Deutsche Bank is aiming to reach an amicable agreement with a former top executive in China who had been accused of misappropriating bank funds.
The ex-employee, Zhang Hongli, purposefully deceived the bank at the time, said a spokeswoman for Deutsche Bank in Hong Kong. “We are trying to get the funds back,”she said.
The case has attracted considerable attention in the Chinese banking world.
Mr. Zhang, after leaving Deutsche Bank, has since become senior executive vice president at Industrial and Commercial Bank of China (ICBC), the leader in the Chinese market and by market value one of the largest financial institutions in the world.
After filing a lawsuit against its former employee at a court in Hong Kong in mid-August, Deutsche Bank has suddenly changed course and is now looking to settle, according to sources inside the company. Instead of seeking $6.2 million including interest, they are demanding the original $3.9 million to avoid a trial.
There could be several reasons for the change.
Mr. Zhang is currently one of the most powerful bankers in China. He is a member of the Chinese People’s Political Consultative Conference, a high-level political advisory body on par with the Chinese legislature. Mr. Zhang and his new employer reportedly sent the message that they did not appreciate the uproar over the alleged misuse of funds.
In addition, there is increasing doubt over whether or not the leadership at Deutsche Bank was really uninformed about Mr. Zhange’s activities at the time. “Everything I did was legal, and I will clear up the discrepancies with Deutsche Bank through regular channels,” Mr. Zhang told the Chinese business publication Caixin.
His supporters have told the Chinese media that in those days Mr. Zhang’s contacts were most welcome at the German bank and opened many doors. Mr. Zhang was indisputably a master of arranging lucrative deals the Chinese market.
The controversial transfer in question to the Hong Kong-based company Harperskille was reportedly a commission for landing a fat contract. According to the South China Morning Post newspaper, one of Mr. Zhang’s relatives was a major shareholder in the company.