Deutsche Bank disclosed in its annual report Friday the Department of Justice determined the financial institution breached its obligations under a 2021 deferred prosecution agreement (DPA).
The Justice Department found the bank “violated the 2021 DPA based on untimely reporting by the bank of certain allegations relating to environmental, social, and governance (ESG)-related information at the bank’s subsidiary, DWS Group,” according to the filing. The term of an independent compliance monitor at Deutsche Bank has been extended until February 2023 as the result of a new agreement between the bank and the Justice Department.
The Justice Department learned of the violation in an August report from the Wall Street Journal, according to the newspaper. The report quoted DWS’s former sustainability chief discussing how the bank was overstating its ESG investing efforts.
Case background: In January 2021, Deutsche Bank agreed to pay more than $130 million to resolve bribery and spoofing charges brought by the Justice Department, Securities and Exchange Commission (SEC), and Commodity Futures Trading Commission. Between 2009 and 2016, Deutsche Bank violated the Foreign Corrupt Practices Act (FCPA) by paying more than $7 million to business development consultants in China, the United Arab Emirates, and Saudi Arabia, according to the Justice Department and SEC.
As part of the settlement, Deutsche Bank entered a three-year DPA with the Justice Department. However, rather than calling for the appointment of a new independent compliance monitor, the agency agreed to have the bank be overseen by the independent monitor that was still in place in accordance with a 2015 settlement of the bank’s manipulation of the London Interbank Offered Rate (LIBOR).
In its annual filing, Deutsche Bank said it agreed on Feb. 28 to extend the existing monitorship and will abide by the terms of the DPA through February 2023 “to allow the monitor to certify to the bank’s implementation of the related internal controls.”
Deutsche Bank added the Justice Department “has reserved all rights to take further action regarding the 2021 DPA if it deems necessary.”