A judge who questioned whether Barclays Bank PLC was getting off too easily nonetheless approved a deal Wednesday that will likely enable the financial institution to avoid prosecution on allegations that it engaged in $500 million in illegal transactions with banks in Cuba, Iran, Libya, Sudan and Burma for more than a decade.
Under the arrangement with the U.S. Justice Department, Barclays will pay $298 million — half of it to the United States and the rest under an agreement with the Manhattan district attorney's office in New York.
In exchange for the London-based bank's ongoing cooperation, the two criminal charges the bank faces will be deferred and ultimately dropped as long as the financial institution demonstrates that it is complying with all U.S. laws.
U.S. District Judge Emmet Sullivan expressed concern that no one working at the bank was charged criminally and that the $298 million would come out of the pockets of Barclays' shareholders.
It looks like the bank is "getting a free ride here; that is what the average person probably concludes," Sullivan said.
Justice Department attorney Kevin Gerrity said the deferred prosecution agreement represents a fair and appropriate resolution of the case, balancing the serious nature of the criminal charges and "doing the right thing."
Gerrity said "we looked very hard" to find individuals at the bank who engaged in the alleged criminal conduct.
"There was no paper trail?" asked Sullivan. "Senior management has to know who is responsible. ... Someone has to mastermind this."
"We did not find anyone," Gerrity replied. According to court papers in the case, senior management discovered what was going on in 2006 and disclosed it to the Justice Department, while low-level employees who carried out the transactions lacked criminal intent.
Sullivan said, "I am not trying to micromanage" the Justice Department, but the judge suggested that prosecuting the bank might have brought pressure to bear in terms of uncovering who was responsible for the alleged criminal conduct.
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