News

Swiss regulator gives the former CEO a telling off following the PDVSA money-laundering scandal.

22/01/2021

The UK FT reported [JANUARY 2021] the former chief executive of private bank Julius Baer, Boris Collardi, has been formally reprimanded by Switzerland's market regulator for his role in connection with a sweeping South American money-laundering scandal.

BACK STORY - February 2020
  1. The Swiss Financial Market Supervisory Authority (Finma) found that Julius Baer fell significantly short in combating money laundering between 2009 and early 2018.
  2. The shortcomings arose in connection with alleged cases of corruption linked to
    • Petróleos de Venezuela SA (PDVSA), an oil company, and
    • FIFA, the world soccer federation,
  3. Finma instructed Julius Baer to
    • Undertake effective measures to comply with its legal obligations in combating money laundering and rapidly finalise the measures.
    • Change the way it recruits and manages client advisers and
    • Adjust remuneration and disciplinary policies.
  4. https://www.internationalinvestment.net/news/4011100/finma-penalises-julius-baer-money-laundering
MEDIA RELEASE - Julius Baer Group Ltd. - Zurich, 20 February 2020
  1. Closure of FINMA enforcement proceedings - Julius Baer greatly enhances risk control and compliance
  2. https://www.juliusbaer.com/index.php?eID=dumpFile&t=f&f=65448&token=2d0d108589bb8fb7b9425d52f531c24cf0d7a2b7
Backstory - "PROJECT ATLAS" - 2018
  1. A case-by-case review of all the lender's accounts — internally dubbed "Project Atlas" — was completed just over a year ago at the cost of SFr87m.
  2. The bank undertook a comprehensive programme over the last two years to strengthen its global risk management, and made new appointments to key and leadership positions. This programme addressed many of the weaknesses identified by Finma. Further investments and measures are being implemented with high priority.
  3. The documentation standards for client data and active client relationships have already been further developed and improved. Both the front office and the control units were extensively involved in this project ('Atlas'), which was completed on schedule in late 2019, to ensure that the associated cultural transformation would be embedded in the organisation with lasting effect.
  4. Meanwhile, a separate internal review into Mr Collardi's tenure resulted in October's decision to withhold SFr2.5m in deferred pay owed to its former boss.
  5. https://www.bnnbloomberg.ca/swiss-bank-cleans-house-after-scandals-1.1144433
IN A STATEMENT JANUARY 2021, FINMA SAID
  1. it had concluded a long-running probe into four former employees of Julius Baer.
  2. It focused on almost a decade of "serious shortcomings" in compliance measures over the handling of dirty money from Venezuela's state-owned oil company, Petróleos de Venezuela (PDVSA).
  3. And a parallel investigation into corruption relating to the governing body of world football, Fifa — was concluded last February.
WHAT THE FINMA SAYS
  1. As a result of the scandal, Finma has also issued a harsh rebuke, with an indefinite ban on acquisitions, and the installation of a Finma-appointed independent auditor to monitor corrective action at the bank's Zurich headquarters.
FINMA SAID ITS INVESTIGATION HAD FOCUSED ON FOUR INDIVIDUALS.
  1. It has sent formal written reprimands to two of them [Mr Collardi was one of the two executives to receive a written reprimand]
  2. Is deciding on more severe enforcement action against a third.
  3. A fourth has been let off without sanction having agreed to retire from financial services.
FINMA - WHY NO NAMES
  1. As is commonly the case in regulatory actions in privacy-conscious Switzerland, Finma did not name any of those concerned.  However, it is reported that a spokesperson for Mr Collardi said
    • He was "pleased . . . that the Finma review in the Julius Baer matter has been completed."
    • Mr Collardi accepted the reprimand that had been issued, the person said. "The key is that this decision brings this matter to a close."
WHERE IS HE NOW AND WHAT HAS BEEN SAID?
  1. Mr Collardi, 46, is now a partner at Julius Baer's Geneva-based rival Pictet.
  2. Pictet said it had taken note of the Finma decision and had "full confidence" in Mr Collardi's ongoing work for the group.
  3. Julius Baer declined to comment on actions taken against former employees.