On Tuesday I wrote a brief note about Barclays being fined for breaches of US sanctions legislation.
I asked a simple question:
Does banking have any ethics at all?
The right wing reaction was furious and hostile. It was suggested I was out of my depth, unrealistic and poor old Barclays had been caught napping because people in Poole in the UK had no idea that US law might apply to them. I did not agree, at all.
And then I read this (and like the judge I’m furious so I’m quoting at length):
A judge has attacked the US government for striking a "sweetheart deal" with Barclays to settle criminal charges that the British bank flouted international sanctions by doing clandestine business with Iran, Cuba, Libya, Sudan and Burma.
At a court hearing in Washington yesterday, judge Emmet Sullivan refused to rubber-stamp an agreement under which Barclays consented to pay $298m to settle charges that its staff deliberately concealed transactions with financial institutions in regimes frozen out by US foreign policy.
"Why isn't the government getting tough with the banks?" Sullivan asked, pointing out that no individuals were being charged or sent to prison over the breaches. The judge's unexpected resistance threw the settlement into doubt pending a more detailed hearing, scheduled for Wednesday.
Barclays is anxious to move beyond a scandal in which it owned up to sanctions-busting between 1995 and 2006. The bank has joined Lloyds TSB, Credit Suisse and ABN Amro among overseas financial institutions caught by US rules which cover them because they have branch operations in New York.
Plea bargains to settle criminal charges are common in the US and are often nodded through by the bench. But in the latest of several shows of judicial scepticism towards hasty settlements of Wall Street misdemeanours, Sullivan described the agreement as "an accommodation to a foreign bank" and pointed out that the average American caught robbing a bank is not given a deferred prosecution deal or an opportunity to refund the proceeds from crime.
Prosecutors say Barclays staff stripped identifying names from payment information in a deliberate ruse to defy US sanctions against repressive regimes, including countries accused of being state sponsors of terrorism.
Court documents say much of the subterfuge took place at a payment centre in Poole, Dorset, where an "interdiction filter" was installed to spot mentions of countries covered by sanctions. Once spotted, the wording on payments was changed to blur the source or direction of funds.
Among the challenged transactions are 46 fund transfers worth $490,000 involving Burma, 61 transactions worth $6.71m concerning Cuba, three payments amounting to $60,000 involving Iran and 1,175 transfers of $105m benefiting individuals or government entities in Sudan.
Lloyds TSB settled similar sanctions-busting charges in January last year by paying fines of $350m. Credit Suisse faced penalties of $536m and ABN Amro, now owned by RBS, forfeited $500m in May.
Let’s be blunt: this was not a mistake. This was organised abuse.
My question stands:
Does banking have any ethics at all?
A second question is now added:
When will these bankers serve time?
And a third:
Is there any abuse bar benefit fraud that the right wing in the UK will not excuse?
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So you back the US’s unjust sanctions against Cuba, Richard? I didn’t realise you were such a supporter of US justice!
I have to say I have some sympathy with Greg here – its not my expertise so I will have to defer judgement.
My understanding is that the sanctions against Cuba are a punishment for Cuba’s refusal to play ball with American capital, to be used to crowbar the countries markets up under the standard neoliberal regime
My understanding is that in order to fund Iran, western banks channel their funds through intermediary banks in the middle east such as those in Saudi
It is very telling that you only registers the facts of the case above now, whereas the rest of us were commenting in the light of those facts earlier and we see clearly from the state ment of facts in th papers that the “perpetrators” were unidentified individual;s in Poole, not US citizens.
In answer to your questions: “Does banking have any ethics at all?” Of course it does, and as much as you like to smear bankers most of them are highly ethical people. In my experience, most bankers are far more honest than the average person, which they have to be to be in control of such vast sums of money. That doesn’t apply to every banker, but the system would have falen apart long ago if it had been otherwise.
“When will these bankers serve time?” Hopefully never because contrary to the reports in the Guardian these are not “international” (i.e. UN) sanctions but US sanctions created by US laws.
“Is there any abuse bar benefit fraud that the right wing in the UK will not excuse?” Yes, the bullying of corporations by governments for a start. The plea bargains by Lloyds, Credit Suisse and ABN Amro arose because although the criminal cases against the banks were unproven, the US government coerced them into a settlement rather than facing punitive sanctions from the loss of banking licenses and other rights, which is a political act rather than a criminal sanction.
Similar abuses occurred related to Enron, not so much against Enron employees, but against Merrill Lynch employtees in the Nigeria Barge case, where Merrill Lynch was coerced into an agreement where its other employees would not assist or give testimony in favour of 4 employees accused of wire fraud. The 4 were convicted but on appeal the sentances were vacated on the basis that either the acts of which they were accused were not actually criminal acts or that the Department of Justuice had evidence that it knew contradicted their case.
I would also object to a US justice system that over-reaches, by for example applying US wire-fraud statutes in conjunction with a claim that a fraud occurs in the deprivation by an employee of a company’s
right to honest services and then to apply those laws to an act between a UK company (Greenwich NatWest) and its UK employees (the NatWest 3). What is worse is that the prosecution knows its case is political and knows that the accused have “confessed” in order to get their ordeal over with.
Such state sponsored judicial bullying is commonplace in the US, and it was becoming more frequent within HMRC, but it seems that the FT is reporting a change of attitude, and an acceptance that there may be more than one interpretation of the tax statutes.
@Greg
No I don’t
But I don’t condone fraud either
@Alex
One word – tosh, and in undiluted form too
I know of three people who were in management positions in banks serving small-ish communities and all three left because of the stress put on them from higher up to sell products to people they knew well even though they knew these people could not really afford the loans and credit cards etc. dangled in front of their noses. Not so long ago we also had the £25+ charges for being overdrawn by a penny. This is banking at the lowest level and it isn’t pretty. Don’t you people understand? You are detested and with good reason. If banking hasn’t gone belly-up it’s because people have nowhere else to go. We’re not talking corner shops, there is ultimately no choice (my nearest town has RBS and HBOS only) and little difference in products offered.
Most bankers are probably ethical (your analysis applies to all people selling something) but banking has become a drain on productive activity and its huge renumeration packages must be distorting many local economies.
As for the sentence (yes I’m paraphrasing slightly), “Most bankers are far more honest than the average person, which they have to be to be in control of such vast sums of money”. Now let’s think who else conceivably controls vast sums of money, oh yes, international drug dealers…now does controlling vast sums of money necessarily imply any honesty at all?
@Philip Martin
“Most bankers are far more honest than the average person, which they have to be to be in control of such vast sums of money”. Now let’s think who else conceivably controls vast sums of money, oh yes, international drug dealers…now does controlling vast sums of money necessarily imply any honesty at all?
Most drug dealers control their own money. Bankers control other people’s money (typically shareholders and depositors) and are paid to act responsibly (i.e. not recklessly) and honestly with that money. By and large most of them do.
So you deny that the Merrill Lynch bankers were released on appeal? The facts speak differently. It is a shame that you are always unable to debate the points but frequently resort to deleting postings or personal abuse.
@Alex
As you well know I have no time for libertarian pedants who nit pick their way to the justification for abuse
You are a prime example
I deal in the obvious big picture – that Barclays acted unethically and criminally – as the judge makes clear
You seek to excuse that
ui find your behaviour as despicable as that of Barclays
You asked 3 questions as to practices that others find unethical. I simply gave examples of how governments act unethically in securing judgements in their favour, particularly the US government. There is nothing new about this behaviour. In the US prior to the Civil Rights Act, unethical behaviour in criminal trials was commponplace, and to a lesser but still significant extent it still is today.
The US government behaves similarly in an unbalanced way when prosecuting what it claims is white collar crime, although in the case of the Merrill Lynch Nigerian barges, the act of which the defendants were accused turned out not to be a crime, the prosecution withheld evidence that demonstrated that the defendents innocenceand their whole case was a lie built on hearsay that they knew was refuted by the first-hand evidence they withheld. I find that extraordinarily unethical.