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BNP fined $8.9 bln for breaking US sanctions on Iran and Sudan Bank and French ministers clear air after record fine

WASHINGTON, July 1, (AFP): BNP Paribas pleaded guilty Monday to US criminal charges of violating sanctions on Iran and Sudan for eight years and was fined a record $8.9 billion. The US Justice Department said France’s largest bank deliberately hid thousands of transactions with the two countries as well as Myanmar and Cuba during 2004-2012 in what officials called a “complex and pervasive scheme” that top bank managers knew broke US law. Officials called it the largest penalty ever obtained by the Justice Department in a criminal economic sanctions case, and the largest in any criminal case involving a bank.


“BNP went to elaborate lengths to conceal prohibited transactions, cover its tracks, and deceive United States authorities,” Attorney General Eric Holder said.
The violations aided countries involved in terrorism and human rights violations, Holder said, “in many cases to the detriment of United States national security.”
“This landmark resolution demonstrates the justice department’s firm commitment to enforcing embargoes and other measures designed to protect America’s security and our vital national interests,” said Holder.
“This outcome should send a strong message to any institution, any institution anywhere in the world, that does business with the United States, that illegal conduct will simply not be tolerated.”


The bank agreed to plead guilty to one count of conspiring to violate sanctions, making it the first bank found guilty in a sanctions case.
As part of the settlement, BNP will pay $8.83 billion as forfeiture of gains, split among several US agencies and authorities, and a $140 million fine.
It also agreed to give up US dollar clearing operations through its New York branch and other affiliates for one year in certain business lines like oil-related transactions, where officials say much of the misconduct took place.
And the bank is letting go of 13 employees, five of them top-level executives, including chief operating officer Georges Chodron de Courcel, who resigned in early June.

Absorb
Leading French bank BNP Paribas said it would face no difficulty in absorbing the record multi-billion-dollar fine slapped on it by US authorities for breaking sanctions against pariah regimes.
But on Tuesday, the bank said it had “ample” resources to pay the fine, and shares in the bank rose.
The terms of the deal enable the bank to avoid criminal prosecution, although the US Justice Department was severe in its findings.
“BNP went to elaborate lengths to conceal prohibited transactions, cover its tracks, and deceive United States authorities,” Attorney General Eric Holder said.
“This outcome should send a strong message to any institution, any institution anywhere in the world, that does business with the United States, that illegal conduct will simply not be tolerated,” Holder said.
The French government immediately sent signals that its threats to block a EU-US trade deal no longer applied and that contrary to its previous warnings, the bank’s ability to lend would not be crippled.
French Trade Secretary Fleur Pellerin assured that there was no risk or linkage between the case and the negotiations between the European Union and United States over the vast trans-Atlantic free trade agreement.


The finance director at BNP Paribas, Lars Machenil said the bank had “ample” cash resources and had no need “to rush”, ruling out any capital-raising operation for now.
Shares in the bank showed a gain of 4.05 percent in early afternoon trading to 51.55 euros despite the record fine, with investors expressing relief that the way ahead was now clearer.
“The CAC 40 (French stock index) is being pulled ahead largely by the good performance of BNP Paribas shares following the announcement of an agreement,” said Saxo bank analyst Christopher Dembik.
He said: “BNP Paribas should be well able to withstand the fine inflicted by US authorities which, in comparison with the assets managed by the bank, amount to only a very small, amount.”

The bank is expected to book a charge of 5.8 billion euros ($7.9 billion) in its accounts for the second quarter of the year. The effect might push its ratio of shareholders’ funds to risks underwritten down to 10.0 percent at most from 10.6 percent at the end of March, but still well within regulatory limits. The agreement, which includes a ban on some dollar transactions, came after long negotiations. French President Francois Hollande appealed for clemency to US President Barack Obama, who said he could not and would not interfere. The bank has paid a severe price for breaching the sanctions, and some other banks are also at risk.
 

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