The FT notes:
Barclays has agreed to pay $298m to US authorities to settle investigations relating to transactions that the bank facilitated between countries facing US sanctions including Cuba, Iran, Libya, Sudan and Burma, reports the FT. Barclays is the latest European bank to be hit with such charges. Lloyds, its UK rival, and Credit Suisse have reached similar settlements over the past year. The Telegraph adds that Barclays is understood to have voluntarily disclosed information on the dealings to the authorities.
Does banking have any ethics at all?
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What is unethical about dealing with Cuba or Iran? The US has a particular beef about Iran, but let us not forget that the husband of a Labour minister acted for Iranian interests (Mahan Air), controlled by the Rafsanjani family, and lobbied other Labour ministers at the DTI for assistance in circumventing the US sanctions. The case was well documented by the Observer.
@Alex
Oh silly me
Breaking the law is ethical now, is it?
Which law?
Which UK law requires UK companies to follow US policies on sanctions? (As opposed to, say, UN sanctions which I’m sure we have signed up to.) A citation might have been useful, since the whole FT article requires registration to view.
And, incidentally, to answer the last question – aren’t the banks being ever so slightly ethical (as opposed to hyperbolically having no ethics) in voluntarily disclosing the information?
@PJH
I think you’ll find Barclays is also US listed
If not – it has massive operations there
And that might be good reason for it to comply
Since when has a person in a foreign company been immune from their law?
Depends whose law. The last time I looked US laws didn’t actually apply to British persons acting on UK territory. The US now claims that non-US persons who make US dollar clearing payments for banks covered by US embargos are in breach of US law. If the payments had been made in pounds sterling, euros or swiss francs the issue would not arise, so I doubt that the choice of currrency is relevant to any ethical matter.
@Alex
Ah, so breaking law is ethical
So you neither like democracy or the rule of law
Great!
I’m not sure that those banks who have fallen foul of US legislation (PATRIOT act etc) are being unethical per se. In the case of Barclays, Lloyds, RBS etc I suspect it is more a case of a poor compliance culture and/ or compliance/ risk management systems employed.
Don’t get me wrong, I’m not making excuses for them…it is the responsibility of the board to oversee compliance etc and if they have failed it is they who should carry the can. If poor risk management/ compliance systems have been put in place then those banks totally deserve their fines.
Although it can be a little hard to keep pace with the lists of individuals and companies listed by OFAC, HM Treasury etc etc…it is pretty easy to run names through systems like World Check or C6 when checking customers or before making payments to “sensitive jurisdictions”. I know one of those firms recently put the whole of a large FTSE100’s client base (we’re talking millions of customers) through their database and it only takes a few hours…I think it would be pretty easy for a bank to keep checks on their customers on a regular basis and perhaps when making third party payments fairly easy to check the receiver of those funds’ details etc.
In short, Barclays et al appear to have failed in their obligations and totally deserve their fines.
@Richard Murphy
I am sure that I break all sorts of laws in Islamic states every day. Fortunately those laws do not apply to me.
Whilst these Barclays transacions were going on, Jack Straw and other UK ministers were encouraging UK firms to do business with Iran. If, for example, Barclays handled payments for Iranian firms in Dubai, I don’t see that there is an ethical distinction between dollar payments cleared in New York and Sterling payments cleared in London.
Technically, the former may be in breach of US embargo rules (although technically they do not apply to non-US persons), whereas the latter do not. Ethically, there is no difference.
@Alex
If you think your amorality is appealing you are sadly deluded
As on so many issues you comment on
I suggest you find out a little more about the particular laws before you make such comments. The Iran Libya Sanctions act specifically did not apply to non-US citizens acting outside the US, so anything that they might have done was not in breach of US laws. If there was a breach it was because either US citizens outside the US were involved (unlikely), or mnore likely because some payments cleared through New York, which is a technical issue not a moral issue.
@Alex
Barclays is a US bank as much as a British bank
Maybe you don’t understand the concept of corporate residence of subsidiary companies?
@Richard Murphy
Barclays Bank plc is a UK Bank but the US law recognises that when non-US persons employed by Barclays outside its US branches or its non-US subsidiaries trade with countries subject to US sanctions, those people and companies are outside the scope of US law.
Which is why both BP and Shell, which have substantial US interests in their groups, are able to make and hold significant investments in Iran. US law also permits the non-US subsidiaries of US companies staffed by non-US persons to make similar investments in embargoed countries, which is how Halliburton manage to hold a significant interest in Iranian oil ventures (and also knocks a hole in the idea that there is any thing ethical rather than political about these US laws).
The only reason any US person was involved in Barclays or Lloyds dealings with Iran was because any US dollar payments would have been cleared in New York. The actual business took place outside the scope of US law and if it had been undertaken in any other currency it would have been overlooked by the US authorities.
@Alex
But a) Barclays should have known the law and b)) Barclays is also a US resident bank
On every level your argument fails
And getting round the law is unethical
Campaigning to change it is ethical
That’s democracy
I accept it can be different in the absence of a democratic process
But then the hurdles for justification are still high
But the issue is – nothing you have said has justified your case
As usual
But a) Barclays should have known the law and b)) Barclays is also a US resident bank
Is this argument akin to saying that a Barclay’s employee from down the street (in the UK, to be clear about this) crossing the road without using a pedestrian crossing of any sort should be charged and convicted for jaywalking, because Barclay’s is also US resident, and all it’s employees world wide are bound by US laws?
Because if it isn’t, it’s certainly coming across that way.
@PJH
No it isn’t
Barclays ash US operations
For heaven’s sake – a bank is not one entity – but thousands
And the US operation should comply with US law
Is that so hard to get your head round?
And the US operation should comply with US law
No-one, thus far, has said anything different. What is at issue is why are you apparently arguing that people in the US should be following US law in reply to comments about operations and staff not involved with the US. Every time you’ve replied to comments about non-US operations it has been with with non sequiturs about US operations as if the non-US operations should be following US law.
Is that so hard to get your head round?
Not for me, but then it’s not my arguments that seem to revolve around the whole of Barclay’s having to follow US law, despite comments above pointing out how ridiculous that proposition is.
And th US operations probably did. The payments went from a Barclays payment centre in Poole to dollar clearing in New York. I ahve no idea how the Barclays operations work in detail, but it is quite likely that any payments “sent” from Barclays UK operations would go straight through the Barclays New York systems without any further human intervention. One of the reasons for the settlementwas that the US DOJ couldn’t actually find anyone they wanted to prosecute. Barclays on the other hand didn’t want to lose their license to be a primary US government bond dealer or to lose their license as a repository for Treasury bonds.
Richard,
to be honest you’re completely out of your depth in this debate.
@Pat
I think most would safely disagree
Barclays paid the fine after all
For good reason
And all Alex et al are doing is offer apology for them
Respectfully, a crime was committed
And penalty has been exacted
And Barclays should have known better – legally AND ethically
That’s what I said
And so far nothing said has in any way come near damaging that hypothesis because the counter argument has been there is no such thing as an ethic in this (patently wrong) and Barclays need not have known (patently wrong)
And yes – I do contend Barclays should have known – that’s what we expect of banks – and what the US expected of banks – and reasonably so
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