Guardian: “France’s biggest bank, has said it deeply regrets the misconduct that led to a record-breaking fine of $8.83bn (£5.2bn) for dealing with countries that were subject to US sanctions.”
“Jean-Laurent Bonnafé, its chief executive, said the misconduct was “something that goes against the grain of the bank”, and insisted that the settlement did not undermine the solidity of its finances.
Speaking to investors on Tuesday, he said BNP Paribas had strengthened its internal controls and all transactions in US dollars would now go through New York.
Shares in the bank rose 3.4% on Tuesday after it announced it would pay a dividend of €1.50 a share – a surprise for some analysts who had assumed the 2014 dividend would be wiped out by the enormous fine.
US prosecutors said the bank had engaged in a “long-term, multi-jurisdictional conspiracy” involving currency trades for clients in Sudan, Iran and Cuba that was known at the highest levels at the company.
….At a press conference, the US attorney for the southern district of New York, Preet Bharara, called the bank’s actions a “tour de fraud”.
The bank’s general counsel, Georges Dirani, told the judge that BNP’s sanctions violations took place between 2004 and 2012. Prosecutors said senior executives at the bank knew of the activities. “This conduct, this conspiracy was known and condoned at the highest levels of BNP,” assistant district attorney Ted Starishevsky told the court.
….The regulator also said 13 individuals would leave the bank as part of the settlement, including the chief operating officer, Georges Chodron de Courcel. His intention to leave after 42 years was announced in June without any mention of the discussions with US regulators. Other staff face demotions and bonus cuts.
The fine is particularly bruising for BNP, which escaped the fallout from the 2008 financial crisis relatively unscathed and unlike many rival banks did not face any fines or other penalties related to the crisis. But after months of discussion and an intervention by the French president, François Hollande, the bank agreed to plead guilty to the offences.
The allegations centred on $190bn in transactions that BNP’s trade-finance arm in Switzerland processed for countries under US sanctions between 2004 and 2012.
In 2006, Bush administration officials warned foreign banks doing business in the US that they would be punished if they helped the sanctioned countries do business in dollars.
In 2007, BNP’s president told staff that the bank would stop doing business with Sudan, Iran and Cuba, according to a report in the Wall Street Journal. Yet regulators claim BNP continued to deal with these countries, and employees hid the transactions using satellite banks as fronts. The bank “placed its financial network at the service of rogue nations to improve its bottom line,” said assistant attorney general Leslie Caldwell on Monday.
The near-$9bn fine is more than BNP’s 2013 profits of $6.5bn. Caldwell said the fine reflected the transactions that prosecutors believed they could prove were criminal. The penalties are in line with a stronger approach taken more recently by the US attorney general, Eric Holder, who said that no bank was “too big to jail”, although no BNP employees in this case are going to prison.
….US deputy attorney general James Cole said BNP shareholders had a responsibility to take a more active role. “The $9bn that’s walking out the door today is your money. Until shareholders demand from their boards [of directors] that those boards choose leaders that create a healthy culture of compliance, the money will keep walking out the door,” he said.
….Swiss bank Credit Suisse was fined $2.6bn in May 2014 for helping US citizens evade tax, offences to which it also pleaded guilty.
The latest fine surpasses the $1.9bn penalty imposed on HSBC in December 2012 for sanctions-busting and money laundering offences, largely involving Mexican drug barons.
US banks have also faced a number of heavy penalties. JP Morgan reached a record $13bn settlement with the US authorities in November over the sale of home loan bonds; but that sum included $9bn of compensation to settle federal and civil claims over the sale of the bonds.”
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