French President Francois Hollande addresses the media during a G7 summit at the European Council building in Brussels, Wednesday. The leaders of the G7 will deliberate their next steps in response to the enduring unrest in Ukraine, after sidelining Russia for its role in the crisis.
PARIS — President Barack Obama deflected France’s appeal Thursday to intervene over a potential multibillion-dollar U.S. fine against the country’s largest bank, clouding two days of meetings with the French leader in a case that could reverberate across Europe’s financial sector.
Investigators in New York and Washington are scrutinizing BNP Paribas’ currency transactions through its New York office for clients in Iran, Sudan and Cuba in violation of U.S. trade sanctions between 2002 and 2009. Two other French banks are under separate investigations for similar activities, and the resulting fines could have repercussions on other companies that do business with those countries as well as the United States.
BNP recently warned it could face fines “far in excess” of the $1.1 billion it had set aside in response to the American investigation, and its shares have fallen more than 15 percent since February. As of Thursday, no amount for the fine had been fixed, and Obama said he was prohibited by the separation of powers from intervening.
“I will read about it in the newspapers just like everybody else,” he said in Brussels.
The French government swung into action when reports surfaced that the total had climbed to $10 billion — more than BNP’s total profit for 2013. There are also concerns that BNP might be stripped of its license to do business in U.S. dollars, which would be a heavy blow for a global bank.
In Europe, many see the case as yet another sign of dollar imperialism — the U.S. using its economic clout and international currency dominance to force foreign institutions to bend to its law.
The normally reticent governor of the Bank of France has said that BNP had complied with all European and French laws. But BNP’s activities in the United States are extensive.
The French foreign minister acknowledged that if a bank violated the law, a punishment is appropriate. But Laurent Fabius warned that any “disproportionate” punishment could hold up a trans-Atlantic free trade agreement. His comments were amplified first by the finance minister, then by the president himself.
Socialist President Francois Hollande, a vocal activist for French corporations but no fan of the world of finance, said repeatedly he would bring it up Thursday at his dinner with Obama.
“It has an impact on the French economy — it has an impact on the European economy,” Hollande told reporters Thursday morning.
The Socialist administration’s comments oddly echoed those of the far-right National Front, which called on the government to protect “the interests of thousands of French depositors.”
Despite an April 7 letter from Hollande to Obama, in which the French president wrote asking for a more “reasonable” solution, the White House had tried to stay out of the debate.
“We’ve made very clear that this is a matter for the Department of Justice, so at the political level it’s not something that we intervene in. We respect the process that our judicial system undertakes and that’s what we have said to the French and will continue to say,” said Ben Rhodes, Obama’s foreign policy adviser.
In two separate similar investigations, authorities are also looking at Credit Agricole and Societe Generale, according to people involved in the probes, who spoke on condition of anonymity because they were ongoing. Together with BNP Paribas, they make up France’s top three banks.
The U.S. authorities pursued other big foreign banks for sanctions violations in two big cases in 2012, against HSBC and Standard Chartered, both British and with operations in New York.MORE IN Wire NewsLAGOS, Nigeria — The death toll in the collapse of a building in Nigeria last week rose on... Full StoryKIEV, Ukraine — Ukraine moved to resolve months of crisis Tuesday by strengthening ties to Europe... Full Story
- Most Popular
- Most Emailed
- MEDIA GALLERY