Credit Suisse ‘Spy’ Found Dead As ‘Espionage Scandal’ Stuns Swiss Banking Establishment

Update (1715ET): The increasingly conspiratorial “spy scandal” underway in Swiss banking has taken an even darker tone as the Credit Suisse contractor – who hired private detectives to follow a former top executive – has died of suicide.

Swiss financial blog Inside Paradeplatz first reported the man’s death, identifying him only as “T” and noting that he shot himself last Tuesday as the spy scandal started to break.

The deceased had hired Investigo on behalf of Credit Suisse to follow its former top wealth management executive, Iqbal Khan. The bank hired detectives because of fears Khan would poach employees after moving to UBS.

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As we detailed earlier, it looks like Credit Suisse CEO Tidjane Thiam is going to survive a scandal that’s erupted over the bank’s spying on a rainmaker who had recently left CS and joined cross-town rival UBS.

The scandal unfolded on the streets of Zurich, where both Swiss banks have their headquarters (UBS is co-headquartered in Basel). It exploded into public view when wealth-management rainmaker Iqbal Khan, who had left CS after purportedly being passed over for promotion, realized that he and his wife were being followed while driving in downtown Zurich.

Tidjane Thiam

Khan confronted his pursuers, an incident that eventually resulted in the arrest of several employees from the security firm retained by CS to track Khan’s movements (the fear was that he might be trying to poach more CS employees). Thiam and several other senior officials were swiftly implicated in the scandal, despite revelations that this type of behavior is hardly unique in the worlds of finance and corporate intelligence. The bank launched an internal probe into the matter, while Swiss prosecutors launched a criminal probe, BBG reports.

The incident became front-page news in Switzerland, though has mostly been confined to the business pages of the English-language press.

But despite CS’s lagging share price, several of the bank’s biggest shareholders have expressed support for Thiam and his leadership team, and have set about persuading the board to do the same.

The most vocal and public expression of support came late last week from David Herro, deputy chairman of influential Chicago-based Harris Associates, Credit Suisse’s biggest shareholder with an 8.1% stake. He said that the bank was justified in taking action to protect itself from possible poaching — as long as it was legal — and that it “would be damaging to CS and its stakeholders to lose any member of senior management over this issue.”

His comments were echoed by Ricky Sandler, Chief Executive Officer of Eminence Capital, which owns Credit Suisse shares. He pointed to Thiam’s restructuring efforts during recent years. “Losing the CEO or any other members of senior management because of this would be a very unfortunate outcome for shareholders and other stakeholders,” he said. “We hope that media reports are not overly influencing the Board of Directors.”

But at the end of the day, the fact that CS doesn’t have an obvious successor for Thiam picked out yet, was probably the deciding factor in saving Thiam’s job. Though some shareholders insisted that his ‘successful’ oversight of the bank’s restructuring also deserved credit.

CS’s internal probe has so far focused on the role of COO Pierre-Olivier Bouee, but it’s still unclear whether any executive at the board level will be punished.

The CS board is expected to meet Monday to ‘discuss the findings of the investigation’, which is being carried out by law firm Homburger. After they’re reviewed by the board, the firm is expected to make its findings public on Tuesday.

At this point, it appears Thiam will survive the worst scandal since he took over in March 2015.