A German water utility alleged a former UBS banker had an 'inappropriate' relationship with consultants advising on disputed swap deals, the latest lawsuit to highlight how complex financial instruments backfired on municipal agencies during the 2008 financial crisis.
Bloomberg News reports that Kommunale Wasserwerke Leipzig GmbH said in court documents that Steven Bracy, the banker at the centre of the allegations, booked strippers for consultants at Value Partners and went on an African safari with them. That happened even as he was supposed to be advising KWL on its derivative transactions with UBS.
KWL made the allegations in its response to a lawsuit filed by UBS, in which the bank is seeking $138m under so-called credit protection agreements from 2006 and 2007. The utility argues in court documents that the close relationship between the bank and the consultants creates a conflict of interest that invalidates the deal. Bracy is scheduled to testify at the trial in London today.
Bracy, then a UBS employee, 'appears' to have asked another man in 2006 to arrange for four strippers to be paid $5,600 each, KWL said in court documents. Later that year, Value Partners invited Bracy and another UBS employee to go on a 'luxury safari' in South Africa to discuss a partnership.
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