Barclays Plc won a judge’s approval of its $298 million settlement with the U.S. over dealings with nations including Sudan, Libya and Iran, a day after he delayed the accord.
U.S. District Judge Emmet Sullivan in Washington yesterday requested more information about the settlement, which he called a “sweetheart deal.” London-based Barclays will pay $149 million each to the U.S. and New York state, according to a deferred-prosecution agreement filed this week.
During an hour-long hearing today, Sullivan criticized the accord for not going after individuals who perpetuated the crime, and for punishing shareholders.
“Why do the shareholders have to pay for this venture?” Sullivan asked. “If I own stock, why do I have to pay?”
Barclays fell 2.35 pence to 324.75 pence today in London trading. The shares have climbed 18 percent this year.
Barclays was accused of violating U.S. financial sanctions against Cuba, Iran, Libya, Sudan and Burma from about March 1995 through September 2006. Barclays followed the directions of banks in those countries to omit their names in payment messages sent to the New York branch and to other financial institutions, according to court papers, moving more than $500 million through U.S. financial institutions.
In addition, Barclays amended payment messages to remove information identifying links to the sanctioned companies, prosecutors said.
Before approving the settlement today, Sullivan said he still had “concerns.” Unlike Barclays, the average American caught robbing a bank doesn’t get deferred prosecution and the option of returning ill-gotten gains, he said yesterday.
‘It’s a fair and appropriate resolution for this case,” said Kevin Gerrity, a U.S. prosecutor.
Barclays has been conducting an internal review and reporting the results to authorities including the U.S. Justice Department, the Manhattan District Attorney’s Office and the U.S. Treasury Department’s Office of Foreign Assets Control “in relation to the possible resolution of this matter,” the bank said in an Aug. 5 regulatory filing.
The company admitted wrongdoing and spent $250 million on its investigation, Gerrity said.
No individuals are likely to be prosecuted, he said.
“They spent $250 million and they couldn’t find anyone?” Sullivan asked Gerrity. He called the outcome “shocking.”
Sullivan said it is unfair that a shareholder who has done nothing wrong is hurt financially by the actions of executives who escape punishment. Taking the financial penalty out of executives’ compensation would serve as a greater deterrent, Sullivan told the attorneys.
The prosecution is “treated as a corporate problem,” said David Braff, an attorney for Barclays, told Sullivan.
Barclays said in February it was being investigated by the U.K. Financial Services Authority over payments involving people or countries under U.K. Treasury sanctions. The bank disclosed the Justice Department probe in 2007.
Barclays “does not anticipate any future regulatory actions related to these issues,” the company said in a regulatory filing today following the judge’s approval.
The U.S. accord requires the bank to voluntarily cooperate with investigators for two years, after which the charges will be dismissed. Mark Harding, Barclays’s general counsel, appeared in court to consent to the agreement.
The company also agreed to adhere to the best practices for international banking transparency and complete an internal review of past transgressions, prosecutors said.
“When corporations self-disclose their criminal wrongdoing to us, as Barclays did, they will not get a pass, but we will take their disclosure, cooperation and remedial efforts into consideration,” Lanny Breuer, head of the Justice Department’s criminal division, said in a statement.
Barclays is the U.K.’s second-biggest bank with 9.39 billion pounds ($14.8 billion) in net income last year.
The case is U.S. v. Barclays Bank Plc, 10-cr-218, U.S. District Court, District of Columbia (Washington).