One of the biggest fraud trials in Swiss financial history is about to get underway. Pierin Vincenz, former CEO of Swiss bank Raiffeisen, will be in court along with alleged accomplices including Beat Stocker, ex-boss of digital payments company Aduno.
Vincenz and Stocker are accused of illegally lining their pockets with millions of francs as they engineered a series of company takeovers.
While Raiffeisen is not on trial, the bank’s reputation has been dragged through the mud for authorising lavish foreign trips and strip club outings on company expenses and for failing to spot a series of suspect deals.
Raiffeisen touts itself as “the third-largest banking group in Switzerland”, yet it is hardly known outside the Alpine state. That’s because it is a cooperative of more than 200 local banks providing loans and other services to their communities.
As a result, the trial of its former CEO is unlikely to have the same global resonance as the latest scandals engulfing Credit Suisse or the tax evasion woes of UBS. However, the Swiss Financial Market Supervisory Authority (FINMA) recognises Raiffeisen’s importance to the economy and has officially labelled the bank as “too big to fail” (or “systemically importantExternal link”). This title comes with increased regulatory supervision and demands to set aside extra reserve funds to cover losses.
As CEO between 1999 and 2015, Vincenz sought to raise Raiffeisen’s profile through the force of his personality and a series of strategic deals. Flamboyant, eager to engage with the media and known for bold strategic gambles, Vincenz was the antithesis of a discreet Swiss banker.
He oversaw the purchase of two private banks with an international footprint, Notenstein and La Roche (which have since been sold by Raiffeisen). Vincenz also wanted to bring Raiffeisen’s chain of local branches up to digital speed by taking stakes in financial technology firms. He chaired Raiffeisen’s daughter company Aduno, with Stocker acting as its CEO.
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Supervisory failings
But the rollercoaster ride of growth and ambition hit the rails in early 2018 when Vincenz and Stocker were accused of fraud, embezzlement and bribery – charges that they deny.
They stand accused of secretly accumulating stakes in companies that were about to be taken over by Raiffeisen or Aduno, which rose in value once the takeover was complete. The indictment also cites the taking of “unauthorised expenses” and the alleged bribing of co-conspirators.
Prosecutors are demanding that the two main defendants be jailed for six years and pay back the millions in illicit gains should they be found guilty.
Seven other people were also charged with offences in connection with the alleged crimes, which include taking bribes.
Vincenz’s ex-wife, who once served as Raiffeisen’s chief legal officer, was convicted in November of violating banking secrecy laws by passing on confidential documents to her former husband.
Raiffeisen has already emerged from the affair in a poor light. A 2018 FINMA investigation found a “serious breach of supervisory lawExternal link”, saying that “Raiffeisen’s board of directors failed to adequately supervise its former CEO, thereby enabling him, at least potentially, to generate personal financial gain at the bank’s expense.”
The banking group’s chair of the board, Johannes Rüegg-Stürm, was forced to resignExternal link, followed by Vincenz’s successor as CEO, Patrik Gisel, who was never implicated in the scandal but could not shake off links with his former boss and found his position untenable.
The trial starts on January 25 and is expected to last several months, if not years, due the complexity of the evidence. Given the size of the case, the trial has been moved from the normal courthouse to a large public building in Zurich that usually stages concerts.
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List of scandals
Switzerland is not accustomed to such high-profile corporate fraud cases. The last comparable event was the trial of Swissair executives in 2007External link, who were cleared of criminal malpractice after the airline went bankrupt.
If Vincenz and Stocker are found guilty, their troubles may not be over. They could be pursued for civil damages amounting to many millions of francs.
What’s more, prosecutors in both Switzerland and Liechtenstein are reportedly poised to launch money-laundering investigations against the duo and a Swiss lawyer who processed payments on their behalf. A guilty verdict in the Zurich trial could result in further charges if the transactions are proven to be fraudulent.
For the discreet Swiss banking sector, the steady stream of lurid headlines is the stuff of nightmares, adding to a growing list of scandals engulfing the industry.
In 2020 Credit Suisse CEO Tidjane Thiam was forced to resignExternal linkafter it emerged the bank had hired sleuths to spy on former employees. Credit Suisse was also embroiled in a high-profile embezzlement case in MozambiqueExternal link and incurred huge losses last year in the collapsed Greensill and ArchegosExternal link investment schemes.
And only a few days’ ago, António Horta-Osório had to step down as chair of the board after flouting Covid-19 restrictions in both Switzerland and Britain and the questionable use of a company private jet.
UBS also suffered a reputational setback in December when a Paris appeal court confirmed the bank’s criminal convictionExternal link for helping French citizens evade taxes for a number of years.
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By Matthew Allen, January 22, 2022, Published on swissinfo.ch
