Credit Suisse scandal deepens further as spy contractor commits suicide

ZURICH: Swiss bank Credit Suisse crisis deepened further after a contractor hired to follow the bank’s former head of wealth management Iqbal Khan committed suicide, reported Financial Times.

The consultant who acted as a middle man between the Credit Suisse and private investigation firm, has put an independent report regarding the surveillance of Khan on the back seat.

Credit Suisse began its surveillance of Pakistan-born Swiss national Iqbal Khan amid fears that he may poach clients from the bank and take with him to his new workplace UBS.

Meanwhile, the bank said on Tuesday that a top executive had resigned after assuming responsibility for the bank’s decision to spy on Iqbal Khan.

The Swiss banking giant said that its chief operating officer Pierre-Olivier Bouee had stepped down following an internal investigation into the spying scandal.

It stressed though that the Homburger law firm which conducted the internal probe found no indication the bank’s chief executive Tidjane Thiam was implicated in the decision to have the former head of the wealth management unit, Iqbal Khan, tailed.

Credit Suisse, Switzerland's second largest bank after UBS, also said there was no evidence that Thiam was even aware of the decision before the scandal erupted on September 18.

The scandal cam came to surface after Khan confronted the private investigators tailing him, leading to a fight in the heart of Zurich. Khan has pressed charges.

Amid the media frenzy, Credit Suisse's board decided to launch an internal investigation.

The probe found that Bouee had ordered the surveillance on August 29, when UBS announced his hiring.

"The COO said that he alone, in order to protect the interests of the bank, decided to initiate the observation of Iqbal Khan," the bank said in a statement, citing the findings of the internal investigation.

It found that "he did not discuss it with Credit Suisse’s Chief Executive Officer, any other member of Credit Suisse’s Executive Board, the Chairman of the Board of Directors of Credit Suisse or the Chairman of its Audit Committee," it added.

And it stressed that neither the internal probe nor the surveillance of Khan meanwhile "identified any evidence that (he) had attempted to poach employees or clients away from Credit Suisse, contrary to his contractual obligations."

The board said that it appreciated efforts to take "appropriate measures to protect the company's interests, including when senior employees leave the company."

"However, the Board of Directors considers that the mandate for the observation of Iqbal Khan was wrong and disproportionate and has resulted in severe reputational damage to the bank," it said.

Credit Suisse said it had appointed James Walker, who is currently finance chief at its US division, to replace Bouee "with immediate effect"

Meanwhile, Zurich’s cantonal prosecutors say they are investigating the death of the consultant. A spokesperson for the prosecutor told the Financial Times that the death was being considered as a suicide.

The prosecutor’s office also clarified that its investigations on the surveillance operation are still underway.

Credit Suisse director John Tiner, who oversaw the law firm’s probe, said that they had found no evidence that suggested that Khan had attempted to poach anyone.