Does the greenwashing scandal of Deutsche Bank’s subsidiary DWS apply only to fund investors and environmental NGOs, or does it also apply to the issue of German corporate culture? At least abroad, things seem to be viewed more fundamentally. British newspaper telegraph People have been asked these days about corporate governance – that is, good company management – in Germany following the recent raid on DWS and the subsequent resignation of CEO Asoka Wöhrmann. From Germany’s largest fund company, the newspaper quickly leaned into the collapse of the Wirecard scammer or the Volkswagen diesel scandal.
The comparison may be a bit sporty, after all, the collapse of the Deutsche Bank branch is not threatened at present. However, a large fine is quite possible and the damage to the fund company is already enormous: 50 investigators from the Frankfurt Public Prosecutor’s Office, the BKA and the financial regulator searched DWS’s headquarters last week. It is said to have sold equity funds as “more sustainable” than they are, and so aggressively that the prospectus and equity investment fraud are now on the air. According to the prosecutor, the investigation was prompted by allegations by the former DWS head of sustainable development. The American woman was fired in March last year, just months after she pointed out that “green” funds had a lot of catching up to do. Since she exposed the charges in the summer of 2021, several US authorities, and now German prosecutors, have investigated. The DWS share price has already dropped significantly last summer – a decline from which it has yet to recover.
But the trials are unpleasant and dangerous not only from the point of view of criminal law and the sale of funds. The fund manager has recently built a reputation as a key shareholder. For years, fund managers have been asking DWS biting questions at general meetings, at the chemical company Bayer about the acquisition of the American seed producer Monsanto, or at Volkswagen over the diesel scandal – many experts believe that an important contribution to better management of the company in this country, which is probably impossible at present.
Critical questions bounce back from leadership
Because now the management board of DWS is criticized like never before: on Thursday, chairman of the supervisory board Karl von Rohr and outgoing president Wöhrmann had to explain themselves at their own general meeting – actually pro forma, after all, Deutsche Bank almost 80 percent goes to the daughter, but there is still room to critical comments and, in normal times, evidence that DWS itself takes so-called shareholder democracy seriously. Now, however, shareholders wanted to know what a burden the company could face as a result of suspicions of greenwashing, and whether the supervisory board reacted early.
Nevertheless, critical questions rebounded from Wöhrmann and von Rohr. Von Rohr, who is the deputy head of Deutsche Bank on a daily basis, seemed to sympathize in the first place with the departing CEO, saying that the “allegations, allegations, rumors and anonymous personal threats” that existed were weighing heavily on Woehrmann. But there is nothing wrong with that: the supervisory board organized an independent “analysis” and “plausibility check” and found no evidence that DWS had made false statements in the prospectuses of securities. Plus, we’re looking back at a year of records: in terms of profit, cost / income ratio, net cash flow. That the share price has dropped significantly since the allegations? Well, it was “frustrating”, admitted Wöhrmann. But justified? no
The encouraging words did not seem to suit the shareholders very much. The umbrella organization of key shareholders and the Union Investment fund, after all, the third largest shareholder and an important vote in Frankfurt’s financial center, even refused to discharge the supervisory board and management board. The governing bodies were still relieved of 82 percent of their capital this afternoon. However, the results below 90 percent. is considered disappointing even if a loyal main shareholder apparently did not vote on the matter. “It was a huge blow to management,” said one shareholder.