Deutsche Bank Reorganization Results in New Compliance Chief

Sam Schwab

Associate Editor

Loyola University Chicago School of Law, JD 2024

 

Deutsche Bank, the multinational investment banking and financial services company, will name Laura Padovani as its new Chief Compliance Officer. The move comes as part of a broader reorganization in the company’s compliance division, taking place in the aftermath of regulatory investigations in the United States and Germany. The regulatory investigations of Deutsche Bank over the last several years concern the organization’s questionable practices as it relates to money laundering and other offenses. The investigations also involve massively high-profile individuals, such as Jeffrey Epstein and Donald Trump.

Deutsche Bank’s reorganization

Padovani is set to join Deutsche Bank as its chief compliance officer and head of compliance on April 1, 2023, according to an internal memo obtained by the Wall Street Journal. Padovani will be replacing Pascal Tagné, who has been in the position for the past two years and has been with the company for the past six. Tagné will now take on the role of deputy chief compliance officer, based in Singapore, overseeing regulatory compliance in the Asia-Pacific region. The current deputy chief compliance officer, one Mr. Graham Kent, will now lead the business selection and conflicts office, according to the internal memo.

 

Before being selected as compliance chief, Padovani gained nearly three decades of experience in regulatory compliance at other major global financial institutions, including Barclays and American Express. She was tapped by Deutsche bank likely because of her “experience of implementing change” and mitigating financial-crime liability at other international financial institutions. Padovani will be based in London with a presence in the company’s Frankfurt headquarters, according to the memo.

 

The bank’s relationship with former President Donald Trump

Having multiple business ventures fail spectacularly, like the bankruptcy of the “Trump Taj Mahal” hotel and casino in Atlantic City, hardly any lenders in the United States wanted to become involved with Donald Trump. It appeared that lending money to Donald Trump was a terrible investment because he never paid his vendors back nor had he any skill in managing and running business. That is why it raised red flags galore when one bank, Deutsche Bank, continued to do business with Trump.

 

As an expose in New York Time Magazine put it, Deutsche Bank gave, “huge loans to finance Trump’s construction and renovation of landmark Manhattan skyscrapers, at a time when the default-prone real estate developer and casino magnate was no longer able to get loans from most mainstream financial institutions.”  Over two decades, the bank loaned Trump more than $2 billion, helping cement its reputation as a “reckless institution willing to do business with clients nobody else would touch.” The article also explains that the bank facilitated introductions between Trump and Russian oligarchs and helped the oligarchs launder “billions of dollars.” These shady practices garnered the attention of law enforcement and financial regulators. Deutsche Bank’s sketchy practices and unthinkable lendees is likely what has led to its current shake up in the compliance department.

 

Scrutiny of the bank’s dealings with Epstein

Deutsche Bank’s legal troubles surrounding entanglements with disgraced financier and serial sexual predator Jeffrey Epstein remain ongoing. Last month, Deutsche bank moved to dismiss charges, brought by victims’ of Epstein’s, that the bank continued to do business with Epstein even though they knew about his sex trafficking operation. Lawyers for the unnamed victims claim that the bank helped expand and perpetuate Epstein’s “sex trafficking ring” by continuing to do business with him. Epstein was a client of Deutsche bank from 2013 to 2018. While the lawsuit, taking place in New York, is ongoing, Deutsche bank has already paid out $150 million to the New York Department of Financial Services in 2020 for failing to properly scrutinize its dealings with Epstein. Epstein committed suicide in his New York jail cell in 2019.

 

Will the reshuffling of Deutsche Bank’s compliance team be enough?

The fact is that Deutsche Bank has been bleeding money over criminal and regulatory compliance investigations into its alleged and proven misconduct. It should thus come as no surprise that the institution continues to experiment with reorganizing its compliance department. However, it remains to be seen whether the reorganization will be enough to overcome the shady practices that appear to be institutionalized at Deutsche Bank.