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Deutsche Bank Spy Scandal Widens: Report

CNBC.com
Monday, 3 Aug 2009 | 6:17 AM ET

Deutsche Bank's effort to spy on its critics was more extensive than previously disclosed, involving a plan to target as many as 20 people, including a number of investors, a detective involved in the affair told the Wall Street Journal.

In May 2009, Deutsche Bank said it had discovered efforts involving "questionable investigative or surveillance activities" directed by its in-house security department and outside contractors, including detective Bernd Buhner, to monitor people affiliated with the bank, the Wall Street Journal reported.

Buhner told the Wall Street Journal in an interview that he received a list of names in 2006 at a meeting with Deutsche Bank representatives that included members of the bank's legal department.

When questioned on the list, Deutsche Bank said investigators were unable to establish who compiled it. And in a July 22 news release, Deutsche Bank said the spying was directed by its security department but made no mention of its legal department's involvement, the newspaper reported.

A Deutsche Bank spokesperson said the list contained people and entities that might be linked to Michael Bohndorf, an activist investor the bank had already disclosed it spied on. The bank said the names on the list might have been able to provide information about Bohndorf's motives towards the bank and any connection he had to Leo Kirch, the former German media mogul who is suing Deutsche Bank for billions in connection with the collapse of his empire, the Journal said.

Last month, the bank fired two mid-level executives involved in the affair and said there was no evidence that senior executives board members were aware of the spying.

Munich law firm Bub, Gaulweiler & Partner, who represented Kirch, was one name that had been targeted on the list. According to the Journal, Deutsche Bank agents devised a plan to infiltrate the firm with a mole posing as an intern, but the bank's lawyers halted the plan days before the mole was to begin work.

The Journal reported that the investigation on Bohndorf transpired after he challenged the legitimacy of the bank's supervisory board chairman Clemens Borsig, saying his election hadn't been performed in accordance to the letter of the law. Following the meeting, Borsig reportedly asked the bank's head of investor relations to look into Bohndorf's motives and links to Kirch, and thus Buhner was hired to investigate Bohndorf.

Last week, Deutsche Bank said none of its senior executives or board members, including Borsig, were involved: "The questionable methods used were not authorized by members of the Supervisory Board or Management Board. We regret what took place. Internal measures have been initiated to prevent similar incidents in the future."

Bank officials have found themselves trying to explain the affair to uneasy clients and regulators, including the Securities and Exchange Commission.

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