Julius Baer to withhold former CEOs bonuses for poor oversight during scandals: FT

October 23, 2020.
Former Julius Baer CEO Boris Collardi. (Richter Frank-Jurgen/Creative Commons)

Former Julius Baer CEO Boris Collardi. (Richter Frank-Jurgen/Creative Commons)

Swiss private bank is seeking to withhold a total of more than CHF 5 million (about $5.5 million) in deferred pay from two former chief executives who oversaw the bank during South American money-laundering scandals, the Financial Times reported Friday.

The bank is planning to withhold more than CHF 2.5 million each (roughly $2.7 million) from Boris Collardi, who was CEO from 2009 to 2017, and Bernhard Hodler, a 22-year veteran of the bank who was CEO from 2017 to 2019. The amounts have not been finalized, and the penalty against Collardi is set to include a deferred cash component of CHF 1.3 million (nearly $1.44 million), the publication said.

Citing people familiar with the matter, the Financial Times said the decision against Collardi was made after an internal investigation determined that he failed to properly oversee the bank. Collardi left in 2017 to join Pictet, another Swiss private bank. Because he joined a competitor, he had already given up his deferred pay in shares, according to FT. 

Again citing people familiar with the matter, the paper said that the penalties against Collardi and Hodler would have been higher but are limited to a certain percentage of their pay in specific years because of company rules.

Julius Baer did not respond to a request for comment from Fastinform outside business hours in Switzerland. 

The bank has been considering a wealth-management expansion in the U.S. and Latin America, and has already made moves in such major Latin American markets such as Brazil. 

But its expansion efforts have been hampered by regulatory sanctions it received in February, when the prohibited the bank from conducting “large and complex” acquisitions in Latin America after finding that it “fell significantly short” in preventing money laundering in the region between 2009 and 2018, a period that covers Collardi and Hodler’s tenures.

Former Julius Baer banker Jose Luis Arzuaga pleaded guilty in 2017 to the transfer of bribes among South American officials of FIFA, the world soccer federation. In 2018, former Managing Director and Vice Chairman Matthias Krull pleaded guilty for his role in a billion-dollar scheme to launder funds embezzled from Venezuelan oil company Petróleos de Venezuela, or PDVSA. Krull said that the conspiracy began in December 2014 and that he became part of it in or around 2016, according to the U.S. Department of Justice.

Julius Baer said in September that it is in talks with the DOJ to settle a case against the firm itself related to FIFA money laundering, which stems from a DOJ corruption investigation in 2015.

Philipp Rickenbacher, who succeeded Hodler as CEO, has worked to distance the bank from the FIFA scandal and other regulatory investigations. And in a letter sent to shareholders in April, Romeo Lacher, the bank’s chairman of the board, said that Julius Baer has taken several measures to improve its risk culture, including completely overhauling its Latin American strategy, appointing a new chief risk officer in early 2018 and making changes to senior management in risk and compliance functions. 

— Additional reporting by Zack Fishman and Beth Newhart