Deutsche Bank. Picture: REUTERS
Deutsche Bank. Picture: REUTERS

London — Deutsche Bank “must have known” that fees it was paying for deals with the Dutch housing firm Stichting Vestia were being used for bribes, according to the man who received those fees — and has since confessed to bribery.

Arjan Greeven, a middleman who helped arrange trades between the bank and Vestia, an affordable-housing provider, testified on Wednesday at a London trial where Vestia is suing Deutsche Bank in a bid to recoup some of the money it lost on derivatives trades.

The bank agreed to pay Greeven a fee every time it entered into a trade with Vestia, he said, and he shared those fees with Vestia’s treasury and control manager, Marcel De Vries. Greeven has confessed to bribing De Vries, who was in charge of Vestia’s derivatives trading, and the two were convicted of bribery in the Netherlands in 2018. Both are appealing.

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The bank “knew nothing about Mr Greeven’s secret arrangements with Mr De Vries,” it said in its filings.

“Vestia’s allegations are without basis and we deny them in the strongest terms,” a Deutsche Bank spokesperson said by e-mail.

Attempts to reach De Vries through Vestia and its attorneys were unsuccessful.

The London lawsuit comes as the bank faces a separate German probe prompted by the Panama Papers, which brought a wave of raids Wednesday by Frankfurt prosecutors targeting wealthy individuals.

In the London suit, Vestia — which nearly collapsed as a result of derivatives losses totalling more than €2bn ($2.2bn) — says some of those derivatives transactions were “flawed” because of the bribes.

Court testimony

Deutsche Bank paid €3.5m in fees to Greeven’s company First in Finance Alternatives, Vestia said in its filings, and that money was split “roughly 50:50” between Greeven and De Vries.

The bank “must have known or had an idea from the outset that there was a relationship in place between me and Mr De Vries that involved the sharing of my commissions”, Greeven said in his filings for Wednesday’s hearing.

De Vries had insisted the bank should pay Greeven for Vestia trades, even though “they could easily have done business with Vestia without using me and without paying me a commission”, Greeven said.

Greeven was sentenced to 30 months in jail in July 2018 after being convicted of bribery and tax fraud, but hasn’t started serving the sentence because he is appealing some parts of his case. In the Dutch legal system, people who appeal their convictions don’t go to jail until the outcome of that appeal, unless a judge agrees to a request for immediate detention from the public prosecutor.

Greeven now runs a bed-and-breakfast in Germany with his girlfriend, and also works as a gamekeeper, he said on the witness stand.

Fancy restaurants

De Vries would talk about the banks “trying to ‘outdo’ each other in their entertainment of him”, and once boasted that he’d “‘eaten 10 Michelin stars’ worth of meals in two days”, Greeven said.

Greeven first started sharing fees with De Vries around 2001, before they were involved with Deutsche Bank, he said in his filings. The arrangement started when Greeven earned a big commission on a deal involving Vestia.

“I cannot now remember exactly how this came about, but I think Mr De Vries made comments about the commission like ‘That’s a lot of money,’ suggesting that he wanted to be paid but without directly asking for money,” Greeven said in his filings.

De Vries told Greeven the fee-sharing “was all fine and that there was also no detriment to Vestia” because the commission payments came from the bank, Greeven said in court filings. “Mr De Vries was trained as an accountant, and so I believed him when he explained all of this and took comfort from what he said.”

Greeven understood the bank’s main motivation to be “to get trades and to earn a profit, and they were willing to pay me on a transaction basis to help with this”, he said. On one occasion he was paid a €250,000 fee for a 2009 restructuring where 10 structured trades were replaced by four new ones, he said.

Greeven approached prosecutors in 2012 to tell them about his involvement in Vestia’s trades, after he saw a press report on the financial strain Vestia was under because of its derivatives. That led to the arrest of De Vries, he said.

Greeven’s firm appeared to Deutsche Bank “to be a reputable and well-regarded independent intermediary”, the bank said in its filings. Vestia has already tried to persuade Dutch authorities to prosecute bank employees over the allegations, the lender said, but there haven’t been any charges or prosecution.