Lukas Mühlemann faces new challenge

Lukas Mühlemann and the Credit Suisse Group are back in the news swissinfo.ch

A financial scandal in Argentina could prove to be a headache for the chairman and chief executive of the financial services group, Credit Suisse.

Lukas Mühlemann is a board member of a Credit Suisse partner bank in Buenos Aires, the Banco General de Negocios (BGN), whose two directors are suspected of massive fraud. Credit Suisse is Switzerland’s second-largest financial services group.

The BGN and a subsidiary in Uruguay are said to have illegally paid out more than $70 million (SFr118.65 million) to high-ranking personalities.

Through its investment bank, Credit Suisse First Boston, the Credit Suisse group has a 26.4 per cent stake in the BGN, with CSFB’s head of international business, David Mulford, also sitting on its board. The Dresdner Bank and JP Morgan Chase also have stakes in the bank.

Influential bankers

The BGN is led by Carlos and José Rohm, who are considered to be among Argentina’s most influential bankers.

A federal judge in Argentina, Maria Servini de Cubria, called for their detention on suspicion of contravening a law blocking all bank accounts, which was ordered by former Argentine president, Fernando de la Rua.

They are suspected of having help hundreds of people in politics, the economy and show business to take money out of the country.

On the same day that Carlos Rohm was arrested in Buenos Aires on January 23, his brother José was on his way to Switzerland, where he attended a board meeting of the BGN in Zurich two days later, according to reports. Mühlemann was also said to be at that meeting.

Request refused

The French news agency Agence France Presse reported that José Rohm asked during the meeting for a credit of SFr260 million so the alleged fraud could be covered up.

However, the three banks refused the request, with JP Morgan Chase later reporting the matter to the Argentine justice authorities.

Although Argentina made an extradition request for José Rohm, Switzerland took no action. Rohm is now said to be in the United States

Not Swiss crime

A spokeswoman from the Swiss justice and police ministry in Bern said no action had been taken because the fiscal offence in question is not considered a crime in Switzerland.

Although the legislation in Argentina governing the blocking of accounts has now been lifted, the judge is continuing with the arrest order, reportedly saying that the capital flight aid could be just the tip of the iceberg.

Commenting on the issue, Credit Suisse First Boston said the three big banks were doing everything they could to bring the facts to light and were in close contact with the Argentine central bank. It said it was “shocked and deeply concerned” at the allegations.

“As a result of the discussions underway, Credit Suisse First Boston cannot comment further at this time,” the bank said, in a statement reported by news agencies.

The Federal Banking Commission told swissinfo that Credit Suisse had informed it of possible irregularities at its Argentinian partner bank at the end of January.

Lukas Mühlemann’s star has been perceived by the media as falling during the past 12 months, against a backdrop of reports indicating weaknesses at the Credit Suisse Group’s level of internal controls.

CSFB confirmed on January 22 a $100 million US legal settlement for alleged malpractices on the stock market.

It said in a press statement that it had signed an agreement with the US Securities and Exchange Commission and the National Association of Securities Dealers to implement revised procedures governing the allocation of new stock issues.

CSFB emphasises that by agreeing to the settlement, it neither admitted nor rejected the allegations.

swissinfo with agencies