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Schadenfreude
<p>Hannelore Foerster/Getty</p>

Hannelore Foerster/Getty

A police raid at the world’s largest bank, in Europe’s most powerful economy.

German Banking Gets A Spanking

Deutsche Bank’s reputation is besmirched, bringing a little light relief to Europe’s Greek tragedy.


Gott im Himmel! Corruption in Germany?

No matter that World War II ended 67 years ago, the jingoistic London publishers of the old British war comics Commando are going strong. And in Commando, lantern-jawed Germans still are always brutal, inhuman automatons, and most everyone else in Europe, particularly Brits, are valiant models of rectitude and probity.

Never mind trifling details such as Germany’s boisterous democracy, “the economic miracle”, Reunification (a Wall that inspired as it fell, arguably history’s most successful nation-building), and allied military boots on the ground in Afghanistan.

The hackneyed Commando-esque cliches are rampant still in English football too; Der Spiegel magazine’s former London correspondent Matthias Mattusek noted a few years back that the British continue to exhibit an “insatiable appetite for Nazi folklore and German-bashing”. However the Anglo-Deutsch ‘rivalry’ now exists almost entirely in English minds — Germany’s great sporting enemy is The Netherlands.

But the real world isn’t a comic. Germany is rich, chunky and successful; Europe’s largest — and the world’s fourth-largest — economy.

And a clean one, too. Germany ranks a laudable 13th on the latest Transparency International measure of global graft among 174 economies; the worthiest of the dominant G-8 economies that really matter to the world economy.

And where Brits sneer about Europe from the sidelines, Germany’s much-consulted taxpayers do the heavy lifting to keep the EU afloat. Indeed, if it weren’t for deep pockets of the Germans, the Union would’ve been kaputt long ago.

But wait, what’s this about corruption then?

This past week, the world’s biggest bank, Deutsche Bank (DB), has been embroiled in a huge corruption scandal. German investigators have fingered two of the country’s most influential businessmen — DB’s chief executive and chief financial officer, no less — in a drama that has Germany all Sturm und Drang.

<p>FRANK RUMPENHORST/AFP/Getty</p>

FRANK RUMPENHORST/AFP/Getty

Policemen outside Deutsche Bank’s Frankfurt headquarters. Allegations of corruption at the bank cut across Germany's reputation for transparency.

German cops, some 500 of them, dramatically raided DB’s Frankfurt headquarters, and regional offices and private homes in Berlin and Düsseldorf, too. They carted off reams of papers and arrested senior executives, such as the bank’s head of legal, as they went.

DB’s CEO Jürgen Fitschen and his CFO Stefan Krause remain at liberty, but none of it is a good look for the bank that anchors Deutschland Inc and, by extension, Europe.

Authorities are probing DB for money laundering, tax evasion and obstruction of justice. Among other misdemeanours, they suspect DB of wilfully creating ingenious schemes to evade taxes on carbon emissions.

Potentially worse, the bank is facing claims in New York from a whistleblowing ex-employee. The former executive, Dr Eric Ben-Artzi, says the bank cooked its books, whitewashing away billions in dodgy transactions as the 2008 financial crisis deepened. DB deny it, but Ben-Artzi claims it was a fraud and has a high-profile whistleblowing American group by his side.

German cops, some 500 of them, raided DB’s Frankfurt headquarters, and regional offices and private homes in Berlin and Düsseldorf too… not a good look for the bank that anchors Deutschland Inc.

Why is this important?

Bad banks are bad news, wherever they fester — witness the revulsion directed at the banking industry after these one-time masters of the universe imploded America in 2008 playing pass-the-toxic-parcel with their subprime junk loans.

Hollywood loves a bad guy, and dubious bankers spawned a popular Hollywood genre in films like Inside Job and Margin Call. Today, there are BBC documentaries about rough-sleeping bankers, but not much sympathy for them.

But in Europe, Deutsche Bank’s travails matter because they are about taxes, money laundering and possible fraud — the stuff of much German finger-pointing at their fellow Europeans.

Real or imagined, it’s the cavalier attitude toward such things in errant EU states like Spain, Italy and Greece that particularly galls northern Europeans, who bear some of the world’s highest taxes. In return, they get a high standard of living, creating a standard Brussels would like the rest of Europe to embrace as it struggles to equalise economies.

But the 2008 financial crises that collapsed economies across Europe’s Club Med belt saw a sharp loss of income to its suddenly stricken governments. Companies failed, people lost jobs, and these states couldn’t be financed as they once were. And all this while official obligations — things like providing the dole and economic stimuli — soared.

Europe’s biggest economy — and one of the euro’s biggest trading beneficiaries — Germany stepped up, largely because no-one else was able to and because it had a market to support. Berlin has been quick — and stern — in lecturing Mediterranean miscreants about mismanagement of their public finances. Germany has even placed teams of bean-counters in Greek government offices, to make sure their EU-saving euros are appropriately handled.

But Berlin’s intervention hasn’t gone down well down south. Yielding to their own Commando cliches, angry Greeks have taken to calling their new Teutonic technocrats ‘Nazis’.

<p>ARIS MESSINIS/AFP/Getty</p>

ARIS MESSINIS/AFP/Getty

The Deutsche Bank raid will spur already raging anti-German sentiment in Europe’s austerity ravaged south.

In Italy too, Il Giornale, a Milan newspaper owned by ousted ex-PM Silvio Berlusconi, who holds German Chancellor Angela Merkel responsible for his downfall, described Germany as ‘the Fourth Reich’, which is perhaps a bit rich coming from a darling of the Italian right seen by many, not least himself, as a modern Mussolini. Naturally, Il Giornale chose an unfortunate photo of Merkel waving to illustrate its anti-German invective.

Merkel has had to despatch jolly emissaries including politician Hans-Joachim Fuchtel to Greece, to calm things down. But that diplo-gambit also ended badly, after Herr Fuchtel told journalists that a German could do the job of three Greeks —  a remark that undoubtedly lifted the spirits of the drycleaner of Germany’s ambassador to Athens, Wolfgang Hoelscher-Obermaier, who copped abuse and any throwable item grumpy Greeks could lay their hands when caught exposed outside after Fuchtel’s indelicate remarks went live.

In Europe, Deutsche Bank’s travails matter because they are about taxes, money laundering and possible fraud — the stuff of much German finger-pointing at their fellow Europeans.

Tell us about Deutsche Bank…

Its very name says everything — German Bank, as if there is no other.

When German TV illustrates the usually dry economic and financial reports on the evening news, it does so with a stock image of DB’s iconic twin towers in Frankfurt, which Germans call Soll und Haben, literally debit and credit.

The lustre is evident in its famous ‘slash-in-a-square’ logo, Germany’s best-recognised brand; a dynamic forward slash, symbolising advancement, contained in a protective, stable box — a metaphor for Germany. (DB’s obsession with its logo has been subtly ridiculed this week in a damning cover story by Der Spiegel, which reverses DB’s famous slash so it slants backwards, highlighting its skandal.)

With more than 100,000 employees, DB commands a prominence in the country’s commercial life that few privately owned banks can equal. Boasting assets worth more than €2 trillion, DB is bigger than many national economies. It’s the premier institution that anchors and lubricates the efficient machine that is Deutschland Inc, owning influential tracts of major German industrial conglomerates, together a vast and powerful corporate octopus. Which makes it persuasive at opening doors — and having people like Germany’s well-connected former ambassador to the United Nations, Thomas Mattusek (brother of journalist Matthias above), as its main public affairs schmoozer also helps.

Despite the potential criminality implied by these current probes, DB likes to think itself in Germany as weißer than weiß. But whiter than white is not how Germans see it, as DB’s legal problems pile up on both sides of the Atlantic. DB is also being investigated in London for rigging interest rates. And last week, a Munich court found DB played a crucial role in bringing down one of Germany’s most powerful media empires, the Kirch Group, a DB critic which failed in 2002 in Germany’s biggest post-war bankruptcy.

So with all these DB problems back home, has Germany’s pot and kettle been blackened?

Absolutely. And Greeks are loving it. Which is all very well, but for all their schadenfreude, they’re still no better off.

4 comments on this story
by Norry.

Once more you deal with the small potato issues. LIBOR is the issue people should know about ! I typed in LIBOR into your search engine , with no result!! You are kidding Global Mail !
Your Global Mail will be no different to any other media outlet if you just keep rehashing Reuters news.
Maybe check out who the directors of the bank are, watch very carefully who pulls their strings, then find the German baron and his lineage who control the string puller and then you have a real story, and all true !!
These twenty plus greedy banks get away with their thieving (LIBOR) because they own the mainstream media, so the majority of the Human Resources out there in Gaga land don't have a clue, cos' it wasn't on the telly !!
Some good stuff at GM, but fairly lame.Maybe It's about time to dive into the deep end and stop paddling in the wader pool with all the other people who believe in santa claus !

December 23, 2012 @ 3:41am
Show previous 1 comments
by Ari

Greeks and Italians getting cranky at the Germans seems rather adolescent - if the governments of those near-bankrupt countries had made the tough decisions earlier, and their respective populations had encouraged them to do so, they wouldn't be in the position of relying on the rest of Europe to bail them out.

Southern Europeans attacking Germany is perhaps the ultimate form of deflecting blame for one's own failings.

January 5, 2013 @ 10:05pm
by MikeA

Is Germany really propping up Europe, or is it somewhat around the other way? With a single currency (like so many federation like Australia) parts are doing better than average, yet enjoy the competitive advantage of a lower exchange rate and vice versa. The German output would not be so high if they had their own currency. Their exchange rate would be higher, the cost of their products higher and they would be struggling with a reconfiguration of their economy like Australia is. However because of the PIGS they have an unusually low exchange rate. Common currency means you must put up with such flows of cash from one bit to another

January 22, 2013 @ 12:47pm
by Richard Ure

Norry,

Was the LIBOR story been covered elsewhere? Does every story have to be covered in multiple media outlets?

February 5, 2013 @ 12:59pm
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