Updated Thursday, July 31, 2014 as of 1:25 AM ET
Practice - Regulatory/Compliance
BNP Executive’s Departure Won’t Quell U.S. Penalty Demands
by: Fabio Benedetti-Valentini, Tom Schoenberg and Greg Farrell
Friday, June 13, 2014
Print
Email
Reprints
Partner Insights

(Bloomberg) -- Georges Chodron de Courcel’s resignation after more than 40 years at BNPParibas SA won’t soften U.Sdemands for a guilty plea and a $10 billion penalty from the French bank for sanctions violations, according to a person familiar with the matter.

The departure of co-Chief Operating Officer Chodron de Courcel may help satisfy one demand from New York State’s top banking regulator, Benjamin Lawsky, who had pressed for his dismissal along with about 12 other BNP employees and has threatened to suspend the bank’s dollar-clearing ability, a person familiar with the matter has said.

“The company officials that may be forced to retire or resign are sacrificial lambs, whether they were actually involved in the alleged sanctions violations or not,” said Douglas Jacobson, a lawyer specialized in international trade with Jacobson Burton PLLC in Washington. “U.S. enforcement officials have placed greater emphasis on the culpability of individuals for sanctions and export-control violations.”

Lawsky is also pressing BNP to dismiss Vivien Levy-Garboua, a senior consultant to the bank, as part of a settlement and considers last month’s departure of Dominique Remy, the former head of corporate and investment banking at BNP’s Brussels-based unit, a result of the sanctions probe, another person said. Both people spoke on the condition they not be identified because the talks are confidential. None of the BNP executives has been accused of wrongdoing.

SWISS UNIT

Chodron de Courcel, 64, will leave his COO post June 30, the bank said in a statement yesterday. He oversees the corporate and investment bank and is chairman of BNP’s Swiss unit, which is based in Geneva and home to a significant part of the bank’s commodity-finance operations. That business, one source of the alleged violations, has fired, allowed to resign or relocated 30 people since 2012, people familiar with the matter said last month.

Remy, 60, who previously ran BNP’s commodities finance business, has left the bank, Brussels-based spokeswoman Hilde Junius confirmed yesterday. Remy also left as a director at BNP Paribas Fortis in the first half of May.

Chodron de Courcel holds degrees in engineering and economics and is a relative of former French first lady Bernadette Chirac. He has been a chief operating officer at BNP since 2003 and is a director at companies including Alstom SA, the French builder of power plants, and Bouygues SA, a family- run construction and media conglomerate.

HELD ACCOUNTABLE

BNP Paribas fell 0.5% to 51.21 euros by 3:57 p.m. in Paris trading, valuing the company at 63.8 billion euros ($86.4 billion). The shares have dropped 9.5% this year, compared with a gain of 4.7% for the Bloomberg Europe Banks & Financial Services Index.

Prosecutors from the Department of Justice and the Manhattan District Attorney’s office are said to be seeking the record criminal penalty against BNP Paribas over alleged dealings in countries including Sudan and Iran. Lawsky, superintendent of New York’s Department of Financial Services, has said that individuals, not just companies, must be held accountable to deter future wrongdoing.

In September 2006, then-U.S. Treasury Undersecretary Stuart Levey toured Europe to persuade governments and companies in France, the U.K., Switzerland and Italy to help crack down on funds used by Iran and other countries to support terrorism and nuclear proliferation. BNP Paribas officials met with Levey on Sept. 13.

The BNP probe has added to commercial strains between the U.S. and France. President Francois Hollande raised the BNP issue with American President Barack Obama at a Paris dinner on the eve of D-Day celebrations last week. French government officials have warned against disproportionate penalties that could harm France’s economy or shake Europe’s banking system.

U.S. POWER

“This affair is the latest example of the power the U.S. has over our banking and financial system,” said Philippe Marini, a senator from the UMP, former President Nicolas Sarkozy’s party. “The extra-territoriality of American law could paralyze our initiatives since our companies are afraid to take any risks.”

The U.S. investigation into BNP’s dealings with sanctioned nations may encourage companies to stop using dollars in international transactions, Bank of France Governor Christian Noyer said on BFM television. Suspending the firm’s right to clear dollar trades also might disrupt markets and hamper lending, he said. Noyer had said previously that BNP Paribas’s actions didn’t violate French or European rules.

Chodron de Courcel, the oldest of BNP’s three COOs, is leaving at his own request to fulfill his duties as director at other publicly traded companies, Paris-based BNP said in a statement yesterday. He will retire from the firm at the end of September after spending his entire 42-year career at the bank.

MORE LITIGATION

Get access to this article and thousands more...

All Financial Planning articles are archived after 7 days. REGISTER NOW for unlimited access to all recently archived articles, as well as thousands of searchable stories. Registered Members also gain access to exclusive industry white paper downloads, web seminars, blog discussions, the iPad App, CE Exams, and conference discounts. Qualified members may also choose to receive our free monthly magazine and any of our daily or weekly e-newsletters covering the latest breaking news, opinions from industry leaders, developing trends and growth strategies.

Already Registered?

Lists
2014 Summer Reading List for Advisors

Current Issue

The July Issue is now online!


TWITTER
FACEBOOK
LINKEDIN

Industry Events

August 10, 2014 |

September 9, 2014 |

September 17, 2014 |

September 20, 2014 |

September 28, 2014 |

Already a subscriber? Log in here