by Ever had to testify in a trial involving your father’s dealings in corrupt activities, and as a result had your tax records leaked for all of the public to see? Sergio Machado, the ex-head of Credit Suisse’s Brazil fixed-income business has, and now everyone knows how much he made in 2015. Sergio’s father, who goes by the same name, is a former Brazilian politician who went on to head the state run oil company Petrobras before being investigated for corrupt activities involving bid-rigging and bribery. During the case (which the elder Machado has since agreed to a plea bargain) Sergio was called on to testify about an HSBC account he opened in Switzerland that some of the illegal funds allegedly moved through. As part of the court proceedings, Sergio had submitted tax records for 2015, and those records were released to the public. What the tax record shows has left many bankers thoroughly confused – in 2015, the younger Sergio Machado made million with Credit Suisse as the head of Brazil’s fixed income business. What makes it curious, is that this was during a year where, as Bloomberg reports, deal fees plummeted 42% to the lowest level in a decade, and as we discussed, in an economy that fell off a cliff in 2015.
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Ever had to testify in a trial involving your father’s dealings in corrupt activities, and as a result had your tax records leaked for all of the public to see? Sergio Machado, the ex-head of Credit Suisse’s Brazil fixed-income business has, and now everyone knows how much he made in 2015.
Sergio’s father, who goes by the same name, is a former Brazilian politician who went on to head the state run oil company Petrobras before being investigated for corrupt activities involving bid-rigging and bribery. During the case (which the elder Machado has since agreed to a plea bargain) Sergio was called on to testify about an HSBC account he opened in Switzerland that some of the illegal funds allegedly moved through. As part of the court proceedings, Sergio had submitted tax records for 2015, and those records were released to the public.
| What the tax record shows has left many bankers thoroughly confused – in 2015, the younger Sergio Machado made $14 million with Credit Suisse as the head of Brazil’s fixed income business. What makes it curious, is that this was during a year where, as Bloomberg reports, deal fees plummeted 42% to the lowest level in a decade, and as we discussed, in an economy that fell off a cliff in 2015. In addition to the Brazilian elements, Credit Suisse overall suffered its first annual loss since the financial crisis in 2015, with its global markets and investment banking operations performing horrendously. |
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| Machado’s $14 million in compensation for 2015 was much higher than the highest paid CS executive board member Rob Shafir, who earned $8.2 million. Additionally, CEO Tidjane Thiam earned $4.7 million for six months of work in 2015, which annualized doesn’t even come close to Machado’s haul. Bloomberg notes that the $14 million did include deferred bonuses from prior years, however those would be some significant bonuses to get the banker up to $14 million. Then again, under Machado’s watch, CS lent $1.27 billion to Minas Gerais State in 2013, and then promptly turned around and sold it to investors a month later for a cool $116 million profit, so perhaps Machado got a large cut of that deal – we’ll never know.
Credit Suisse declined to comment, saying it doesn’t discuss employee earnings. Machado left the firm in April amid global cutbacks after spending 17 years at the bank, and perhaps the removal of Machado’s lofty paycheck will be spun by Thiam as evidence that the CEO is serious about turning the organization around in hopes that the stock will stop crashing. Then again, probably not. |
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Also, for those interested in the other piece to the story, which is how the younger Machado testified to the fact that illegal funds were moving through his bank account, Sergio said that he had been kept in the dark about any allegedly illegal activities:
“The whole time, I believed in the lawful purposes of the account.”
And just in case anyone gets any ideas of prosecution, don’t, because the trail may lead to the very top and that is not acceptable.