BNP Paribas has agreed to a record $9 billion settlement with US prosecutors over allegations of sanctions violations.
As part of the deal, France’s largest bank will plead guilty to two criminal charges of breaking US sanctions against trade with Sudan, Iran and Cuba.
The bank will also be prevented from clearing certain transactions in US dollars for one year from the start of 2015.
The settlement is the largest for such a case in US history.
“Between 2004 and 2012, BNP engaged in a complex and pervasive scheme to illegally move billions through the US financial system,” said US Attorney General Eric Holder in a press conference.
In doing so, BNP Paribas “deliberately and repeatedly violated longstanding US sanctions”, he said.
Eric Holder added that he hoped the settlement would serve as a warning to other companies that did business with the US that “illegal conduct will simply not be tolerated”.
BNP Paribas has agreed to a record $9 billion settlement with US prosecutors over allegations of sanctions violations (photo Euronews)
As part of its agreement with US authorities, BNP agreed to fire and not re-hire 13 individuals who were associated with the sanctions violations.
BNP said as a result of the fine it would take an “exceptional charge” of 5.8 billion euros ($7.8 billion) in the second quarter of this year.
It said this was on top of the $1.1 billion it had already set aside to cover the cost of the US penalties.
However it said it expected “no impact on its operational or business capabilities”, and said it would post “solid results” for the second quarter.
BNP chief executive Jean-Laurent Bonnafe said resolving the issue was “an important step forward” for the bank.
“We deeply regret the past misconduct that led to this settlement,” he added.
In a conference call on Tuesday morning, Jean-Laurent Bonnafe explained that during the year in which the bank was banned from dollar clearing – converting payments from foreign currencies into US dollars – it would engage a third party to carry out the transactions.
Jean-Laurent Bonnafe added that as part of the settlement BNP Paribas would be able to keep its license to operate in the US.
The Swiss financial regulator, FINMA, also announced that it had closed its investigation into BNP Paribas operations in the country, following the US authorities’ decision.
FINMA said in a statement that BNP Paribas had “persistently and seriously violated its duty to identify, limit and monitor the inherent risks” relating to foreign transactions.
Shares in BNP Paribas rose more than 3% in morning trading, following assurances that the bank could weather the $9 billion fine.
France has been pressing the US over the size of the fine, which almost equals BNP’s entire 2013 pre-tax income of about 8.2 billion euros ($11.2 billion).
French cosmetics company L’Oreal has agreed to settle a case with US Federal Trade Commission’s Bureau of Consumer Protection over charges of deceptive advertising.
A campaign for L’Oreal’s Genifique products claimed its products would lead to “visibly younger skin in just seven days” by targeting the users’ genes.
The US consumer regulator said that the adverts were “false and unsubstantiated”.
L’Oreal’s Genifique campaign claimed its products would lead to visibly younger skin in just seven days by targeting the users’ genes (photo Lancome)
L’Oreal said the claims in question had not been used “for some time now”.
“It would be nice if cosmetics could alter our genes and turn back time,” said Jessica Rich, director of the Federal Trade Commission’s Bureau of Consumer Protection.
“But L’Oreal couldn’t support these claims.”
As part of the settlement, L’Oreal USA is barred from making any anti-aging claims unless it has “competent and reliable scientific evidence substantiating such claims”, the FTC said.
The advertising campaigns ran across TV, radio and online and claimed that the Genifique product was “clinically proven” to “boost genes” activity and stimulate the production of youth proteins which would lead to “visibly younger skin in just seven days”.
“The safety, quality and effectiveness of the company’s products were never in question,” said L’Oreal USA spokeswoman Kristina Schake in a statement.
“Going forward, L’Oreal USA will continue to serve its customers through industry-leading research, scientific innovation and responsible advertising,” Kristina Schake added.
Toyota has reached a $1.2 billion settlement with US regulators after a four-year inquiry into its reporting of safety issues.
The criminal investigation came after the Japanese carmaker recalled more than 10 million vehicles over issues with brakes, accelerator pedals and floor mats.
Attorney General Eric Holder said Toyota had “intentionally concealed information” about the problems.
It is the largest criminal penalty yet imposed on a carmaker in the US.
Eric Holder told a news conference in Washington: “Rather than promptly disclosing and correcting safety issues about which they were aware, Toyota made misleading public statements to consumers and gave inaccurate facts to members of Congress.
“And they concealed from federal regulators the extent of problems that some consumers encountered with sticking gas pedals and unsecured or incompatible floor mats that could cause these unintended acceleration episodes.”
Toyota has reached a $1.2 billion settlement with US regulators after a four-year inquiry into its reporting of safety issues
Toyota issued a series of recalls in 2009 and 2010 affecting various models including the Camry, one of its best selling cars.
The problems dented Toyota’s reputation for reliability and hurt its sales in the US, one of its biggest markets.
The carmaker was also criticized for its handling of the issue, with allegations that it did not respond quickly and tried to protect its brand image.
Toyota has already paid millions of dollars in fines over delays in its reporting and handling of the safety problems.
On Wednesday, Eric Holder said that Toyota would “fully admit” wrongdoing and described the company’s behavior as “shameful”.
“It showed a blatant disregard for systems and laws designed to look after the safety of consumers,” he said.
“By the company’s own admission, it protected its brand ahead of its own customers. This constitutes a clear and reprehensible abuse of the public trust.”
Toyota said it had changed the way it handled such issues and had been working towards rebuilding its relationship with customers.
“At the time of these recalls, we took full responsibility for any concerns our actions may have caused customers and we rededicated ourselves to earning their trust,” said Christopher Reynolds, chief legal officer Toyota Motor North America, in a statement.
“We have made fundamental changes across our global operations to become a more responsive company – listening better to our customers’ needs and proactively taking action to serve them.”
The deal was announced by Eric Holder, Transportation Secretary Anthony Foxx and the US Attorney for the Southern District of New York, Preet Bharara.
Eric Holder said Toyota settlement should also serve as warning to other companies on how to handle such issues.
“Other car companies should not repeat Toyota’s mistake: a recall may damage a company’s reputation, but deceiving your customers makes that damage far more lasting.”