Legal battles Deutsche Bank Settles U.S. Tax Fraud Case

Germany's biggest bank reached a settlement in another U.S. lawsuit on Wednesday, agreeing to pay $95 million in a tax fraud case.
Deutsche bank is facing a raft of legal suits in the U.S.

Deutsche Bank on Wednesday agreed to pay $95 million (€90 million) to settle a U.S. lawsuit that charged Germany's biggest lender with tax evasion.

The U.S. attorney's office filed a lawsuit against the lender in December 2014, originally seeking more than $190 million in taxes, penalties and interest. It claimed Deutsche Bank used insolvent shell companies to mask a tax liability on its purchase of shares in drugmaker Bristol-Myers Squibb, according to a report by Reuters news agency.

The agreement is the latest settlement in a raft of lawsuits involving the litigation-ridden bank. Last month, Deutsche Bank cleared its biggest legal hurdle, agreeing to pay up $7.2 billion to resolve a U.S. Justice Department investigation into mortgage-backed securities. That figure was half the $14 billion the United States initially sought in September to settle the claims. If approved, the agreement would allow the bank's Chief Executive John Cryan some breathing room to focus on the bank's future strategy instead of the mountain of legal cases that have weighed on the bank's profits and shares.

The bank still faces many other regulatory investigations and lawsuits, including a money-laundering investigation in Russia.

In its 2016 annual report, Deutsche Bank's recap of its most important legal risks took 18 pages. To date, the bank has set aside €5.5 billion, about $6.2 billion, to cover fines related to legal issues.

Earlier on Wednesday, Handelsblatt learned from sources in the financial industry that Peter Hazlewood, the head of the bank's internal unit tasked with fighting money laundering, would leave the lender after only 6 months on the job.

It’s still unclear why exactly Deutsche has decided on a leadership change at its financial crime unit. Mr. Hazlewood will remain at the bank in a different capacity. His successor will be named soon.

German’s largest financial institution has sought to strengthen Mr. Hazlewood’s unit over the past year in the wake of a money-laundering scandal in Russia. Deutsche clients in Moscow allegedly laundered €10 billion through the bank’s offices in London. American, British, German and Russian authorities are all investigating the case.

 

Tina Bellon is an editor for Handelsblatt Global. To contact the author: [email protected]