UPDATE:Federal Judge Approves Barclays Settlement Despite Concerns
August 18 2010 - 2:42PM
Dow Jones News
A federal judge Wednesday approved a $298 million legal
settlement that allows Barclays Bank PLC (BCS, BARC.LN) to avoid
prosecution on charges that it violated U.S. economic sanctions,
despite voicing concerns that the agreement is too lenient.
In approving the settlement, U.S. District Court Judge Emmet G.
Sullivan said it wasn't his job to micromanage how the U.S. Justice
Department handles a prosecution.
On Tuesday, Sullivan had described the settlement as "a
sweetheart deal."
The judge offered more criticism during Wednesday's court
hearing, saying the public would look at the settlement and
question whether Barclays was getting "a free ride."
Sullivan said the public had little faith in how white-collar
criminal cases are treated and added, "It's proceedings like these
that raise concerns in the public's mind about fairness and
justice."
Justice Department lawyers said during Wednesday's court hearing
that the settlement was an appropriate resolution to the case
because Barclays voluntarily disclosed its conduct and cooperated
extensively with U.S. investigators.
"You don't believe the government has put on the kid gloves
here?" Sullivan asked.
"I absolutely do not," Justice Department lawyer Kevin Gerrity
responded.
Gerrity said the charges against Barclays were very serious, but
he described the bank as "extremely cooperative" and said senior
management spent $250 million to conduct an internal investigation
once it became aware of the violations.
Sullivan also questioned why no individual bank employees were
being charged in the case.
Gerrity said the Justice Department didn't have enough evidence
against any individual to prove a case beyond a reasonable
doubt.
The U.S. government filed criminal charges Monday alleging that
Barclays over an 11-year period facilitated and hid transactions
for banks and other entities in countries facing U.S. economic and
trade sanctions, including Iran and Cuba.
Barclays General Counsel Mark Harding acknowledged Wednesday in
court the truthfulness of the government's charges, while another
lawyer for the bank, David Braff, said Barclays' conduct "developed
at the lower levels of the bank."
Braff said senior management moved swiftly to address the bank's
practices once it became aware of them.
Braff said the bank had been able to track the lower-level
people who processed individual transactions on behalf of banks and
other entities facing U.S. sanctions, but said that identification
of those employees didn't mean that they acted with criminal
intent.
In addition to forfeiting the $298 million, Barclays will enter
into a two-year deferred-prosecution agreement, which will allow it
to avoid prosecution if it complies with a list of requirements,
including continued cooperation with government investigators and
the implementation of new training and compliance programs.
Judge Sullivan said he plans to hold status hearings every three
months to oversee Barclays's compliance with the settlement.
Barclays is the fourth bank to face similar sanctions-related
charges since January 2009.
Similar deferred-prosecution agreements between the U.S.
government and Credit Suisse Group (CS, CSGN.VX), Lloyds Banking
Group PLC (LYG, LLOY.LN)and the former ABN Amro Holding NV (ABNYY)
over processing payments from sanctioned countries were approved by
federal courts.
-By Brent Kendall, Dow Jones Newswires; 202-862-9222;
brent.kendall@dowjones.com
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