Credit Suisse Group AG’s top shareholder expressed alarm at the prospect of ousting top executives over the surveillance of former wealth management head Iqbal Khan.
“We are fully supportive of CS’s management actions taking any legal steps necessary to protect the company and think it would be damaging to CS and its stakeholders to lose any member of senior management over this issue,” said David Herro, deputy chairman of Chiacago-based Harris Associates.
Herro’s comments underscore how quickly a drama mingling the personal and professional rivalries among the Swiss financial elite has engulfed Credit Suisse. The fate of top officials, including Chief Executive Officer Tidjane Thiam, hangs in the balance as law firm Homburger wraps up the final stages of its inquiry into the matter.
The bank’s board of directors will likely meet early next week on the issue after receiving the final report from Homburger. Chairman Urs Rohner will move swiftly to take punitive action against the institution’s senior officials if they’re found to be responsible, a person familiar with the situation said, asking not to be identified because of the sensitivity of the matter.
Former Credit Suisse and UBS Group AG chief Oswald Gruebel took the opposite tack to Herro earlier this week, saying Thiam should be fired if the reports are confirmed, particularly if the scandal had its roots in a personal conflict between the CEO and Khan.
The management crisis stems from the bank’s hiring of a private investigation firm to shadow Khan because of fears he would poach former colleagues for his new employer, crosstown rival UBS Group AG, where he’s scheduled to begin work Oct. 1. It emerged after a confrontation in downtown Zurich last week between Khan and the investigators.
Rohner has tasked board member John Tiner with leading the internal probe, a person familiar with the situation said. A spokesman for Credit Suisse referred to a statement from the board on Monday which said: “As soon as the investigation is completed, the Board of Directors will inform of its findings. Until this time, no further information can be released.” Homburger declined to comment.
In the meantime, the details of the feud between Thiam and Khan that started it all are leaking through the allies of both men.
Tensions mounted in January during a party at Thiam’s house in the upscale neighborhood of Herrliberg outside Zurich when the two men had an argument, people familiar with the situation have said. When a corporate reorganization came in February, Khan’s responsibilities stayed the same, even as two colleagues were elevated to the executive committee. The rift widened as Khan’s name surfaced as a candidate to for the top job at Julius Baer Group Ltd.
Khan left Credit Suisse almost three months ago, and UBS in August enlisted him for a key role at its wealth-management business as part of a wider shake-up.
But the drama continued after Credit Suisse hired the private investigator to shadow its former employee. Khan was followed by unidentified men while driving his car with his wife last week, several people briefed on the events said previously. He eventually noticed that he was being followed and took pictures of his pursuers, which led to a physical confrontation when the men tried to take away his mobile phone, the people said.
A report from the private security firm hired by Credit Suisse paints a different picture. Investigo GmbH, which offers cash collection, investigations and security services, said its employee was acting alone and “defensively,” contradicting earlier accounts.