German state-owned bank HSH Nordbank is caught up in a furor of allegations from magazine Spiegel that it used break-ins, bugging and planting of child pornography on a laptop computer to engineer the ousting of high-level employees.
In an article in English summarizing its previous reportingand published Wednesday, the magazine said that the bank is the target of a New York City district attorney's criminal investigation that it framed the director of HSH New York, known in documents only as Roland K.
On Aug. 21, Spiegel said that the bank hired a private security company to spy on its chief operating officer.
COO Frank Roth was fired in April 2009, accused by the bank of disseminated confidential information. The case against Roth was dropped due to insufficient evidence and many with knowledge of the company were aware that HSH Nordbank CEO Jens Nonnenmacher was anxious for Roth to leave.
Citing an internal company memo, Spiegel reported that Roth's office was allegedly bugged and someone broke into his apartment to tap Roth's phone.
Former HSH Nordbank COO Frank Roth
For two weeks there has been an investigation of a 42-year-old German who is suspected of installing a bug in Roth's office and attempting "to break (into) his apartment and tap his phone,” the General Attorney and Spokesman of the Hamburg prosecutors told CNBC.
The 42-year-old man is Arndt Umbach, a former subcontractor of Prevent AG, a security firm commissioned by HSH Nordbank, sources told CNBC.
According to Spiegel, Prevent AG played a pivotal role in both the German and New York cases.
Roth, the ousted COO, said in an official statement on Aug. 23, shortly after Spiegel broke the story that the "fact that a state owned bank which is being financed by the taxpayer is involved in such obviously criminal actions, is a deeply shocking situation which sheds a totally different light on my forced departure from HSH Nordbank."
"I will ask my lawyers to check whether those unbelievable circumstances are legally relevant in my case and I am waiting for an apology from those responsible within HSH Nordbank," he said.
"It is for us in the management, but as well for all other colleagues in the bank, hardly bearable and devastating that during the operational restructuring of the bank, rumors are spread systematically," CEO Nonnenmacher said in a press conference Aug. 27. "You can be sure, that we are doing everything (to ensure) that these unbelievable and mean accusations will be clarified."
HSH Nordbank declined to comment to CNBC.
New York Investigators Suspect Frame-Up
Spiegel also reported that a report by law firm WilmerHale found that the bank was trying to get rid of employee Roland K. using drastic measures.
According to the WilmerHale report, US prosecutors came to the conclusion that the bank has placed child pornography on Roland K.'s computer and afterwards organized a raid of his offices during which the pornography was detected. Consequently, prosecutors decided there was evidence he was the victim of a conspiracy.
The attorney general in Hamburg confirmed they had the WilmerHale report and were looking into the matter, while another source familiar with the situation confirmed the nature of the report to CNBC.
A name mentioned in both affairs and who was present when the New York offices were raided is the former head of legal affairs of HSH Nordbank, Wolfgang Gössmann. The district attorney's office in New York consider Gössmann and Nonnenmacher as possible suspects, according to Spiegel.
Bafin, the german regulator, told CNBC they launched a special investigation last week based on available information at the time.
Gössmann is officially suspended and sources close to the matter are told CNBC that he suffered a nervous breakdown.