Deutsche Bank asset manager CEO quits after ‘green laundering’ raid

The raids and the departure of DWS CEO Asoka Woehrmann mark another setback for German Bank (comics)the majority shareholder of DWS, which attempted to circumvent regulatory offenses including money laundering and securities mis-selling, resulting in billions in fines.
DWS has been dogged by the charges for months, prompting German prosecutors to carry out the raids on DWS and the headquarters of German Bank tuesday.

German officials have been investigating reports and allegations by a whistleblower that DWS exaggerated the green credentials of investments it was selling – a practice known as greenwashing. DWS has repeatedly denied misleading investors.

Woehrmann, told employees in a memo that it was a joy to see DWS flourish but “the allegations…however unsubstantiated or indefensible they may be, have left a mark.”

“To quote Charles Dickens: It was the best of times, it was the worst of times,” he said in the memo, which was seen by Reuters.

Deutsche Bank, which retained the majority stake in DWS after its IPO, has marketed itself as a bank that banking companies can turn to when looking for a greener future.

Uncertainty

On Tuesday, German prosecutors said “sufficient factual evidence has emerged” to show that environmental, social and governance (ESG) factors have been considered in a minority of investments “but have not been considered at all.” taken into account in a large number of investments”. “, contrary to the statements in the sales prospectuses of the DWS funds.

The U.S. Securities and Exchange Commission and German financial watchdog BaFin launched separate investigations into the whistleblower’s allegations last year. The whistleblower, a former sustainability manager at DWS, said the company had overdone the way it used sustainable investing criteria to manage investments.

Asoka Woehrmann, chief executive of DWS, told employees that the greenwashing allegations

Shares of DWS have fallen 26% since the SEC and BaFin investigations were made public in August last year. They were down about 7% on Wednesday.

The charges show that “greenwashing is not a trivial offence”, said Magdalena Senn of German consumer group Finanzwende.

“The raid and the resignation will have a signal effect for other asset managers,” she said.

Credit Suisse analysts said Woehrmann’s departure was a disappointment as he successfully implemented the reform and turnaround of DWS.

“We see the management change heralding a period of uncertainty for DWS’ strategy – and may even raise questions about its future as an independent asset management company,” Credit Suisse said.

DWS and Deutsche Bank said on Tuesday that the asset manager had cooperated with regulators and authorities in the past and would continue to do so.

Under pressure

Woehrmann has come under pressure on multiple fronts since the greenwashing allegations surfaced.

Deutsche Bank conducted an internal investigation into the possible use of Woehrmann’s private email for business purposes, and the European Central Bank also looked into corporate governance issues surrounding it.

He also received threatening letters, including one in December with a red crosshair, white powder and a racial slur.

Asked about the allegations during a DWS earnings call with analysts, Woehrmann said he emphatically rejects all allegations.

Deutsche Bank CEO Christian Sewing publicly backed Woehrmann in January, saying he had done a terrific job.

Stefan Hoops, who has overseen Deutsche Bank’s corporate banking division since 2019, will replace Woehrmann from June 10, the bank said.

Hoops has not been involved in asset management for the past two decades, although Deutsche Bank said he was “a proven specialist in capital markets”.

Woehrmann’s resignation takes effect on June 9, the day of his annual general meeting.

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