France's SocGen agrees on $1.3bn fine in Libya and Libor probes
French bank says that the settlement is not expected to affect its ability to continue serving clients
French bank Societe Generale will pay $1.3 billion to resolve criminal and civil charges in the United States and France for bribing Gaddafi-era Libyan officials and manipulating the Libor interest rate benchmark, US authorities said on Monday.
The Paris-based bank is due to plead guilty in US District Court in Brooklyn, New York, to resolve the foreign bribery case, the Justice Department said in a statement.
Earlier on Monday, SocGen said it had agreed to pay 250 million euros ($293m) to the French treasury as part of the overall US-France settlement.
The resolution is the first coordinated between U.S. and French authorities in a foreign bribery case, the Justice Department said.
“Today’s resolution ... sends a strong message that transnational corruption and manipulation of our markets will be met with a global and coordinated law enforcement response,” John Cronan, acting assistant attorney general for the Justice Department’s Criminal Division, said in a statement.
SocGen said in a statement that the settlement was “not expected” to affect its ability to continue serving clients and that it had taken extensive steps to strengthen its risk and compliance controls. The bank said the total penalties were already covered by a previously booked provision of 2.3bn euros ($2.7bn).
The Justice Department penalties include a $585m fine relating to a multi-year scheme to pay bribes to officials in Libya and $275m for violations arising from its manipulation of Libor, the Justice Department said.
The London interbank offered rate, known as Libor, is used as a benchmark against which rates on hundreds of trillions of dollars worth of contracts and loans are set across the world.
Societe Generale bank also agreed with the US Commodity Futures Trading Commission, which regulates derivatives, to pay $475m for rigging Libor.
SocGen’s agreement to pay 250m euros to the French treasury brings the bank’s total settlement to $1.3bn.
“We regret these past misconducts, which are contrary to our values and ethical standards that led to these settlements,” Frédéric Oudéa, chief executive of Societe Generale, said in the bank’s statement, calling the settlement “an important step for the Bank.”
Between 2004 and 2009, SocGen paid more than $90m in bribes through a Libyan broker to secure 14 investments by Libyan state-owned financial institutions, the Justice Department said.
The bank will enter into a three-year deferred prosecution agreement while its European subsidiary, SGA Société Générale Acceptance, will plead guilty to one count of conspiring to violate the Foreign Corrupt Practices Act.
SocGen also agreed to continue to cooperate with the Justice Department’s investigation and adopt and maintain enhanced compliance procedures, the Justice Department said.
On Monday, the Justice Department said that Maryland-based investment management firm Legg Mason entered into a non-prosecution agreement to pay $64.2m to resolve a probe of the firm’s Permal Group subsidiary. Permal had partnered with SocGen to help solicit business from the state-owned financial institutions in Libya, and Legg Mason had ultimately benefited from some of the bribes paid by SocGen, the Justice Department said.
In a letter to stakeholders on Monday, Legg Mason’s chairman and chief executive, Joseph Sullivan, said the firm was in discussions with the US Securities and Exchange commission to settle civil charges on the same matter.
“The misconduct by former employees of the legacy Permal business that the government found was totally unacceptable. It violated our high standards...,” he wrote.
He said that over the last decade Legg Mason “has substantially enhanced its anti-corruption oversight, compliance policies, procedures and other related mechanisms.”
Updated: June 5, 2018 03:40 PM