(Bloomberg) -- Julius Baer Group Ltd. has started an investigation after the arrest of an ex-employee who has since admitted to participating in a billion-dollar scheme to launder money bilked from Venezuela’s state oil company.

The private bank is not being charged, Chief Executive Officer Bernhard Hodler said in Zurich on Thursday, declining to comment further. His comments came after Matthias Krull, 44, a German resident in Panama, pleaded guilty to one count of conspiracy to commit money laundering. He was arrested in July and charged with using real estate and fake investment schemes to conceal $1.2 billion embezzled from Venezuelan crude producer Petroleos de Venezuela SA.

Authorities in the U.S. and Switzerland are probing how billions of dollars were embezzled from PDVSA, as the oil company is known. Switzerland in 2016 seized $118 million in bank assets linked to a Venezuelan businessman who has admitted to bribing PDVSA officials to steer about $1 billion in energy-supply contracts. Krull, a senior relationship manager at Julius Baer based in Panama at the time of the alleged money laundering, faces as much as 10 years at sentencing, and has agreed to cooperate with prosecutors.

The Zurich-based bank enjoyed stellar growth through high-profile acquisitions and a hiring spree under former Chief Executive Officer Boris Collardi. His successor is seeking to replicate that success through increasing relationship managers at the same time as managing risk as know your customer and other regulation becomes increasingly complex.

The company said in June that some bankers had left amid a strategic realignment of Baer’s Latin American unit. The exits from Switzerland’s third-biggest wealth manager included Krull, Bloomberg reported at the time. Krull was one of five senior Julius Baer bankers in the Bahamas and Panama that were set to join smaller Swiss rival Gonet & Cie. Marc Sulser, who oversaw the business with wealthy clients in the Andean region and central America for Julius Baer, also recently left the company.

Julius Baer and local rivals such as Credit Suisse Group AG have been growing in the region through acquisitions, partnerships and hiring. Earlier this year, Julius Baer acquired 95 percent of Sao Paulo-based Reliance Group and is also looking at ways to build an operation in Argentina.

To contact the reporter on this story: Jan-Henrik Förster in Zurich at jforster20@bloomberg.net

To contact the editors responsible for this story: Dale Crofts at dcrofts@bloomberg.net, Sree Vidya Bhaktavatsalam

©2018 Bloomberg L.P.

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