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Credit Suisse blames ex-COO for second spying scandal

Bank paints disgraced exec as rogue operative who kept CEO in the dark about his surveillance operations

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The most recent revelations have prompted the Swiss financial markets regulator Finma to step up its investigation into Credit Suisse.

Zurich

CREDIT Suisse Group AG blamed Pierre-Olivier Bouee for a second spying scandal that's shaken the bank, again painting the former chief operating officer as a rogue operative who kept chief executive officer Tidjane Thiam in the dark about his activities.

Mr Bouee - once a close confidant of Mr Thiam - used a contractor to spy on former human resources head Peter Goerke and, along with his staff, took care to hide any internal evidence of the surveillance, according to a statement from Credit Suisse on Monday. There was "no indication" that other members of the board knew about the spying.

Credit Suisse is struggling to emerge from one of the most damaging periods in its recent history after spying on former international wealth management head Iqbal Khan led to a confrontation between him and the men sent to follow him in downtown Zurich. The incident exposed a deep rift between Mr Thiam and Mr Khan that had worsened over previous months and the methods used by the bank to protect its business.

In the aftermath of the Khan incident, Credit Suisse hired Homburger, a blue-chip Swiss law firm, to investigate the spying and said that Mr Bouee had acted alone in what Mr Thiam at the time called an isolated event. Chairman Urs Rohner told the public that staff surveillance was not "part of our toolbox".

In the meantime, others have stepped forward to say they also have been followed. Colleen Graham, who headed up a joint venture between Credit Suisse and Palantir Technologies Inc, has also alleged the bank took retaliatory measures against her - including surveillance - after she had refused to sign off on how revenue from the joint-venture would be booked.

In following Mr Khan, Credit Suisse was probably concerned that he may take hard-to-replace wealth managers with him to his new employer UBS Group AG. The reasons for the surveillance of Mr Goerke seem less clear. The executive was followed for a period of several days in February with the help of a contractor. Credit Suisse has apologised.

"The observation of Peter Goerke, which has now been confirmed, is inexcusable," Mr Rohner said in the statement. "We are aware that the observations of Iqbal Khan and Peter Goerke have damaged the reputation of our bank."

The controversy overshadowed the conclusion of Mr Thiam's painful three-year turnaround of the bank, which was finally starting to bear fruit. However, Credit Suisse cut its main profitability target for this year and next earlier in December, as trade tensions and negative interest rates clouded the outlook.

The most recent revelations have prompted the Swiss financial markets regulator Finma to step up its investigation into Credit Suisse, according to a statement late on Friday. The probe will be heightened with the help of an independent auditor, the body said, adding that the "observation activities carried out by Credit Suisse raise various compliance issues". BLOOMBERG