Legal News

Spying Probe at Deutche Bank Leads to Fall of Two Execs

By Ashby Jones

Remember the big Hewlett-Packard scandal from 2006? It feels like so many moons ago — and indeed it was — but it took up a lot of the Law Blog’s bandwidth back in September of that year. The quick version: H-P chairwoman Patricia Dunn hired investigators to retrieve the phone records of board members in an effort to plug a press leak. Those investigators did so by using fake identities. Dunn, in turn, used the information to attempt to find out the source of the leaks. The scandal resulted in the resignation of Dunn as chairman and board member director George Keyworth, as well as several H-P executives.

Having set up that backdrop, let’s turn our sights eastward, to Germany, where something not dissimilar is happening. The country’s Deutsche Bank AG has dismissed two top executives following an internal investigation into whether the company conducted surveillance on a board member and others, people familiar with the matter said. Click here for the WSJ story.

The dismissals are fallout from an internal probe at Deutsche Bank stemming from incidents the bank disclosed in May, after discovering activities involving the bank’s corporate security department.

In one incident, the bank used private detectives to determine whether there was a link between an activist shareholder and an German media mogul Leo Kirch; according to a person familiar with the matter. Other targets included were Gerald Herrmann, a former member of the bank’s supervisory board suspected by the bank of leaking information and Hermann-Josef Lamberti, Deutsche Bank’s chief operating officer.

The 2006 and 2007 incidents involved the other targets. In the case of Lamberti, the company allegedly hired private detectives to determine whether the COO had adequate security measures in place. For example, the detectives tried — unsuccessfully — to plant a GPS device on Lamberti’s car. They also sent flowers to his home with a dead microphone hidden in the arrangement to see if he would notice it.

A Deutsche Bank spokesman said that the surveillance incidents were all isolated, not a systemic program hatched to collect information about executives or corporate enemies. A spokesman also said that the incidents don’t involve client data.

Indeed, so far, the incidents at Deutsche Bank appear to be more limited in scope — and more random in what the company went after — than the H-P scandal. Still, they’ve made waves in Germany, where the protection of privacy is sacrosanct following the legacy of the East German secret police, which routinely spied on citizens.

For all those LB readers looking for a U.S.-legal angle, take note: the investigation was conducted by Cleary Gottlieb Steen & Hamilton. The probe focused on four incidents, stretching from 2001 to 2007, in which the bank contracted with outside firms that monitored people affiliated with the firm, according to a person familiar with the matter.

Full post as published by Law Blog - WSJ.com on July 21, 2009 (boomark / email).