U.K. prosecutors are assisting the U.S. Securities and Exchange Commission on inquiries involving financial institutions and whether bribes were paid in transactions with sovereign wealth funds.
The Serious Fraud Office, which prosecutes corruption and white collar crime in Britain, has been contacted by the U.S. regarding the probes, SFO Director Richard Alderman said in an interview yesterday.
“We’re talking to the Americans about various issues,” Alderman said, without specifically identifying the companies.
The SEC is examining whether transactions with Libya’s sovereign fund may have violated bribery laws, the Wall Street Journal reported earlier this month, citing people it didn’t identify. SEC officials are reviewing documents including those related to a $50 million fee Goldman Sachs Group Inc. (GS) agreed to pay the Libyan fund to help recoup losses, the newspaper said. The payment was never made, it said.
HSBC Holdings Plc (HSBA) and Goldman Sachs are among banks that held funds for the Muammar Qaddafi-controlled Libyan sovereign wealth fund, London-based advocacy group Global Witness said last month. HSBC held $292.7 million across 10 accounts and Goldman Sachs had almost $44 million in four accounts as of June 30, 2010, according to a document posted on Global Witness’s website.
When asked about whether HSBC would be a focus for the SFO, Alderman replied, “Yes, that’s the thought.”
HSBC spokesman Jezz Farr declined to comment. Goldman Sachs spokeswoman Fiona Laffan also declined to comment.
The SEC opened an investigation into whether banks, hedge funds and private-equity firms paid placement agents to win access to the state-owned money, four people familiar with the matter said in January. An agent working with a sovereign wealth fund may be considered a government official, making interactions with that person subject to the U.S.’s Foreign Corrupt Practices Act.
Bank of America Corp., Morgan Stanley, and Citigroup Inc. received letters of inquiry from the SEC, one of the people said at the time. Investigators are also scrutinizing whether the firms improperly provided other benefits, including entertainment or travel, directly to fund employees in order to secure investments or sell securities.
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