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Excerpts from today’s lead story in The Wall Street Journal -
U.S. Authorities Are Expected to Slap BNP with Nearly $9 Billion in Penalties
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“The landmark settlement expected (today) between U.S. authorities and BNP Paribas SA began to take shape last summer, after bank executives flew to New York to share an embarrassing admission: The French bank had been processing potentially illicit dollar transactions with countries blacklisted by Washington years after the U.S. began investigating the lender.
"We can't believe we're having this conversation now," said one of the officials in the meeting with the U.S. Justice Department and the New York District Attorney's office at the Federal Reserve Bank of New York, according to a person present. The U.S. had at times already expressed frustration with the bank's efforts in the probe.
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Run by some of France's brightest minds from a hallway of the bank's Paris headquarters nicknamed the "Hall of Mirrors"—referring to the famed room at the Versailles Palace—BNP Paribas deftly navigated the financial and euro sovereign-debt crises.
During the meeting in New York last summer, however, BNP Paribas admitted it had processed transactions with Iran and other sanctioned countries, including some after the U.S. probe started, people familiar with the matter said. The bank told U.S. officials it had no knowledge of the alleged misconduct before the probe and blamed a small group of employees at its trade-finance unit, notably in Switzerland, the people said.
That disclosure left the bank's senior management caught in a paradox, said a former BNP Paribas director familiar with the investigation: "They claim they knew nothing but then, who was running the bank?"
Prosecutors focused on alleged falsification of U.S. banking records to camouflage the identities of beneficiaries in sanctioned countries to defeat the U.S. embargoes.
In May, in what appeared to be a thinly veiled reference to BNP Paribas and other banks under investigation, U.S. Attorney General Eric Holder said, "There is no such thing as too big to jail," signaling that for the first time in decades the government was ready to press guilty pleas on financial institutions.
As bargaining over possible multibillion-dollar penalties intensified in recent weeks, BNP Paribas insiders said they have been enduring the equivalent of a perp walk.
On Friday, Mr. Bonnafé, BNP Paribas's CEO, sent a humble message to the bank's 200,000 employees: "Let me put it clearly: we will be severely punished. Because some malfunctions occurred and mistakes were made."”
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