Credit Suisse saga exposes banker-surveillance state

Bloomberg

The scene: a street in Zurich. The mark: a wealthy Swiss banker. His pursuers: hired goons looking for intel.
It sounds like something ripped from John Le Carre. In fact, it’s real-life — and not all that unusual in the world of high finance.
News that Credit Suisse Group AG had hired private investigators to tail a star banker who’d defected to a rival has captivated the hush-hush world of Swiss banking. The ensuing scandal has reached the very top of the firm and, in all likelihood, heads will roll.
Yet no one in finance should be under any illusions. Banks spy all the time. The only difference? Credit Suisse got caught, and publicly so.
Call it the banker-surveillance state — a phenomenon probably as old as banking itself. From Deutsche Bank AG to Spain’s BBVA and even Barclays, firms have long turned to a range of techniques to gather corporate intelligence and protect their talent and client lists. But the line between safeguarding intellectual property and carrying out vendettas can, at times, be blurry.
“Surveilling employees who are getting ready to leave the company is a dog-eared page in the playbook,” said Mary Inman, a partner with law firm Constantine Cannon in London who
specialises in employee whistle-blower cases. “What’s remarkable about the current situation is that it got so heated.”
Beyond the business-as-usual monitoring of emails and chats, banks often step up scrutiny of records once top employees leave.
Suspicions of wrongdoing can prompt forensic reviews of messages, documents and phone logs. Some banks hire external intelligence firms to scour public records for indications that the departing person may be gearing up to start a rival business — and possibly breach a non-compete or try to poach former colleagues.
But the situation at Credit Suisse, which is playing out against the backdrop of a personal rift between the departed banker and CEO TidjaneThiam, appears to be a step beyond common procedure, prompting questions about internal controls. But, it’s hardly the first of its kind.
A decade ago, German prosecutors investigated potential data protection violations at Deutsche Bank after bank officials on several instances hired private eyes to spy on board members, a shareholder and an individual. The lender fired two executives over the matter.
In 2014, HSBC Holdings Plc was fined by a Brazilian court for using private investigators to spy on 152 employees on medical leave. The investigators entered some employees’ houses without permission to film and take pictures, attempting to corroborate suspicions among some at the bank that they were fraudulently collecting medical-leave benefits. The court said those actions invaded people’s privacy.
And Spanish bank BBVA is currently investigating reports that bank officials hired a detective agency in 2005 to tap the phones of senior managers, regulators, politicians and journalists as part of a high-stakes power struggle in the executive suite. Drastic measures are taken to address matters of a more personal nature.
Credit Suisse’s Thiam is now wrapped up in a perilous situation. Tensions between the CEO and Iqbal Khan, a 43-year-old rainmaker who led the bank’s international wealth management division, escalated in January. The two men argued during a party at Thiam’s house in the upscale neighborhood of Herrliberg outside Zurich.