In a crowded court room where victims of the violations by the global bank were present, BNP Paribas (BNPQY, Financial) has pleaded guilty and agreed to make amendments to its policies. The company accepted full responsibility for its actions and is marching its way to improvement under the guidance and personal supervision of CEO Jean-Laurent Bonnafé as said in a statement by its general counsel.
Countries sanctioned
Out of the several countries that are harmed by the bank from Kenya, Tanzania to Sudan, Cuba and Iran, only the later three countries are entitled to relief since the tenure of relief as sentenced by the U.S. judge is between 2004 and 2012 which excludes the victims of United States embassy bombings in Kenya and Tanzania in 1998 killing 224 people.
Web of satellite banks
One of the important wrong operations by the bank that led it to forfeit more than $8 billion is the creation of satellite banks through which transactions that were against U.S. laws took place. The wrongly floated satellite banks would first gather the money internally from another BNP Paribas bank in the U.S. and then transfer to the beneficiary in countries like Sudan, Cuba and Iran. This has led to more than $8 billion worth of financial loss to the United States economy with countries such as Sudan, which doesn’t have a law benefiting from the global economy.
Sentenced to five-year probation
As per assistant attorney general Leslie R. Caldwell, BNP Paribas being the biggest financial institution from France has been sentenced to five-year probation as the company deliberately violated the law and provided access to global financial system to rouge nations. During this five-year period, the company has been ordered to mend the ways it currently operates and reconstruct its policies. Being the first financial institution to be sentenced to probation, the company has to forfeit a huge amount of about $8.4 billion to the United States and also pay a fine of $140 million. The judgment came after the company posted its first quarter financial results which were on a high due to the sales and marketing drive which has impacted the strong operating revenue reported by the company. There is an increase of 11.6% from the first quarter of 2014 which is rather commendable. But, this judgment might definitely jolt the company’s prospects as the people in the United States will now be in retrospection before investing their funds in the bank as the company is under probation and has a chance of failing to meet the expectation of the court in the five-year period.
What lies ahead?
The statement of the company’s officials seems promising, though. With the personal supervision of the CEO, the company is expected to reconstruct all its policies and change entirely to be in tandem with U.S. economic sanctions thus improving its image and marketability. The company will have to work really hard to gain the trust of both the court and the people alike. Trust which are the important KPAs for any bank will play a pivotal role in the change of global bank and the company understands the same clearly. In a move to impart trust in the people, the company has sacked some and warned some out of 45 employees who have connections with the settlement. The company has already cut ties with 13 employees and now none of the employees face criminal charges.
