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Credit Suisse C.E.O. Tidjane Thiam to Step Down After Spying Scandal Credit Suisse C.E.O. Tidjane Thiam Exits After Spying Scandal
(about 7 hours later)
Credit Suisse said on Friday that its chief executive, Tidjane Thiam, will step down, the biggest casualty of a corporate spying scandal that has tainted the Swiss bank’s reputation since it first emerged in October. They were two top executives at the same bank, living next door to each other. One day, they got into an argument over trees on one person’s property. A year later, it has ended badly.
Mr. Thiam will resign on Feb. 14 after presenting the bank’s latest financial results, the company said. He will be succeeded by Thomas Gottstein, a longtime veteran of the company who leads its Swiss operations. On Friday, Tidjane Thiam announced his resignation as chief executive from Credit Suisse, brought down over a spying scandal involving his next-door neighbor, the bank’s former head of wealth management, Iqbal Khan.
Mr. Thiam, who joined the Zurich-based bank in 2015 with a charge of turning the company around, was cleared of wrongdoing in the spying scandal involving a former employee last year. The Swiss bank hired Mr. Thiam in 2015 to help turn the company round. But his well-publicized falling out with Mr. Khan, who accused the company of spying on him after he left for a rival, UBS, has prompted resignations, as well as criminal and regulatory investigations, and tainted the reputation of Credit Suisse and the Swiss finance industry.
But since then, more reports about surveillance efforts have emerged in the press, raising questions about their extent and why Mr. Thiam was not aware of them. The bank has been in the grip of a high-powered tussle, as some shareholders threw their support behind the chief executive and demanded the resignation of the chairman, Urs Rohner. Mr. Thiam, who has been credited with improving the bank’s financial position, has now become the biggest casualty of the scandal.
At the same time, Credit Suisse is being investigated by the Swiss Financial Market Supervisory Authority for the surveillance activities. The dispute between two men, who had homes in the Lake Zurich area, stemmed from an argument Mr. Khan had with Mr. Thiam’s partner over some trees on the Thiam property, according to news reports. This disagreement was eventually followed by Mr. Khan’s departure for UBS.
Mr. Thiam on Friday maintained again that he knew nothing of the spying efforts. “I had no knowledge of the observation of two former colleagues,” he said in a statement. After he left Credit Suisse, the company began surveillance of Mr. Khan to see if he was trying to poach employees or clients, which would have been a breach of his Credit Suisse contract.
“It undoubtedly disturbed Credit Suisse and caused anxiety and hurt,” he added. “I regret that this happened, and it should never have taken place.” But the investigation turned messy after Mr. Khan confronted the corporate spy outside a Zurich restaurant in mid-September last year.
During his tenure, Mr. Thiam managed to steady profit at the bank, where a drive for revenue at any cost had pushed traders to take outsize positions in risky and hard-to-sell securities. Mr. Rohner, the chairman of the board, credited him with Credit Suisse’s “very solid foundation” in a statement on Friday. Mr. Khan filed a criminal complaint, which prompted an investigation by Zurich’s public prosecutor. The spying efforts had not produced any evidence that Mr. Khan was trying to poach employees or clients.
Mr. Thiam turned Credit Suisse away from the volatility of its investment bank by embracing its more reliable wealth management division. That strategy appeared to be working: The bank reported a doubling of profit in the third quarter of last year. The surveillance activities also prompted an investigation of Credit Suisse by the Swiss Financial Market Supervisory Authority.
But the department that had helped this turnaround produced an embarrassing episode of corporate surveillance, which led to the resignation of the bank’s chief operating officer, Pierre-Olivier Bouée, in October. Credit Suisse started its own inquiry, conducted by an outside law firm, which found the spying had been ordered by the bank’s chief operating officer, Pierre-Olivier Bouée, who resigned in October after the finding. The inquiry found that Mr. Thiam and other executives had not been aware of the surveillance effort.
Mr. Bouée had ordered Credit Suisse’s head of security services to track Iqbal Khan, its former head of wealth management, who had left the bank for a competitor, UBS, after a personal disagreement with Mr. Thiam.
Mr. Khan was followed in order to see if he was trying to poach employees or clients, which would have been a breach of his Credit Suisse contract. But the investigation turned messy after Mr. Khan confronted the corporate spy outside a Zurich restaurant in mid-September last year.
Mr. Khan then filed a criminal complaint, which led to an investigation by Zurich’s public prosecutor. The spying efforts had not produced any evidence that Mr. Khan was trying to poach employees or clients.
An investigation commissioned by Credit Suisse, conducted by an outside law firm, found that Mr. Thiam and other executives had not been aware of the surveillance effort. In October, Mr. Rohner said, “We strongly reject any and all assertions made over the last days that call into question the personal and professional integrity of our C.E.O.”
But the incident was damaging for the bank, which had spent years trying to put its house in order, only to be faced with questions about whether its chief executive was out of the loop on a corporate spying effort and, if he was, what else might be happening under his management that he did not know about.But the incident was damaging for the bank, which had spent years trying to put its house in order, only to be faced with questions about whether its chief executive was out of the loop on a corporate spying effort and, if he was, what else might be happening under his management that he did not know about.
Then in December, the Swiss newspaper Neue Zuercher Zeitung reported that Peter Goerke, a former head of human resources at Credit Suisse, had been followed just before he left the management board, an indication that the surveillance of Mr. Khan was not an isolated incident. The same month, another former executive, Colleen Graham, said that she believed she had been surveilled in 2017 in retaliation for her stance on an accounting issue, according to The Wall Street Journal. Before long, more reports about spying emerged in the news media.
Earlier this month, another Swiss newspaper, SonntagsZeitung, reported that Credit Suisse had also spied on Greenpeace, after the environmental group disrupted the bank’s annual shareholder meeting in 2017. In December, the Swiss newspaper Neue Zuercher Zeitung reported that Peter Goerke, a former head of human resources at Credit Suisse, had been followed in February 2019, just before he left the management board. And another former executive, Colleen Graham, said that she believed she had been surveilled in 2017 in retaliation for her stance on an accounting issue, according to The Wall Street Journal.
The bank declined to comment on the more recently reported incidents of spying on Friday. When the case with Mr. Khan became public, Mr. Rohner admitted that the scandal had tarnished both the reputation of the bank and Swiss banking. Earlier this month, another Swiss newspaper, SonntagsZeitung, reported that Credit Suisse had spied on Greenpeace after the environmental group disrupted the bank’s annual shareholder meeting in 2017.
The company will hand the reins to a familiar executive in Mr. Gottstein, who has been at the firm for more than 20 years and has worked in the investment banking and private banking divisions. The bank on Friday declined to comment on the more recently reported incidents of spying.
“Based on his deep and comprehensive experience in our business and in view of his impressive performance as head of our Swiss bank and his respect amongst our clients and employees, Thomas Gottstein is excellently positioned to lead Credit Suisse into the future,” Mr. Rohner said. The storm of questions put the bank in the grip of a high-powered tussle, as some shareholders threw their support behind the chief executive and demanded the resignation of the chairman, Urs Rohner.
Credit Suisse shares fell on Friday after Mr. Thiam’s resignation was announced. On Friday, Mr. Thiam maintained again that he “had no knowledge” of the spying efforts. “It undoubtedly disturbed Credit Suisse and caused anxiety and hurt,” he said in a statement. “I regret that this happened, and it should never have taken place.”
During his tenure, Mr. Thiam managed to steady the bank profits, where a drive for revenue at any cost had pushed traders to take outsize positions in risky and hard-to-sell securities. He turned Credit Suisse away from the volatility of its investment bank by embracing its more reliable wealth management division. That strategy appeared to be working: The bank reported a doubling of profit in the third quarter of last year.
Mr. Rohner, the chairman of the board, credited him with Credit Suisse’s “very solid foundation” in a statement on Friday.
Mr. Thiam will step down on Feb. 14 and hand over the reins to Thomas Gottstein, a longtime veteran of the company who leads its Swiss operations.