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Credit Suisse under fire as Swiss watchdog steps up snooping scrutiny

By Brenna Hughes Neghaiwi

ZURICH (Reuters) – Switzerland’s bank watchdog is stepping up an inquiry into staff surveillance at Credit Suisse <CSGN.S>, it said on Friday, as pressure mounts on the bank to explain a second alleged instance of an executive being tailed.

Credit Suisse said on Tuesday it was looking into a report by a Swiss newspaper that its then-human resources boss was followed by private detectives in February. The report revived concerns about its practices after a similar surveillance operation uncovered in September rocked Switzerland’s financial center and prompted the ousting of one of Chief Executive Tidjane Thiam’s long-term associates.

Last week the Wall Street Journal reported that a former executive at a Credit Suisse joint venture told top bank executives as well as U.S. and Swiss authorities that she was put under surveillance in 2017 while in a dispute with the bank.

“The observation activities carried out by Credit Suisse raise various compliance issues,” financial market supervisor FINMA said in a statement on Friday. “FINMA’s ongoing investigations of this matter will now be stepped up with the help of an independent auditor.”

Credit Suisse in October cleared its CEO of snooping on star wealth manager Iqbal Khan after he left the bank for arch-rival UBS <UBSG.S>, in an incident that badly damaged the second-biggest Swiss bank’s reputation and which its board described as “wrong and disproportionate”.

Khan, 43, went to the police after a Sept. 17 confrontation with at least one detective who was shadowing him and his wife as they drove through Zurich.

The emergence of a second alleged case of surveillance, reported in detail in Swiss newspaper Neue Zuercher Zeitung (NZZ) earlier this week, comes as an embarrassment after its chairman said the bank did not condone surveillance of employees. An investigation ordered by the bank into the first case of snooping said it had found no evidence Credit Suisse had ordered observation of other employees.

The probe conducted by law firm Homburger found only two employees — then-Chief Operating Officer Pierre-Olivier Bouee and the security boss under him, who both resigned — knew of the surveillance of Khan, which prompted a criminal investigation that remains ongoing.

“Of course I didn’t know. I hesitate to say it, but it happens in international companies that one has to do these kind of things,” Thiam said in a later interview with Swiss broadcaster RTS. “But it’s a legitimate weapon that the bank sometimes unfortunately has to use to protect its business.”

A senior officer working in the business intelligence industry who asked not to be named said spying on employees was “very, very rare” in Switzerland and should only be conducted with a very high level of approval within a company.

“It is very sensitive and it can be very damaging if it gets into the public domain,” he said.

Following FINMA’s statement on Friday, Credit Suisse said it was nearing the completion of its own investigation and would publish the results on Monday.

“Credit Suisse will continue to fully cooperate with FINMA,” it said.

(Reporting by Brenna Hughes Neghaiwi; additional reporting by John Revill and John O’Donnell; Editing by Hugh Lawson, Louise Heavens and Catherine Evans)


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