It reads like something out of a potboiler spy thriller, set on Lake Zurich’s millionaire ‘Gold Coast’.
A simmering neighbourhood feud between one of the City of London’s best-known figures and his high-flying protege, a botched surveillance operation by private detectives and the suspected suicide of a middleman caught up in the scandal.
This is the plot-line that has rocked banking giant Credit Suisse, gripped the world of finance and now threatens to engulf the firm’s chief executive Tidjane Thiam, who ran the Prudential for six years.
Lake Zurich’s upmarket ‘Gold Coast’ is the scene of the feud between Credit Suisse boss Tidjane Thiam and the bank’s hugely successful wealth management boss Iqbal Khan
Yesterday the saga claimed its first corporate scalp – chief operating officer and Thiam’s right-hand man Pierre-Olivier Bouee. The firm’s global head of security, Remo Boccali, also fell on his sword.
An investigation commissioned by Credit Suisse and carried out by the Homburger law firm found that Bouee ‘acted alone’ when he instructed Boccali to recruit private detectives to spy on Iqbal Khan, the bank’s hugely successful wealth management boss.
This would culminate in extraordinary claims by Khan last month that three men chased him and his wife through the streets of Zurich by car and on foot – leading to a physical confrontation behind the Swiss National Bank.
Bouee is said to have hired private detectives amid fears that 43-year-old Khan, who arrived in Switzerland from Pakistan aged 12, was trying to poach clients from Credit Suisse after jumping ship for arch-rival UBS.
In a statement issued yesterday, Credit Suisse said Bouee had taken full responsibility for his actions and resigned with immediate effect.
Ivory Coast to the City: The past of Credit Suisse boss Tidjane Thiam
Exonerated: Credit Suisse boss Tidjane Thiam
Born into a prominent political family in Ivory Coast, Tidjane Thiam was raised and educated in France.
He returned to his home country in the mid-1990s where he accepted a government job, becoming minister for planning and development.
But within a year, the government was overthrown in a military coup and he was placed under house arrest.
However, his return to the private sector proved more successful.
Thiam was appointed to lead Prudential in 2009, becoming the first black chief executive of a FTSE 100 company. His six-year tenure was not without controversy.
In 2013 he also became the first boss of a blue chip firm to be censured by the City watchdog, which was fined £30million.
Bouee, the bank reported, had told the inquiry he ‘decided to initiate the observation’ of Khan ‘in order to protect the interests of the bank’ on August 29, as soon as UBS announced it had recruited Khan to head up its own wealth management business.
But it said the banker insisted he did not breathe a word about it to any of the board executives, including 57-year-old Thiam.
According to Credit Suisse, the Homburger investigation ‘did not identify any indication that the chief executive had approved the observation of Iqbal Khan nor that he was aware of it prior to September 18, 2019, after the observation had been aborted’.
After distancing its top executives from the scandal, the bank said Bouee’s decision to hire private detectives was ‘wrong and disproportionate and has resulted in severe reputational damage to the bank’.
It also said Bouee’s suspicions proved unfounded – as the investigation found no evidence that Khan had ‘attempted to poach clients away from Credit Suisse’.
In a hastily arranged press conference, the bank’s chairman Urs Rohner apologised to employees, shareholders and to Khan and his family.
He added it was ‘with great sadness’ that the bank had learned of the reported suicide of a security expert who worked for Credit Suisse and acted as the middleman between the bank and the private investigation firm Investigo. Asked whether Credit Suisse was in any way responsible for the unidentified man’s death, he said: ‘We are greatly saddened.’
Resigned: Pierre-Olivier Bouee was Credit Suisse’s chief operating officer
Unfortunately for Credit Suisse and Thiam, the departure of its chief operating officer will not draw a line under the debacle – which is being investigated by Swiss prosecutors.
Suspicion that other executives were aware of what Bouee was doing is also unlikely to go away.
And speculation over Thiam’s role in the affair increased after reports about the breakdown of his relationship with Khan, who he had previously described as a ‘star’ and singled out as a potential successor.
The personal animosity between the two men is said to have intensified over an unseemly neighbourhood dispute, when Khan bought a property immediately next to his boss on Lake Zurich’s north-eastern ‘Gold Coast’ and spent two years redeveloping it.
After Khan moved into the property in January, he is said to have fallen out with Thiam’s partner at a cocktail party hosted by the chief executive.
The cause of the argument – which resulted in a confrontation between Khan and his boss – is thought to have been some trees planted on Thiam’s property. The two men were said to have been barely on speaking terms after the spat.
Rohner said the probe had not looked into ‘personal differences’ between Thiam and Khan, and there was no intention of filing criminal charges against anyone involved. But the plot thickens.
RUTH SUNDERLAND: Troubling times for Tidjane Thiam as the row at Credit Suisse rages on
The man at the centre of the extraordinary row at Credit Suisse, chief executive Tidjane Thiam, is well known to UK investors from his stint at the helm of insurance company Prudential.
A brilliantly clever strategist – some say too clever by half – he is also a divisive figure.
His fans see him as a near genius, while detractors point to arrogance, prickliness and lapses of judgment.
His deputy, Pierre-Olivier Bouee, has fallen on his sword in a corporate spying scandal, taking responsibility for snooping on former colleague Iqbal Khan who was ostensibly suspected of poaching clients but whose real crime was nakedly trying to depose the boss.
Credit Suisse boss Tidjane Thiam is well known to UK investors from his stint at the helm of insurance company Prudential
Khan went beyond mere metaphor in putting his tanks on Thiam’s lawn.
He moved into the mansion next door to his boss on the shores of Lake Zurich, then embarked on long and disruptive renovations.
Anyone would be annoyed by that, but power grabs and confrontations happen all the time at the top of finance.
An ability to handle turbulent young pretenders ought to be part of a chief executive’s basic repertoire, without letting them escalate and drag the bank into disrepute. But this is not the first time Thiam has been in hot water.
While at the Pru, he was censured by City regulators for failing to inform them of his plans for a £21billion takeover of Asian insurer AIA, and the company was fined £30million.
That was a serious error on his part and regulators were rightly disgusted.
It emerged this week that there was an appalling rip-off of British pensioners taking place on his watch, when the Pru was fined £24million for gulling pensioners into taking poor-value annuities that left them worse off for life.
Much of the dreadful mis-selling took place during the period when Thiam was chief executive.
Back at Credit Suisse, the lurid revelations inevitably raise questions over whether he is the right sort of person to be in charge.
If there is one quality that ultra-rich clients want to see at their Swiss bank above all others, it is discretion.
Don’t be fooled by the benign-sounding label that John Lewis has attached to its radical overhaul.
It might be called Future Partnership, but at least 70 managers, including Waitrose boss Rob Collins, have no future with the partnership because their jobs are being culled as part of an effort to save £100million.
However benign an organisation would like to be, cuts of this magnitude are brutal. It is all the more shocking because, until recently, John Lewis was a byword for bourgeois solidity.
Middle Britain’s favourite retailer, however, is buckling under the same pressures as everyone else on the High Street, making a £26million half-year loss and grappling with a debt pile of £2.4billion.
Something had to be done – and fast.
Announcing the move now, rather than waiting for the arrival of new chairman Sharon White next year, smacks of desperation.
But bringing together John Lewis department stores and Waitrose grocery shops and running them as a single business is not a real solution.
Cutting costs, improving IT and supply chains might be necessary but it doesn’t provide a vision of how to create thriving retail brands for the future.
John Lewis is suffering because of the slowdown in the housing market and uncertainty over Brexit, which mean shoppers buying less new furniture and white goods.
Business rates bills are huge. Online rivals are luring once-loyal customers and the ‘Never Knowingly Undersold’ pledge is increasingly expensive to honour.
Waitrose has been undercut by German discounters Aldi and Lidl, which offer middle-class staples such as prosecco at cheaper prices.
It is also having to come up with a new solution for online grocery sales as its partner, Ocado, is entering a new arrangement with M&S.
An internal reorganisation may save money but it does not solve these problems, nor does it give any vision of how the brands might regain their former glories.
The two businesses were separated in 2001 as it was thought then they would grow faster as independent brands. Putting them back together just reduces duplication. There is no alchemy here for growth.
The risk is that partners on the shopfloor, who have already seen their bonus and pension entitlements reduced, will become demoralised.
That would be extremely dangerous because the quality of the staff, whose experience and knowledge are vastly superior to many rivals, has always been one of John Lewis’s biggest assets.
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