(Reuters) – The top German asset manager DWS will resign next week, he said on Wednesday, a day after calls from prosecutors over allegations that the company misled investors about “green” investments.
The raids and the resignation of DWS CEO Asoka Woehrmann mark another setback for Deutsche Bank, DWS’s majority owner, which has tried to move on from rule violations, including money laundering and the sale of securities, which has led to billions in fines.
DWS has been haunted by the charges for several months, prompting German prosecutors to raid DWS and Deutsche Bank’s headquarters on Tuesday.
German and US officials have investigated reports and a whistleblower̵7;s allegations that DWS had exaggerated the green merits of investments it sold – a method known as greenwashing. DWS has repeatedly denied that it misled investors.
DWS’s highest management change had been going on for some time but was finally done at meetings late on Tuesday in the wake of the raids, said a person with direct knowledge of the matter.
Mr Woehrmann told employees in a memo that it was a joy to see DWS flourish but that “accusations …, however unfounded or indefensible, they have left traces.”
“To quote Charles Dickens: it was the best of times, it was the worst of times,” he told the Reuters PM.
Deutsche Bank, which retained the majority ownership of DWS after its IPO, has marketed itself as banking companies can turn to when looking for a greener future.
Desiree Fixler, who is involved in the investigation, told Reuters that the departure was positive but that it did not go far enough.
“It’s not just a one-man exchange,” she said.
“It’s greenwashing, and there is the blackout. It’s a huge cultural issue at Deutsche Bank,” she said.
DWS and Deutsche Bank declined to comment on Fixler’s comments.
On Tuesday, German prosecutors said “sufficient evidence has emerged” to show that environmental, social and governance factors were taken into account in a minority of investments “but not at all taken into account in a large number of investments”, contrary to statements in the DWS fund sales prospectus.
Last year, the US Securities and Exchange Commission and German financial watchdog BaFin launched separate investigations into the whistleblower allegations.
Whistleblower, Ms. Fixler, a former head of sustainability at DWS, had said that the company overestimated how it used sustainable investment criteria to manage investments.
In February, Deutsche Bank agreed with the US Department of Justice to extend the stay of a special supervisor at the bank after it failed to report allegations involving DWS in time.
Shares in DWS have fallen by 24% since the SEC and BaFin investigations were announced in August last year. They decreased by about 5% late on Wednesday.
The accusations show that “greenwashing is not a trivial crime”, says Magdalena Senn from the German consumer organization Finanzwende.
“The raid and the departure will have a signal effect on other asset managers,” she said.
Credit Suisse analysts said Woehrmann’s departure was disappointing as he successfully implemented reforms and a turnaround in DWS.
“We see that the change of leadership heralds a period of uncertainty for DWS’s strategy – and may even raise questions about its future as an independent asset management company,” said Credit Suisse.
DWS and Deutsche Bank said on Tuesday that the asset manager had cooperated with supervisory authorities and authorities before and will continue to do so.
Mr Woehrmann has been under pressure on several fronts since accusations of greenwashing were broken.
Deutsche Bank conducted an internal investigation into Woehrmann’s possible private e-mail use for business purposes, and the European Central Bank also investigated corporate governance issues surrounding him.
He also received threatening letters, including one in December with a red cross, white powder and a racist statement.
Asked about the allegations in a DWS results interview with analysts, Mr. Woehrmann that he emphatically denied all allegations.
Deutsche Bank’s CEO Christian Sewing publicly supported Woehrmann in January and thanked him on Wednesday for “his impressive work and achievement.”
Stefan Hoops, who has overseen Deutsche Bank’s corporate banking division since 2019, will replace Woehrmann from June 10, the bank said.
Woehrmann’s resignation will take effect on June 9, the day of its Annual General Meeting.