Credit Suisse COO Bouee resigns to draw line under spying scandal

Bank hired investigator to shadow former employee amid fears he would poach colleagues

Credit Suisse is seeking to draw a line under one of the worst scandals in its recent history after the bank hired a private detective agency to shadow former executive Iqbal Khan because of fears he would poach employees after moving to UBS. Photograph: Stephen Kelly/Bloomberg

Credit Suisse is seeking to draw a line under one of the worst scandals in its recent history after the bank hired a private detective agency to shadow former executive Iqbal Khan because of fears he would poach employees after moving to UBS. Photograph: Stephen Kelly/Bloomberg

 

Credit Suisse Group chief operating officer Pierre-Olivier Bouee resigned in effort to draw a line under a spying scandal that has rocked Switzerland’s financial circles and which the lender said caused severe reputational damage to the bank.

Mr Bouee, a long-time associate of chief executive Tidjane Thiam, assumed responsibility for the surveillance of former Credit Suisse executive Iqbal Khan. The board of directors said that the mandate for the observation of Iqbal Khan was wrong and disproportionate and that the COO didn’t discuss the decision to observe Mr Khan, according to a statement on Tuesday.

Chairman Urs Rohner is trying to contain a drama that started in the local tabloids a week ago, when it emerged that the bank hired a private investigation firm to shadow its former employee because of fears he would poach former colleagues after deciding to move to UBS. The surveillance resulted in a confrontation in downtown Zurich between Mr Khan and investigators, and has since engulfed CEO Thiam, who was said to have a personal dispute with Mr Khan.

The resignation removes a longtime associate of Mr Thiam and close ally in Credit Suisse whose career has closely followed that of his own. They both moved to Prudential in 2008 from Aviva Plc, where they worked together for about four years. Mr Bouee started his career in the French Treasury before he moved to McKinsey and Co. in 2000, where Thiam also worked.

He was named his chief of staff at Credit Suisse in 2015 and later became chief operating officer, responsible for global operations, IT and security. As such, any official surveillance fell under his purview. Without citing sources, Swiss daily Tages-Anzeiger had reported earlier that the surveillance was ordered by Bouee and his global head of security Remo Boccali.

While it’s common for banks to try to prevent staff who leave from poaching colleagues, the spying case has shaken Switzerland’s reputation for quiet professionalism and raised questions about who ordered the surveillance and who knew about it.

With the COO’s resignation, Mr Thiam is being spared responsibility for the drama after coming under criticism when it emerged that he and Mr Khan had a falling out at a party in Mr Thiam’s house in January. The two men are neighbors in the upscale neighborhood of Herrliberg outside Zurich, and Mr Khan had enjoyed a rapid rise through the ranks of Credit Suisse, promoted by Mr Thiam to lead a key unit.

But their relations soured this year and their rift had been an open secret inside Credit Suisse for months. In January, the two had an argument during a party at Mr Thiam’s house, people familiar with the situation have said. In February, Mr Khan was being passed over in a corporate reorganisation that saw two colleagues elevated. By July, he had decided to leave the bank and the following month agreed to join UBS.

One of the bank’s top investors defended Mr Thiam against criticism, including from former Credit Suisse CEO Oswald Gruebel, warning that his ouster would hurt the bank.

“It would be damaging to CS and its stakeholders to lose any member of senior management over this issue,” David Herro, deputy chairman of Chicago-based Harris Associates, said before the decision. – Bloomberg