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First Hawaiian Bank's parent agrees to pay $9 billion settlement

By Associated Press

LAST UPDATED: 01:31 p.m. HST, Jun 30, 2014

WASHINGTON >> France's largest bank and the parent company of First Hawaiian Bank, BNP Paribas, pleaded guilty Monday and agreed to pay nearly $9 billion to resolve criminal allegations that it processed transactions for clients in Sudan and other blacklisted countries in violation of U.S. trade sanctions, the Justice Department announced.

After months of negotiations, the bank admitted to violating U.S. trade sanctions by conducting currency transactions for clients in Sudan, Cuba and Iran. The transactions were made through the bank's New York office from at least 2004 through 2012. The United States had imposed the sanctions on the countries to block their participation in the global financial system.

BNP entered a guilty plea in state court in New York City and is expected to do the same Tuesday in federal court, officials said.

"BNP Paribas went to elaborate lengths to conceal prohibited transactions, cover its tracks and deceive U.S. authorities," said Attorney General Eric Holder. "These actions represent a series breach of U.S. law."

The roughly $8.9 billion deal is the largest sanctions case brought by the Justice Department. The goal of such sanctions is to cut off an enemy nation's access to banks and other sources of capital, limiting its economic growth and ability to buy weapons, food and other items available through global trade. The sanctions generally apply to U.S. bank and foreign banks with U.S. operations.

First Hawaiian Bank, the largest financial institution in the state by assets, said earlier in June that the fine would not affect local operations.

"As a customer of the bank, you have no cause for concern," First Hawaiian spokes-man Chris Dods told the Star-Advertiser on June 3. "This matter is a very specific issue. It has no impact on First Hawaiian's business with our customers, and we assure you it will not affect your relationship with the bank. We also assure you that there is absolutely no risk whatsoever with regard to your deposits."

As the BNP deal inched closer, French officials in recent weeks had expressed deep concern about the punishment. They lobbied for White House intervention and warned that a large penalty could affect the entire European economy and hold up a trans-Atlantic free trade agreement.

The French economy minister last week asked the Justice Department to be "fair and proportionate" in deciding on the potential penalty. President Francois Hollande wrote to the Obama administration in April asking for a "reasonable" solution.

President Barack Obama has declined to intervene in the dispute.

The U.S. authorities pursued other big foreign banks for sanctions violations in two cases in 2012, though both matters were resolved for smaller dollar figures.

HSBC, Europe's largest bank, agreed to a $1.9 billion settlement with U.S. and New York authorities in connection with the transfer of billions of dollars on behalf of Iran, Cuba, Libya, Sudan and Myanmar.

Standard Chartered paid $340 million in a settlement with New York state regulators, who accused the bank of scheming with the Iranian government to launder billions of dollars. The bank also paid $327 million to settle U.S. and New York charges related to currency transactions for Iranian, Sudanese, Libyan and Burmese entities that were said to be concealed from regulators.

Meanwhile, in two separate similar investigations in France, authorities are also looking at Credit Agricole and Societe Generale, people involved in the probe have said. Together with BNP Paribas, they constitute France's top three banks.

The BNP announcement comes weeks after Credit Suisse struck a $2.6 billion plea deal with the Justice Department for helping wealthy Americans avoid taxes. Shortly before that case was brought, Attorney General Eric Holder -- whose Justice Department has been accused of not being aggressive enough in confronting bank misconduct -- issued a video message declaring that no bank was too large to prosecute.

Star-Advertiser reporter Dave Segal contributed to this report.

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Mei mei wrote:
on June 30,2014 | 12:39PM
false wrote:
So do they pay Obama Directly or Does Schatz, Hanabusa,and Gabbard get a piece of it
on June 30,2014 | 03:13PM
awahana wrote:
All banks are slimy. I have banked at almost a dozen Hawaii banks. Any bank with Hawaii or American or Central Pacific in their name is not worth your business.
If you akamai, you go credit union.
on June 30,2014 | 03:37PM
Ronin006 wrote:
Is there some reason the Honolulu rail project was not mentioned in this story? After all, BNP Paribas is the major financier of Ansaldo Breda, which happens to be the company building rail cars for Honolulu's rail project. Ansaldo Breda is heavily indebted to BNP Paribas. What happens if BNP Paribas recalls its loans to help pay the $9 billion fine? Perhaps some real reporting would tell us that.
on June 30,2014 | 04:41PM
tigerwarrior wrote:
Quite revelatory Ronin! However, BNP will continue doing business as usual-- perhaps any way it sees fit--as in "Too Large to fail". Case in point: Recently, the president of the European Central Bank admitted to CNN that a fine of this magnitude ($10 billion), could carry risks for the global banking system. In other words, she's implying that big banks shouldn't be prosecuted regardless of the laws they break--and violating U.S. money laundering laws is quite serious. I also doubt that any chief execs will face any jail time--and the ones let go will most likely receive very generous golden parachutes. But then again, $9 billion sounds like a pretty hefty fine considering that the big banks (i.e., Bank of America, Citibank, Goldman Sachs, Wells Fargo, J.P. Morgan) who played a major role in helping to facilitate the Great Recession only got slapped with fines that ranged in the hundreds of millions of dollars. Since a major reason for the crackdown on BNP Paribas was to discourage big banks from financing enemy countries and terrorist nations--does this also mean that the Attorney General will likewise crack down on major U.S. arms dealers? Since 2009 to now, the U.S. has been the top supplier of major weapons in the world--including 45% of the arms supplied to Persian Gulf states in 2013.
on June 30,2014 | 05:02PM
islandsun wrote:
And people are okay with guys like Don Horner on the School Board?
on June 30,2014 | 06:49PM
etalavera wrote:
A bank can't recall a loan unless a borrower violates a loan covenant or a default event occurs. If the bank is in serious need of cash they could sell the loan to another financial institution at a haircut (or if badly enough, a scalping).
on June 30,2014 | 05:44PM
tigerwarrior wrote:
And I'm guessing BNP will receive a zero-interest loan from the Federal Reserve to help them pay off the fine--as has been done with the big banks during the Great Recession.
on June 30,2014 | 05:50PM
Ronin006 wrote:
Ansaldo Breda has had many problems living up to terms of contracts for rail cars and systems it has built which could violate loan agreements with PNB Paribas. We will just have to wait and see what develops.
on June 30,2014 | 10:30PM
wondermn1 wrote:
It appears as though the Bank that financed the RAIL has many problems and the fact that Anasaldo was bribing officials to get the RAIL type jobs needs more investigation here in Honolulu remember First Hawaiian is a European bank and they think they are above the law. Remember the informative meeting at Kapolei Hale where the vice president of First Hawaiian Bank was harassing people going into the meetings.
on July 1,2014 | 12:30AM
BHH wrote:
"As a customer of the bank, you have no cause for concern," Well, I do have concern over the moral, ethical and legal conduct of the parent company of First Hawaiian Bank. A fish rots from its head.
on June 30,2014 | 05:01PM
inHilo wrote:
Agreed. Can't believe Dods would say this and not face the bigger issue of being a part of a criminal organization, even if they are the kind of crooks who don't get arrested.
on July 1,2014 | 06:06AM
csdhawaii wrote:
What's wrong with this picture? Will there be any jail time for the guilty parties at BNP? Especially considering they deliberately sought to conceal evidence of criminal wrongdoing. Surely the tab for the $9 billion fine is going to be passed on to customers. This is white collar crime at the corporate level, and people should be brought to trial for it! Instead, only the customers will pay.
on June 30,2014 | 05:10PM
tigerwarrior wrote:
Unfortunately, until CEOs and oligarchs face prison time or are required to pay these fines out of their own pockets--things will remain pretty much status quo--for what have they got to lose--since after all they are a major cog in a machine built that is too large to fail. Until the big banks are broken up, Attorney General Eric Holder will have his work cut out for him.
on June 30,2014 | 05:16PM
HD36 wrote:
Sanctions, and record fines will hasten the alternative dollar trading platform initiated by the G20. The 29 trillion dollar bailout from 2007-2009 included funding the European Central Bank which they lent out to European banks. It's not authorized in the Fed charter, nor was Congress consulted, but since the Federal Reserve is a privately owned corporation made up of domestic and international banks, why wouldn't they bail themselves out and put the taxpayer on the hook. Now we can see clearly who is behind the massive bond buying and taking up the slack since the Fed began tapering. Belgium can't be buying more than $450 billion in US bonds because that's almost as much as their entire GDP. I believe, along with James Rickards, Peter Schiff, and Ron Paul, that the ECB and the Fed agreed that the ECB would buy more than or an equal amount of US Treasury bonds as the Fed began tapering from $85 billion down to $35 billion right now. How else can you explain a 50 bps decline in the 10 year TNX since the start of tapering?
on June 30,2014 | 08:36PM
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