By Giovanni Legorano and Jenny Strasburg
A Milan court on Friday convicted 13 former and current
executives of Banca Monte dei Paschi di Siena SpA, Deutsche Bank AG
and Nomura International PLC of a number financial crimes, in a
long-running judicial saga tied to losses at the troubled Italian
The court gave the bankers suspended jail sentences of up to
seven years and six months each, according to a court document seen
by The Wall Street Journal.
The court also ordered the seizure of about EUR65 million ($71
million) from Deutsche Bank and EUR88 million from Nomura plus a
EUR3 million fine for Deutsche Bank and EUR3.5 million for
Giuseppe Iannaccone, a lawyer for the Deutsche Bank former and
current managers, said he "couldn't hide his shock for this
verdict" and is fully confident the managers are innocent. Mr.
Iannaccone said the defendants will appeal the verdict.
"We are disappointed with the verdict. We will review the
rationale for it once it is published," a Deutsche Bank spokesman
said. A Nomura spokesman said the bank "is disappointed with the
verdict delivered by the Court. After thoroughly examining the
content of the judgment, the Company will consider all options,
including an appeal. The penalties will not be enforceable until
all appeals have been concluded."
An appeal could prolong the case another two to three years,
according to people involved,
The decision follows a three-year trial and an investigation
lasting more than 1 1/2 years by Milan prosecutors into two complex
financial transactions that Monte dei Paschi arranged in 2008 and
2009 with Nomura and Deutsche Bank, as well as other transactions
that prosecutors said had helped the Tuscan bank misrepresent its
financial health during and after the financial crisis.
Deutsche Bank and Nomura were also defendants in the trial,
since, according to Italian law, companies can be charged with a
direct liability for some crimes committed by their
representatives. Monte dei Paschi reached a plea-bargain agreement
with the court in 2016.
The executives were charged in October 2016 after Milan
prosecutors said they had found evidence of the manipulation of
Monte dei Paschi's stock and falsification of its accounting, and
some of the executives' obstruction of the supervisory activity of
Prosecutors accused the executives of collusion to design and
carry out two complex derivatives trades, dubbed Santorini and
Alexandria, which the prosecutors said helped Monte dei Paschi hide
In particular, prosecutors alleged Monte dei Paschi's accounting
was false between 2008 and 2012, with the bank's actual earnings
being as much as 88% lower than what it disclosed during that
After many attempts to keep Monte dei Paschi -- the world's
oldest bank -- afloat both with private and public money, Italy's
Economy Ministry stepped in to nationalize it at the end of 2016, a
few months after the trial started.
The bank, which had been a perennial trouble spot in Europe's
most troubled banking system, has since made significant progress
in cleaning up its balance sheet and returning to profitability,
after years of multibillion-dollar losses. During those years the
bank was hit by mounting bad loans, the legal scandal related to
the derivative transactions that hurt its reputation and a costly,
ill-fated acquisition of a rival Italian bank.
Convicted former managers at Monte dei Paschi include
ex-chairman Giuseppe Mussari, who was given a jail sentence of
seven years and six months, the longest.
"This incredible verdict will vanish, because Mr. Mussari is
innocent," Mr. Mussari's lawyers said in a statement.
The most senior of the ex-Deutsche Bank defendants, Michele
Faissola, oversaw interest-rate and commodities trading in the
bank's markets division, then ran its combined global asset- and
wealth-management business. He left in late 2015 during a
high-level management shake-up.
Mr. Faissola since has advised members of Qatar's royal family
on investments including their large shareholding in Deutsche Bank.
That role has put him at the nexus of shareholder discussions with
the struggling bank related to capital-raisings, investor
representation on the supervisory board and management performance
during several major restructurings.
Michele Foresti was a fixed-income trading executive who left
Deutsche Bank in 2014. Dario Schiraldi left the bank in 2016 after
working in various asset-management sales roles. A former equity
analyst, Marco Veroni oversaw client accounts for Deutsche Bank
including dealings with Monte dei Paschi during the period in
focus. He left in 2012.
Matteo Vaghi still works for Deutsche Bank in wealth management
Former global-markets executive Ivor Dunbar, Mr. Faissola and
Mr. Foresti were sentenced to four years and eight months each in
jail. Mr. Schiraldi, Mr. Veroni and Mr. Vaghi were sentenced to
three years and six months each in jail. The individuals who
responded to requests for comment referred to the lawyer's
statement made on their behalf.
Sadeq Sayeed, who had been in charge of Nomura's Europe, Middle
East and Africa region and left the bank in 2010, was sentenced to
four years and eight months in jail. He couldn't immediately be
reached for comment.
in Milan contributed to this article.
Write to Giovanni Legorano at email@example.com and
Jenny Strasburg at firstname.lastname@example.org
(END) Dow Jones Newswires
November 08, 2019 15:09 ET (20:09 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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