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August 19, 2010

Barclays, beneficiary of what judge calls "sweetheart deal," agrees to pay $298 million to avoid prosecution for "trading with the enemy"

Atlantic Yards Report

And people were upset about "Citi Field?"

So Barclays Bank PLC, the "major global financial services provider," is in the news this week, and it's not because the company has committed more than $200 million to plaster its name on the in-construction Atlantic Yards arena, aka the Barclays Center.

Nor is it because Forest City Ratner has promised $4 million to add the Barclays Center name to the Atlantic Avenue/Pacific Street transit hub.

Rather, it's because Barclays has committed, as part of deferred prosecution agreements, "to forfeit $298 million to the United States and to the New York County District Attorney’s Office in connection with violations of the International Emergency Economic Powers Act (IEEPA) and the Trading with the Enemy Act (TWEA)," according to the Department of Justice (DOJ).

Essentially, the bank used subterfuge to let banks from Cuba, Iran, Libya, Sudan, and Burma, as well as prohibited persons, move money through the U.S. financial system.

The tab for Barclays might have been more, since it agreed to pay $176 million for other violations, but the DOJ press release described that as "concurrent," which means that the violator's obligations are satisfied via the $298 million. (The exact calculations of fines is ambiguous.)

None of the coverage, as far as I can tell, connected the Barclays prosecution with the firm's effort to establish a foothold in the United States via the Brooklyn arena. But this certainly casts doubts on Barclays as a "good corporate citizen," a term the Empire State Development Corporation used for Forest City Ratner, which has a murky role--with no charged wrongdoing--in the Ridge Hill corruption case.

The "sweetheart deal"

And while the settlement was approved yesterday by U.S. District Judge Emmet Sullivan, it came after Sullivan a day earlier criticized it as "a sweetheart deal."

"Why isn't the government getting rough with these banks?" the judge asked, according to the Wall Street Journal. He called it "an accommodation to a foreign bank, and that concerns me."

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Posted by eric at August 19, 2010 9:35 AM