BNP Paribas to pay record $9B fine for dodging sanctions

[Don Corleone]

This seems a bit heavy handed to me (http://money.cnn.com/2014/06/30/investing/bnp-paribas-sanctions-fine/index.html)... I don't argue that (according to the article), the bank working actively to stymie the investigation, indeed allowing more transgressions to occur after the investigation started, raises the bar somewhat.

Yet even so, this represents roughly one entire year of profits for the bank. This would be crippling... I'm curious, do the European economic types think this is likely? Can the BNP Paribas survive such a penalty? Should anybody be penalized so dramatically for ignoring the sanctions regimes?

[Kadagar_AV]

This seems a bit heavy handed to me (http://money.cnn.com/2014/06/30/investing/bnp-paribas-sanctions-fine/index.html)... I don't argue that (according to the article), the bank working actively to stymie the investigation, indeed allowing more transgressions to occur after the investigation started, raises the bar somewhat.

Yet even so, this represents roughly one entire year of profits for the bank. This would be crippling... I'm curious, do the European economic types think this is likely? Can the BNP Paribas survive such a penalty? Should anybody be penalized so dramatically for ignoring the sanctions regimes?

Mind giving some back story?

[Sarmatian]

A year's profit? 9bn? Cry me a river.

[Greyblades]

Apparantly in this case the bank losing a years profit could result in the entire company folding.

On the one hand: for once a bank gets a non trivial comuppance for dodgy dealings. Hurrah.

On other hand, these guys got comuppance for dodging sactions while the idiots that ruined the economy for the 5th time in a century got off scott free. Hurroo.

[Don Corleone]

What I know of the story is that BNP Paribas, France's largest bank, has been under investigation for some time by US Treasury officials for allowing some of it's overseas capital desks to launder and thwart economic sanctions against Iran and the Sudan, among others. The investigation was announced last month. They are apparently going to announce a settlement this evening, now that financial markets in the US have closed.

I must confess, I don't know a lot about the story. It caught my eye because such a large sum has to throw some uncertainty into the banking sector universally.

[Kadagar_AV]

I think banks are among the greatest evils of society, so I have nothing against them getting smacked hard.

[Don Corleone]

I'm no fan of banking. I'm just not a big fan of global banking insecurity.

[Seamus Fermanagh]

Don Corleone:

It is a great pleasure to renew your acquaintance in this forum. For myself, at the least, I assure you that you have been missed. Slainte to you and your ladies!


As to the central issue here:

Without efforts like these to police those who try to circumvent sanctions, sanctions are nothing but window-dressing. If you want them to have teeth, they have to be policed by such efforts as these.

On the other hand, the collapse of a major European bank would bring economic hardship to many who do NOT deserve it who deposit or invest in that bank in good faith. So I would propose an appropriate payment plan that would spread the damage for the bank down to bearable levels....say 5-7 years overall.

Of course, as I am sure they would understand, they would have to pay the appropriate rate of interest :beam:

[Montmorency]

Insecurity...

Let me speak generally here:

I think the time has come to admit that the practice must end of fining corporations and banks petty change for enormous transgressions against society, or thousands when their criminal mischief profits them in the range of tens of billions...

In addition (and in particular), men such as this (http://en.wikipedia.org/wiki/Charles_R._Forbes) should not be allowed to return to normal life, ever.


With millions of dollars at his disposal, Forbes hired 30,000 new workers at the Veterans' Bureau, many of whom were personal friends to Forbes. The Veterans' Bureau under Forbes was overstaffed and many appointed agents looked for means to justify their paid positions. During his tenure as director, Forbes ignored the needs of the wounded veterans. In the less than two years that Forbes held his position, he embezzled approximately $2 million, mainly in connection with the building of veterans' hospitals, from selling hospital supplies intended for the bureau, and from kickbacks from contractors. The budget for the Veterans' Bureau during his tenure was $1.3 billion in total. Forbes had rejected thousands of legitimate claims by veterans.[6]
Although 300,000 soldiers had been wounded in combat, Forbes had only allowed 47,000 claims for disability insurance, while many were denied compensation for reasons that Congress called "split hairs". Even fewer veterans received any vocational training under Forbes' direction of the bureau. According to the Charleston Gazette, Forbes toured with his contractor friends to the Pacific Coast, known as "Joy-Rides", inspecting veterans' hospital construction sites. Forbes and his contractor associates allegedly indulged in parties and drinking. Forbes and corrupt contractors developed a secret code in order to communicate insider information and ensure government contracts.[7] According to congressional testimony, in Chicago, on one of his many inspection trips, Forbes gambled and took a $5,000 bribe from contractor J. W. Thompson and E. H. Mortimer at the Drake Hotel to secure $17,000,000 in veterans' hospital construction contracts. Mortimer was the middleman man who had handed Forbes the bribe in one of the rooms at the Drake. Forbes said the $5,000 payment was a loan. Mortimer stated that Forbes had an affair with Mortimer's wife while on the inspection tours.[7] After Forbes returned from his inspection tours he began to sell hospital supplies at severely discounted prices. According to a Highbeam Business report, he sold nearly $7,000,000 of much needed hospital supplies for $600,000, a fraction of their worth.[8] Forbes was suspected of receiving kickbacks from contractors. When President Harding ordered Forbes to stop, Forbes insubordinately disobeyed and kept selling supplies.[9]
On January 24, 1923 Forbes awarded Hurley-Mason Construction a sizable contract of $1,300,000 to construct a new veterans' hospital at American Lake, near Tacoma. Forbes had resigned his vice presidency at Hurley-Mason Construction upon assuming his federal position under the Harding Administration. By January 1923, rumor was spread by Forbes's close friends that Forbes would resign from the Veterans' Bureau on June 1, 1923.[4] During the summer of 1922 on one of Forbes's "joy rides", Forbes had come back to Spokane and visited the F. Lewis Clark House while he was looking for a possible site for a veterans' hospital at Hayden Lake, Idaho. Forbes was accompanied by Dr. Stanley Rhinehart. The F. Lewis Clark House was one of the most prestigious summer homes in the Pacific Northwest;[4] it had been offered to Forbes and the Veterans' Bureau at a low cost. Colonel Forbes stayed there for several days. The Spokane division office of Hurley-Mason Construction had been closed down.[4]

[...]

Forbes was prosecuted and convicted of conspiracy to defraud the U.S. Government, fined $10,000, and sentenced to a prison term of two years

[Don Corleone]

Why thank you sir. Always good to see you too.

[Husar]

Only the profits? Entire income seems more apt....

Profits are the part they can spend on expanding and to satisfy shareholders, how is that crippling?

[Greyblades]

Without efforts like these to police those who try to circumvent sanctions, sanctions are nothing but window-dressing. If you want them to have teeth, they have to be policed by such efforts as these.

Well, personally when I want them to have teeth I rather have them take the idiots running the bank and throw them in the river with concrete shoes than forcing the bank itself to pay. if all you do is fine the bank the idiots running it will just up sticks and get hired on by a different firm.

[Seamus Fermanagh]

Well, personally when I want them to have teeth I rather have them take the idiots running the bank and throw them in the river with concrete shoes than forcing the bank itself to pay. if all you do is fine the bank the idiots running it will just up sticks and get hired on by a different firm.

I have no problem with those who made/approved the illegal decisions being held criminally liable as appropriate. Seems appropriate.

[HopAlongBunny]

I await the moaning and complaining about "selective enforcement".
8.whatever billion in fines and criminal charges; the likelihood of seeing this level of retribution directed toward a US bank seems vanishing small.
Now if only they had the same level of zeal in cleaning up their own backyard....

[Brenus]

Well, that will teach the European Banks few lessons, and the European few lessons.
First, if you want to invest in the USA, you will face US decisions, your choice.
Second, US lawyers and law enforcement agencies will always favourite the US side, see what happened with the Vulture Debt and Argentina.

So, don’t invest in the USA would be my advice if don’t want to face this.
Don’t sign any treaties with USA linking your laws and trade standards with USA. Stop immediately the negotiation of the Transatlantic Treaty and well, go back to honest trade as well practices as well.

[Ironside]

Well, that will teach the European Banks few lessons, and the European few lessons.
First, if you want to invest in the USA, you will face US decisions, your choice.
Second, US lawyers and law enforcement agencies will always favourite the US side, see what happened with the Vulture Debt and Argentina.

So, don’t invest in the USA would be my advice if don’t want to face this.
Don’t sign any treaties with USA linking your laws and trade standards with USA. Stop immediately the negotiation of the Transatlantic Treaty and well, go back to honest trade as well practices as well.

IIRC, the justification used by the US in this case was that BNP traded with USD. Thus they can be targeted by US law.

Short version. The US is enforcing their embargo on companies that operate outside the US and has no local embargo. Of course being a multinational company makes things a bit weird, since some parts of your company has an embargo and some does not.

[Papewaio]

Too big too fine now?

Surely the fine is the first part and criminal custodial sentences the follow on part. Banks and bankers should not be above the law.

[Fisherking]

Pardon my cynicism but this would never happen to a US bank but it is ok to attack a French bank.

They often go out of their way not to see what their own banks are doing.

[Seamus Fermanagh]

I await the moaning and complaining about "selective enforcement".
8.whatever billion in fines and criminal charges; the likelihood of seeing this level of retribution directed toward a US bank seems vanishing small.
Now if only they had the same level of zeal in cleaning up their own backyard....

Agreed. There should have been more instances of jail time over the "Toxic Derivatives" crash than there were. I would have no problem with that. Most of the bankers playing that game screwed up....but a few were actively duplicitous and they needed to go to jail for fraud.

[Sp4]

I honestly don't think it has an awful lot to do with punishing anyone *tinfoil*

[HopAlongBunny]

Apparently US regulators have been focusing on home; I stand corrected.
Still precious few criminal proceeding anywhere.

http://www.bbc.com/news/business-28021000

[Brenus]

"Apparently US regulators have been focusing on home; I stand corrected" Yeap. You do. The USA decided that BNP Parisba broke US law so should be fined. If Parisba doesn't want to pay the fine, it just has to renounce to invest in the USA. Job done. Now, BNP might think to have access to USA market is worth to pay the ransom, err the fine, but choice is theirs.

[Sigurd]

Don... long time no see. Greetings!!