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Kleptocracy Watch
The Moral Crisis Behind Deutsche Bank’s Russia Scandal
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  • Kevin

    A fish rots from the head … See Gerhard Schroeder. Or the Clinton Global Foundation.

  • qet

    In fairness (if that’s the right word), I would like to know of any period in which business and banks stoically withstood the temptations of sleazy money (or any other kind).

    • Jim__L

      Early 20th century England seemed to do allright generally, if CS Lewis’ reports are to be believed.

  • Anthony

    “Despite the talk of Russian values and Russian nationalism, this regime is just as coldly indifferent as any Soviet commissar or Tsarist noble to the well being of the average Russian citizen.” The quote speaks for itself WRM. And at bottom, I am in complete concurrence with essay’s general thrust. In spite of that (reading and appreciating your inclination as I’ve come to know it), old lessons come to mind: “1) crime is here to stay. Professionals of power are well versed in all its variants – God himself expressed discouragement over the sickening sinfulness of the human race; 2) Ethics is a functional component of power and power is a functional expression of ethics.”

    To that end, morality may dictate the constraints of institutions but it must be awaken by the appeals of human beings. Your effort is appreciated.

    • Jim__L

      There is such a thing as an institution dedicated to appealing to morality.

      It’s called a church.

      Elites in Europe and America have been either ignoring or actively dismantling these institutions. Is should surprise exactly no one that moral appeals are so rare these days, and that elites have trained themselves to be so deaf to them.

      • Anthony

        I considered the divine implication before I concluded posting and chose not to utilize reference. So, Jim let’s end it there. Thanks.

        • Jim__L

          Considered then ignored. Typical elite approach to the righteousness of the self apart from God.

          • Anthony

            OK, you’re obviously a mind reader and authenticator. Still, Merry Christmas and God Bless.

  • Matt B

    I want to believe that this was perpetrated by Russian nationals in the Moscow office. Financial crime is a major industry in the former Soviet Union. Also, having worked for years at a major multinational company, the anti-corruption message was repeated so strongly, starkly and repeatedly that anyone who valued their career would adopt a high standard of integrity just because it is the path of least resistance.

    But, as WRM said, let’s not kid ourselves. Corporate ethics extend only as far as legal compliance and fear of bad PR will take it. Beyond that, as individuals and corporations, I’m afraid that most Americans limit the notion of virtue to three things: tolerance, the environment, and financial gain. Deception is virtuous if it is legal and profitable. Thus the behavior of Goldman Sachs and other players prior to the financial crisis. Any moral failing was on the part of the victim who was not sufficiently

    • Иван Афанасьев

      You shouldn’t believe your american public media. We see every day how they are blatantly lying about Russia, about russians, about events around the world deceiving you.

      • Matt B

        Ivan – the Russian emergency services workers aren’t getting paid this month. How are things at the Ministry of Information?

        • Иван Афанасьев

          Who have said it to you? It’s a lie. Their work will be paid undoubtedly. As always.

          • Andrew Allison

            Well yes, the Russian media do lie, and so perhaps the report therein was indeed untrue.

          • Иван Афанасьев

            We have free media in Russia. And of course a lot of them just the way in the West sometimes or constantly do lie particularly in the web edition. It should be noted that in Russia it happens much more less.

          • Andrew Allison

            If you actually believe that you have free media in Russia, I have a bridge I’d like to discuss selling to you. Meanwhile, see the official confirmation at http://www.e1.ru/news/spool/news_id-435586.html

          • Иван Афанасьев

            Are you kidding? E1 is not a russian media, it’s an american media in Russia. The E1 belongs to the american companies. Are you expecting that they would be saying a truth? I doubt it.

          • http://chicagoboyz.net/ TMLutas

            The problem seems to be limited to Sverdlovsk region and is a pay delay at present with a partial payment in December. These things do happen with incompetent (and generally leftist) governments. Illinois stopped payouts on its lottery because of budget difficulties in 2015 and California had a budget crisis a few years back that led them to issue a number of warrants to paper over problems. As the money runs out, these things will likely happen more frequently both in Russia and all over the rest of the developed world.

  • http://winterings.net/ Alex K.

    Ordinarily, mirror trades are legitimate ways of exploiting the arbitrage between depositary receipts (DRs, usually traded in dollars) and their underlying Russian securities (typically shares traded in rubles). It’s only when the volume of mirror trading grows humongous (by the standards of the Russian equity market) that regulators get interested. Russia has no formal capital controls. From the point of view of Russia’s central bank, Deutsche might have been guilty of currency reporting violations, at most.

    • Andrew Allison

      http://petersburgcity.com/business/bguide/currency/ The trades under discussion are intended to move rubles out of the country.

      • http://winterings.net/ Alex K.

        Honestly, I don’t get the point of moving rubles out of Russia. Dollars or euros, sure, but rubles?

        • Andrew Allison

          Buying securities in Russia and simultaneously selling them in London (a mirror trade) both gets them out of the country and converts them to sterling.

          • http://winterings.net/ Alex K.

            In which case, it is a means of getting not rubles but other currencies (most Russian GDRs are quoted in dollars, so it’s got to be dollars) out of Russia : a variety of capital flight. As I’ve said, Russia has no formal capital controls but retains certain reporting requirements, which were presumably bypassed via those trades. On the other hand, simultaneous buying and selling of GDRs and the underlying local shares is, more often than not, a legitimate way to play the arbitrage between the two securities.

          • Andrew Allison

            “Such trades, as described by the Russian central bank audit, involved clients buying Russian blue-chip stocks for rubles in Moscow and simultaneously selling them in London, usually for dollars, according to people familiar with the situation.”

  • Иван Афанасьев

    What a fucking lie. The USA are the most corrupt country in the world.

  • Kirill Pankratov

    It is funny to read “moral indignation” rants in this article. What is the substance of these accusations of the Deutsche Bank? “Mirror trades”? These are something like what American banks and corporations do every day – on a vastly larger scale – to “optimize” their taxes and balance sheets. In fact it is hard to find anywhere the scale of theft routinely perpetrated by the Wall Street – the world most corrupt operators who hardly got even a slap on the wrist for screwing both the US public and much of the world before and during the 2008 financial crisis, and continuing business as usual, thanks to the US Federal Reserve showering them with money created out of thin air.

    • http://somercet.livejournal.com/ somercet

      Here, let me highlight the sentence in the article you apparently were too drunk to read:

      “That sort of trade, while legal in some circumstances, can also be used to skirt U.S. rules on reporting large international movements of money.”

      Nice boy. Now, go back and read the article for any more statements you may have missed.

      And the subprime criminal of the banking crisis, Fannie Mae, was not a Wall Street bank or brokerage. It was a US Government Sponsored Enterprise.

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