Credit Suisse admits spying on second executive

By Brenna Hughes Neghaiwi

ZURICH (Reuters) - Credit Suisse <CSGN.S> on Monday admitted to snooping on another of the bank's former executives, deepening a spying scandal at the Swiss group, which is already under investigation for putting its ex-wealth management chief under surveillance.

Switzerland's second-largest bank blamed former chief operating officer Pierre-Olivier Bouee for hiring detectives in February to track former HR head Peter Goerke. They described a rogue operation in which all executives and directors, including Chief Executive Officer Tidjane Thiam, were kept in the dark about what was going on.

Credit Suisse had earlier blamed Bouee for a similar incident involving former wealth management boss Iqbal Khan and had also cleared Thiam of any role in it. At the time, Thiam characterized it as an "isolated incident".

Reuters was not immediately able to reach Bouee and Goerke for comment.

"The observation of Peter Goerke, which has now been confirmed, is inexcusable," Credit Suisse Chairman Urs Rohner said in a statement, adding there was "grave concern" that those responsible for ordering the surveillance had not mentioned it during an earlier probe regarding Khan.

"We are aware that the observation of Iqbal Khan and Peter Goerke have damaged the reputation of our bank," Rohner said.

Goerke had no knowledge that he had been followed by private detectives until officials from the bank contacted him shortly before Swiss newspaper Neue Zürcher Zeitung made the matter public last Monday, a person familiar with his thinking said.

Goerke, who remains employed by the bank as an adviser, saw no grounds to pursue the matter criminally, the person said, and was in contact with senior officials at Credit Suisse.

Credit Suisse has been in the spotlight since September when Khan filed a criminal complaint in Zurich after a confrontation between him and one of the private detectives tailing him.

The bank launched an investigation and found it had bankrolled the surveillance.

An investigation by law firm Homburger into the spying on Khan -- who now works for rival UBS <UBSG.S> -- had found Bouee and a security boss under him were alone responsible for the order and found no evidence of other incidents.

Both resigned and Credit Suisse said on Monday that Bouee's employment had now been terminated for cause, indicating his bonus and other potential compensation would likely be forfeited. Bouee was a long-time associate of Thiam and had followed him to Credit Suisse from Prudential <PRU.L>.

Harris Associates, the bank's third-largest investor, according to Refinitiv data, remained positive.

"We are extremely supportive of the CS executive management team - a team that we believe has greatly improved CS over the last four years," David Herro, manager of the firm's Oakmark International Fund, told Reuters.

Switzerland's finance watchdog is looking into the bank's surveillance activities and its corporate governance. There is also a criminal probe into the Khan affair.

A Credit Suisse spokesman said Credit Suisse and Homburger would continue their latest probe having determined that Bouee and others involved had not told the truth when asked about any other surveillance orders in September and had taken care not to leave any identifiable traces in the bank's systems.

"Credit Suisse will look into any relevant indications if we receive information about alleged (surveillance)," he said.

Credit Suisse stock was down 0.4% at 1530 GMT while the European bank sector index <.SX7P> was off 0.7%.

(Reporting by Brenna Hughes Neghaiwi; additional reporting by Maiya Keidan; Editing by Michael Shields and Jane Merriman)