Deutsche Bank investigation Digging Too Close to Home

Some members of Deutsche Bank's supervisory board are beginning to regret appointing colleague and lawyer Georg Thoma to investigate the bank's raft of scandals. They're worried he might be digging too deep.
Georg Thoma has been leading Deutsche Bank's internal investigations for three years.

Georg Thoma has fought and won many battles. He pushed through spectacular deals such as Daimler's purchase of Chrysler and steelmaker Thyssen's hostile takeover of Krupp. But since last Sunday, the member of the supervisory board of Deutsche Bank has found himself in an unfamiliar position: on the defensive. For days now, the 71-year-old lawyer has been caught in the middle of a public mudslinging match.

This is taking the form of a secret campaign instigated by several members of the supervisory board against the head of the "integrity" committee, which is responsible for handling the seemingly never-ending scandals surrounding Deutsche Bank.

To name a few, these have included the multi-billion euro fine over the Libor rate rigging affair, investigations by the U.S. Securities and Exchange Commission into the bank's actions during the 2008 financial crisis and criminal charges against current and former bosses over their role in the collapse of the Kirch media empire in 2002. And that's not to mention shareholder anger at the bank's record €6.8 billion ($7.7 billion) loss in 2015.

The banks's deputy supervisory-board chairman, Alfred Herling, has criticized the internal investigation, saying Mr. Thoma is being overzealous in his probe into the bank’s misdeeds. Other board members agree.

It seems as if a curse hangs over Mr. Thoma's supervisory-board mandates. Three years ago, Paul Achleitner, the current head of the supervisory board at Deutsche Bank, invited Mr. Thoma onto the bank's supervisory board in order to work through the raft of problems.

He doesn't consider himself to be a political creature and can't deal with the machinations.

Mr. Thoma did this with his typical meticulousness. Increasingly driven by fear of making himself liable, he applied himself to numerous investigations – most recently, against the former management board in order to ascertain whether its inquiry into the Libor interest-rate manipulation scandal was sufficiently thorough.

Several members of the supervisory board believe that he went too far with this. They would prefer to let the scandal peter out and turn their gaze forward. A few even want to force Mr. Thoma to resign.

The talk is of “excessive zeal,” of ballooning expenses, of isolation within the supervisory board and even of imminent calls for his resignation. Instead of continuing to rummage around the past and hamstring the bank, Mr. Thoma is being called upon by board members – in both internal emails and public statements – to look to the future and pursue the “vision of management.”

Colleagues on the board are demonstrating the skills that got them where they are today: the sort of power politics of which Machiavelli would have found delight. Mr. Thoma has never cultivated such a talent for intrigue. The art connoisseur has told friends that he is “astounded.” He doesn't consider himself to be a political creature and can't deal with the machinations. Indeed, his career is characterized by straightforwardness and loyalty to clients.

Mr. Thoma is considered to be one of the best corporate lawyers in Germany. After his law studies, clerkship and positions in London and New York, he settled in Düsseldorf at the beginning of the 1990s and built up the German office of the U.S. law firm Shearman & Sterling. As so often, Mr. Thoma was in the right place at the right time. As the German figurehead of the American law firm, he advised the state holding company regarding the privatization of businesses in the former East Germany.

His close relationship with Paul Achleitner, the current head of the supervisory board at Deutsche Bank, dates from this time. Mr. Achleitner was also involved in privatization deals as a Goldman-Sachs banker.

“I know that I can trust him unreservedly,” Mr. Achleitner once said about Mr. Thoma. It is unlikely that he would make this statement today in view of the controversy raging on the supervisory board.

A glorious moment in Mr. Thoma’s career, however, was a deal that never happened: At the beginning of the new millennium, he advised the Düsseldorf-based energy conglomerate Veba against a merger with the U.S. energy giant Enron. Soon thereafter, Enron was revealed to be involved in a huge scheme of fraud – and went bankrupt.

The dealmaker has always kept his feet on the ground. He is closely connected to his native soil. In 2007, he bought an estate in Kanzem on the Saar River. With his daughter Anna Reimann, a scientist who works in wine and wine making, he thoroughly revamped the Baroque viticulture operation.

In the last few years, Mr. Thoma’s fortunes have changed somewhat. The German operations of Shearman & Sterling is shrinking. And he had bad luck as the head of the supervisory board of Ferrostaal, a provider of industrial services. After unsuccessful decisions regarding personnel, he resigned in 2012.

But in his current role, the lawyer will put up a good fight. His integrity committee is due to meet on Thursday, and shareholders are bracing for a showdown between him and his detractors. It could perhaps be one of the last great battles of his career.

 

Daniel Schäfer is head of Handelsblatt's finance pages and is based in Frankfurt. To contact the author: [email protected]