Shareholder Advisors Call For Special Audit At Deutsche Bank
Advisory group Institutional Shareholder Services (ISS) called on Wednesday for an independent audit into the conduct of Deutsche Bank’s management in handling scandals that include the manipulation of Libor and Russian trades.
Deutsche Bank, which has conducted its own investigation over poor conduct and has faced a litigation bill worth 15 billion euros (US$16.37 billion), previously rebuffed requests for another audit and has urged investors to look to the future.
It declined to comment after Wednesday’s statement by ISS.
The idea of an independent or special audit, first proposed by small shareholder Marita Lampatz, won backing last week from Glass Lewis, another proxy voting firm which like ISS advises shareholders how to vote.
The two firms could force the issue if the proposal wins support at the bank’s annual general meeting on May 18.
A similar call for a special audit of management’s handling of some of Deutsche Bank’s largest litigation cases received 46.4 percent of votes at last year’s shareholder meeting, narrowly missing the majority needed to push it through.
Deutsche Bank has settled major litigation cases that include scandals over the sale of toxic mortgages and sham Russian trades. A probe into alleged violations of U.S. sanctions on countries such as Iran is pending and the bank expects to conclude that by the end of 2017.
Deutsche Bank agreed last year to settle the case over alleged manipulation of interbank rates such as Libor for a record US$2.5 billion with U.S. and British authorities, which had accused the bank of obstructing their investigation.
Some shareholders say fines for interest rate manipulation could have been 100 million pounds (US$129 million) less if management had provided appropriate information to Britain’s Financial Conduct Authority.
They also said Deutsche was slow to improve its reporting and risk management, while the roughly US$2.5 billion in fines connected to the Libor fine damaged the bank’s reputation and its business.
The shareholders said the Russia trading case also showed the bank did not have an effective anti-money laundering program.
Deutsche Bank’s probe cleared Chairman Paul Achleitner of accusations that he was partly to blame for poor cooperation with authorities investigating rate manipulation.
“Considering the chairman’s potential involvement in the wrongdoing and the bank’s refusal to disclose details of the results of the investigations, there are significant doubts about the supervisory board’s ability to investigate potential wrongdoing by its own members,” ISS said.
ISS said a special audit could lay such concerns to rest.
Glass Lewis advised shareholders to refrain from ratifying the actions of Deutsche’s top executives and supervisory board members for last year. ISS said a such vote was not warranted.
Votes to ratify the decisions by company bosses are customary in Germany and are an opportunity for shareholders to express confidence in their leadership. But such votes do not release individuals from liability for their actions.