert acted as a middle man between the bank and Investigo, the private investigation firm, according to one person briefed on the arrangement.

“We express our deep condolences. Out of respect to the relatives we will not comment further on this matter,” he added.

Asked whether Credit Suisse was in any way responsible for the person’s death, Mr Rohner replied: “We are greatly saddened.”

The bank began its surveillance of Mr Khan last month because of fears that he was preparing to poach bankers and clients to bolster the fortunes of rival UBS, where he started work on Tuesday.

John Tiner, a Credit Suisse director who oversaw Homburger’s investigation, said the law firm had found no evidence that Mr Khan had attempted to poach anyone, although he did continue to socialise with some employees after he was placed on gardening leave by the bank.

Mr Tiner said Homburger had conducted 14 interviews, including with Mr Khan, Credit Suisse employees and the investigations company Investigo.

However, he warned that the law firm’s investigation was limited in two important respects. It did not have access to police files that might contain relevant information. And it could not retrieve deleted messages that were sent over Threema, a third-party messaging app.

Risks

Threema describes itself as a “proprietary, end-to-end encrypted instant messaging application” and markets itself under the tagline “seriously secure messaging”.

Mr Tiner said that Homburger had concluded that Mr Bouée was aware that the plan to tail Mr Khan “entailed significant reputational risks” for the bank. The private investigation firm was “retained through a security consultant”, he added, and there were no “contemporaneous instructions” regarding its remit.

Mr Tiner dismissed suggestions that Mr Thiam’s ignorance was a sign that he was not “on top” of the company, adding that Mr Bouée had acted in “a highly unusual and irregular” manner.

Mr Khan discovered he was being followed in downtown Zurich two weeks ago. The 43-year-old banker confronted the individual tracking him, leading to a chase and then an altercation.

The affair has raised questions over the judgment of Mr Thiam, who has led Credit Suisse since 2015. He and Mr Khan had an acrimonious relationship, stemming in part from a string of neighbour disputes concerning residences they each own in wealthy suburb of Herrliberg in Zurich.

Mr Rohner said the inquiry had not investigated the “personal differences” between Mr Thiam and Mr Khan, who were involved in an altercation at a cocktail party earlier this year. Nor had it looked at the “alleged planting of trees” – a reference to the neighbourly dispute.

However, Mr Rohner said he was responsible for allowing Mr Khan to start work at UBS without completing a six month notice period and stint of gardening leave of up to one year.

Dispute

Following “a dispute, a heated discussion” between Mr Thiam and Mr Khan, Mr Rohner had initially concluded that the pair were able to continue working together. But, in time, it became clear a “long-term collaboration on mutual trust was not possible and Mr Khan wanted to leave the group”.

“I helped broker a termination agreement with Mr Khan, a mutually beneficial agreement,” he said.

One person briefed on the arrangements said “this could have all been avoided” if Mr Khan had been subject to the normal notice period, which is designed in part to ensure that outgoing employees cannot poach colleagues or clients.

Asked whether he had considered resigning, Mr Rohner said: “I consider my position as chairman every day. My job is to protect the integrity of this company. If I see something that doesn’t go right, we will take the necessary action.”

Mr Rohner said that the Homburger investigation was now complete and dismissed suggestions that it had concluded too early. But he said the bank would continue to investigate whether it should overhaul its security unit, which might have to report to the bank’s legal and compliance department rather than the chief operating officer.

Mr Rohner said the bank had “looked at the legal situation” but had no intention of filing criminal charges against Mr Bouée or the company’s head of security.

Roles

Credit Suisse said it appointed James Walker to succeed Mr Bouée as chief operating officer. It said Mr Walker currently held several senior roles in the bank’s finance organisation, including chief financial officer of key US subsidiaries and head of product control.

As the damage to Credit Suisse’s reputation grew with more details of the operation and the disputes which led to it leaking into the open, shareholders in the bank rallied to support Mr Thiam’s leadership.

Harris Associates, Credit Suisse’s largest shareholder, said Mr Thiam’s stewardship should not be called into question by the events.

“These are humans; people aren’t flawless,” said Harris’s deputy chairman, David Herro. “They don’t make perfect decisions every time. And this is why, unless laws have been broken, this doesn’t seem like a case for anyone losing their job. . . Perhaps . . . some poor judgment was shown in the way to best protect the stakeholders from a departing executive. I think at this point this is the worst that can be said.” – Copyright The Financial Times Limited 2019

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