BNP Paribas Plea Agreement, Documents, and Non-Resolution of Tax Investigation (7/4/14)

Most readers have already read, at some level, about the BNP Paribas plea agreement for "conspiring to violate the International Emergency Economic Powers Act (IEEPA) and the Trading with the Enemy Act (TWEA) by processing billions of dollars of transactions through the U.S. financial system on behalf of Sudanese, Iranian, and Cuban entities subject to U.S. economic sanctions."  See the DOJ Press Release, dated 6/30/14, here.  Justice Dept press release in BNP Paribas case.  The key documents (plea agreement, etc.) may be found here.  The press release is unusually long, at least compared to press releases in tax crimes and tax crimes related cases. The plea agreement is long as well.  But there is a lot of ground to cover in them.

I include here only certain excerpts from the plea agreement related to tax (I have added the bold facing to emphasize my comment at the end)::

In consideration of the plea of BNPP to Count One of the Information, neither BNPP nor BNP Paribas (Suisse) S.A. shall be further prosecuted criminally by the Offices (except for criminal tax violations as to which the Offices cannot, and do not, make any agreement) for any violations by BNPP of United States economic sanctions laws and regulations, including TWEA and IEEPA, that occurred between 2002 and 2012, to the extent that BNPP has truthfully and completely disclosed such conduct to the Offices as of the date of this Agreement. 

* * * * 

BNPP agrees to pay the Stipulated Fine Amount in full no later than 90 days after the imposition of sentence. BNPP agrees that it shall not claim, assert, or apply for, either directly or indirectly, any tax deduction, tax credit, or any other offset with regard to any US. federal, state, or local tax or taxable income for any fine or forfeiture paid pursuant to this Agreement. 

Note specifically Than BNP Paribas has not resolved the tax investigation of BNP Paribas' Swiss affiliate, BNP Paribas (Suisse) S.A.

BNP Paribas Rumor Mill (5/30/14)

Devlin Barrett, David Enrich and Christopher Matthews, Justice Dept. Seeks More Than $10 Billion Penalty From BNP Paribas (WSJ 5/30/14), here.  This is subscription only.

Reuters passes the WSJ Report:  U.S. seeks $10 billion penalty from BNP over sanctions probe: WSJ (Reuters 5/30/14), here.

(Reuters) - The U.S. Justice Department is pushing BNP Paribas SA to pay more than $10 billion to resolve a criminal probe into allegations that the French bank evaded U.S. sanctions against Iran and other countries for years, the Wall Street Journal reported on Thursday, citing people familiar with the matter. 

Sources told Reuters earlier this month that U.S. authorities were seeking more than $5 billion from the French bank. 

The Journal said the final settlement amount could be less than $10 billion. Still, the multibillion dollar figure would put the fine among the largest penalties imposed on a bank and is far higher than what BNP has provisioned for. 

* * * * 

The $10 billion settlement figure would represent a "hit" of around 5 percent to the bank's tangible book value, Citigroup analysts said in a research note. 

It would also reduce BNP Paribas' common equity tier 1 capital ratio to around 9.5 percent, a hit of around 10 percent on the bank's reported tier 1 capital ratio for the first quarter of 2014, Citigroup analysts said. 

* * * * 

Prosecutors have also pushed the bank to plead guilty to criminal charges as part of a resolution, sources have previously said.

The gravamen of the U.S. angst, as reported, is not U.S. taxpayer offshore accounts used for U.S. tax noncompliance.  However, I believe that the U.S. does have a bone to pick there.  BNP Paribas is among the 14 who could not resolve its problems for such accounts in the U.S. DOJ initiative.  I would expect that BNP Paribas will look to resolve all of this at the same time.

BNP Paribas and Credit Suisse Reported as Targets for Criminal Prosecution (4/29/14)

It is reported that prosecutors are pushing to indict two banks -- BNP Paribas and Credit Suisse.  Ben Protess and Jessica Silver-Greenberg, U.S. Close to Bringing Criminal Charges Against Big Banks (NYT DealBook 4/29/14), here.  The focus of the investigation is not the current offshore bank brouhaha, where banks (including Credit Suisse) assisted U.S. persons hiding money for tax purposes.  Rather, they relate in BNP Paribas' case to dealing with blacklisted countries and in Credit Suisse's case for its tax shelter activities.

I won't excerpt or summarize the article.  I encourage those interest to read it.  Some fascinating detail.