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Explained: The spying scandal that claimed the job of Credit Suisse CEO

Thiam’s exit took formal shape at a board meeting on February 6. Thiam agreed to resign after acknowledging that the spying scandal had “disturbed” Credit Suisse.

By: Express News Service | New Delhi | Updated: February 25, 2020 1:33:45 pm
Credit Suisse spying scandal, Tidjane Thiam resigns, switzerland company spying scandal, express explained, indian express Tidjane Thiam in Zurich; he resigned earlier this month. (Photo: Reuters)

Earlier this month, Credit Suisse ousted its chief executive Tidjane Thiam, capping a spying scandal that had rocked the Switzerland-based financial services company. In July last year, it emerged that detectives had followed an executive who had quit Credit Suisse for another group; in December, it was reported that another former executive had been followed. And while Credit Suisse exonerated Thiam of involvement in both instances, these are widely seen as having turned the bank’s board against him. Thiam has since been replaced with Thomas Gottstein.

The rise

Before Credit Suisse, Thiam, now 57, was with Prudential Inc; before that, he was a minister in his home country, Ivory Coast. Educated in France, he worked as young man with McKinsey, then with the World Bank, before going home to Ivory Coast, where he became minister in charge of privatisations. Following a military coup that felled the government, he left Ivory Coat in 2000, The Guardian wrote in a profile of Thiam.

It set him off on a career in financial services. At Prudential between 2009 and 2015, he more than doubled Prudential’s profits and tripled its share price; when he left for Credit Suisse in 2015, its shares rose almost 7% while Prudential’s fell 3%, according to the Guardian profile.

When Thiam left Credit Suisse, it was just after the bank had posted its highest profit in a decade. It was 3.419 billion Swiss francs ($3.5 billion) for 2019, the best since 2010. However, Reuters noted, this came with a steeper-than-expected loss in the investment banking business.

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The fall

Before Thiam joined, Credit Suisse chairman Urs Rohner reportedly spent months wooing him. After he joined, Thiam and Rohner were initially seen as being close, before signs of a rift began to emerge. Bloomberg News described a conflict over Thiam’s dispute with ex-international wealth management head Iqbal Khan — one of the two executives spied on later.

“Under Thiam, Khan enjoyed a steady rise. The two men were so close that they became neighbors in the upscale Zurich suburb of Herrliberg,” Bloomberg wrote. “But their relationship soured as Khan’s success grew and he assumed the role of ‘crown prince’ in a possible CEO succession. Tensions between the two men erupted in an altercation at a party at Thiam’s house in January 2019, prompting Khan to complain to the bank’s board. The next month, Khan was passed over for a promotion that elevated two of his colleagues to the executive committee. And by July, the wealth-management star was quitting to join crosstown rival UBS Group AG. What happened next sparked an international scandal.”

The detectives who followed Khan were reportedly hired by one of Thiam’s deputies, Pierre-Olivier Bouee. It became public after Khan confronted his pursuers in Zurich. An internal probe absolved Thiam and blamed Bouee, his long-time aide across three companies and a decade. Yet Thiam said publicly that he wasn’t “sure you can describe him as a friend”.

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In December, the second controversy unfolded. This time, it emerged that former HR head Peter Goerke who had been followed. This episode was a turning point for Rohner because, as Bloomberg News noted, it indicated a pattern and left the bank unable to explain the spying.

The exit

Several top shareholders are reported to have come to Thiam’s defence, demanding instead that Rohner should be the one to go. While the chairman appeared to be on the defensive, he was reportedly lining up support from other shareholders, and counting on the board’s support.

“The issues accelerated, probably more than we wanted in the last couple of days,” Rohner has been quoted as saying. He received unanimous backing from the directors on the board.

Thiam’s exit took formal shape at a board meeting on February 6. Thiam agreed to resign after acknowledging that the spying scandal had “disturbed” Credit Suisse.

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