Deutsche Bank Accused of Bribery in London Lawsuit

Stichting Vestia, a Dutch affordable-housing provider that nearly collapsed as a result of derivatives losses, is suing Deutsche Bank AG, saying the bank is responsible for bribery.

The bank paid 3.5 million euros ($3.9 million) in commissions to a Dutch company, First in Finance Alternatives, Vestia alleges. About 1.75 million euros of that went to Vestia’s treasury and control manager Marcel de Vries, who single-handedly conducted Vestia’s derivatives trading, the housing group said.

The bank may have paid commissions to First in Finance Alternatives — referred to as FIFA — at De Vries’ personal request, Vestia said in court filings for a hearing in London on Wednesday, where it accuses the bank of “wining and dining and entertaining him to an excessive degree.” De Vries and Arjan Greeven, an intermediary who traded under FIFA’s name, were convicted of bribery in the Netherlands last year.

The bank either knew or suspected that De Vries was benefiting from fees paid to FIFA, and “dishonestly continued to pay commission nonetheless,” Vestia said. In any case, the bank used FIFA as an agent to encourage transactions involving the housing group, so is “vicariously liable” for bribes paid by FIFA, Vestia said.

No one at Deutsche Bank knew about the bribery, the bank said in its filings for the case. It said the lawsuit is a “strained and unsustainable attempt” by Vestia “to recover the losses on its derivatives by any means, including by creating a fallacious link between those losses and the separate matter of FIFA’s bribery of Mr. De Vries.”

“Vestia’s allegations are without basis and we deny them in the strongest terms,” a Deutsche Bank spokeswoman said Wednesday.

Trading Losses

Vestia lost more than 2 billion euros on derivatives trades, of which “a substantial part” came from trading with Deutsche Bank, it said in its filings. The lawsuit aims to recoup some of that money on the grounds that the bribes meant some transactions were flawed. It’s seeking 840 million euros in damages. Commissions paid to FIFA “were being priced in by Deutsche Bank and paid at Vestia’s expense,” the housing group said.

Vestia’s bribery case stems from its discovery that De Vries was taking a share of the fees that Arjan Greeven, an intermediary trading under the name “FIFA,” received from various banks in connection with Vestia’s trading, according to the bank’s filings.

Greeven “confessed his wrongdoing to the Dutch authorities in March 2012,” and in July 2018, he and De Vries were convicted of bribery in the Netherlands, the document said. They are appealing in the case.

Phone numbers for Greeven and FIFA no longer worked, Bloomberg found when trying to reach them. No information on FIFA was available at the Dutch Chamber of Commerce.

FIFA appeared to Deutsche Bank “to be a reputable and well-regarded independent intermediary,” the bank said in its filings. The bank “knew nothing about Mr. Greeven’s secret arrangements with Mr. De Vries.” Vestia has already tried to persuade Dutch authorities to prosecute Deutsche Bank employees over the allegations, the bank said, but there haven’t been any charges or prosecution.

Champagne, Vodka

The scale of the derivatives trading between Deutsche Bank and Vestia was “colossal,” with the notional principal peaking at almost 3 billion euros by September 2011, Vestia said. The trades were “beyond Vestia’s capacity and beyond the authority of its officers,” it said.

Deutsche Bank took De Vries to Michelin-starred restaurants and to Boujis, an exclusive London nightclub, where a group drank bottles of vodka and Dom Perignon champagne, according to the housing group’s filings. That club is popular with younger members of the British royal family, “some of whom have made the transition to responsible parenthood,” Vestia’s lawyer Rhodri Davies said in court Wednesday. After the nightclub trip, De Vries entered into new Deutsche Bank trades, Vestia said.

“A tenant of Vestia, or a Dutch taxpayer, could reasonably question whether Mr. De Vries was motivated solely by the best interests of Vestia when he traded with Deutsche Bank while being entertained by them at a cricket match or shortly after dinner and a night out at Boujis,” Vestia said.

Bloomberg | May 8, 2019
https://www.bloomberg.com/news/articles/2019-05-08/deutsche-bank-accused-over-bribery-in-vestia-derivatives-lawsuit