In order to resolve allegations made by the Financial Conduct Authority (FCA) that Julius Baer International (JBI), a U.K.-based investment and wealth management subsidiary of the Swiss-based Julius Baer Group, paid bribes to get business with a Russian oil company, JBI will pay more than 18 million pounds (U.S. $21.5 million).
hree of JBI's former workers, Louise Whitestone, Thomas Seiler, and Gustavo Raitzin, opted to have their claims heard in court despite JBI's agreement to settle with the FCA, the regulator reported in a press release on Wednesday.
JBI was accused by the FCA of failing to take "reasonable care to organize and control its affairs," in addition to failing to conduct business with integrity. The company was criticized for not being "open and cooperative" with the regulator due to the two-year delay in disclosing the alleged bribery scheme.
Even yet, it received a cut from a nearly £24.5 million (U.S. $29 million) penalty for resolving quickly.
A finder's fee deal between JBI and a worker of Yukos, a now-defunct Russian oil business, is the basis of the FCA's accusations. According to the regulator's final notice, JBI allegedly paid Yukos employee Dimitri Merinson over $3 million over a number of years to divert significant foreign exchange transactions to JBI, resulting in "unusually high levels of commission."
According to the FCA, the infractions happened between 2007 and 2014. Senior management at JBI was informed in 2012 of internal concerns that the company's finder's fee agreement with Merinson might amount to bribery.
"Despite these concerns being raised, JBI failed to report them to the authority and continued to discuss doing further business with Mr. Merinson and other Yukos representatives until March 2014," according to the FCA's notice. The suspected bribery scheme was not reported by JBI to the FCA until May 2014.
"There were obvious signs that the relationships here were corrupt, which senior individuals saw and ignored. These weaknesses create the circumstances in which financial crime of the most serious kind can flourish," according to FCA Executive Director of Enforcement and Market Oversight Mark Steward.
The UK's Upper Tribunal will review the FCA's rulings regarding the people it claimed were complicit in the scam.
Whitestone is charged with negotiating the finder's fee arrangements with Merinson while working as a relationship manager for JBI's Russian and Eastern European Desk in London. The arrangement is said to have been approved by Seiler, who served as the sub-regional market head for Russia and Eastern Europe at Bank Julius Baer (BJB) in Switzerland from 2008 to 2014. The first two payments to Merinson allegedly received approval from Raitzin, who served as BJB's regional director for Latin America, Spain, Russia, Central and Eastern Europe, and Israel from January 2010 to March 2011.
JBI issued a statement noting that it "deeply regrets and apologizes for the events and shortcomings that led to today’s final notice." The company shared the findings of its own internal inquiry into the alleged plan as part of its cooperation with the investigation.
"This independent investigation informed the FCA’s findings and has led to significant changes to the company’s leadership, governance, systems, and processes, including that JBI no longer accepts any finders’ business," according to the statement.
By fLEXI tEAM