Regulator orders sacking of bank manager

Vladimiro Montesinos is believed to have laundered money through the Leumi le-Israel bank Keystone Archive

The Federal Banking Commission has ordered the removal of a bank manager for dealings with the former Peruvian intelligence chief, Vladimiro Montesinos.

The move is the first time the commission has forced a bank to dismiss a manager.

It ordered that the general manager of the Swiss subsidiary of Israel’s biggest bank, Bank Leumi le-Israel, be removed for failing to exercise due diligence when approached by Montesinos to open accounts.

The commission said the dismissal was ordered on August 28, but was not made public until now because it wanted to give the bank time to appeal. The manager resigned on September 15.

The head of the commission, Daniel Zuberbühler, told swissinfo that the general manager was responsible for “severe deficiencies in the internal organisation of the bank… and because the manager himself approved the relationship [with Montesinos]”.

“He did not recognise Montesinos as a politically exposed person,” Zuberbühler added. “He merely relied on information that was given to him by another customer of the parent bank in Israel without checking any of the information.”

Frozen accounts

Last year Switzerland froze $114 million (SFr) in accounts linked to Montesinos, who was arrested in June in Venezuela. He was a key figure in propping up Alberto Fujimori’s 10-year regime, and was implicated on video for corruption and bribery of top officials.

Switzerland’s banking commission said this information was in the public domain and could have been accessed by the Bank Leumi le-Israel manager with “reasonable efforts”.

It added that the bank had “accepted [the commission’s] order and had taken further measures to eliminate organisational shortcomings”.

The commission has ordered a special audit to be held next year to check on the implementation of these measures.

Four other banks were cleared of wrongdoing as part of the investigation, either because they terminated dealings with Montesinos once the allegations against him were made public, or because they did not have reason to believe the funds were of illegal origin.

Zuberbühler told swissinfo that the move sent a signal that top management can be held responsible for their banks’ conduct, and that their actions can have consequences for them personally.

by Anna Nelson and Jonas Hughes