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Barclays Plc (BARC) and the U.S. Justice Department were ordered by a federal judge to explain how the bank’s settlement of allegations involving its manipulation of Libor should effect a 2010 deferred prosecution agreement.
U.S. District Judge Emmet Sullivan in Washington yesterday issued the one-sentence order calling for a joint report to be filed by July 11. The order comes three days after lawyers for both parties were in his courtroom for an update on the 2010 agreement, which involves a $298 million settlement with the U.S. over illegal dealings with such nations as Sudan and Iran.
Barclays Plc was on June 27 fined 290 million pounds ($451.4 million), the largest penalties ever imposed by regulators in the U.S. and U.K., after admitting it submitted false London and euro interbank offered rates. Part of that fine went to the Justice Department, which agreed not to prosecute the bank for what it called “illegal conduct.”
Mark Lane, a spokesman for London-based Barclays, declined to comment on the order. Alisa Finelli, a Justice Department spokeswoman, said she couldn’t immediately comment yesterday.
Barclays, Britain’s second-biggest bank by assets, must comply with the terms of the deferred prosecution agreement, which was approved by the judge on Aug. 18, 2010, until Aug. 16. Such agreements allow a company to avoid a criminal conviction as long as the terms of the deal are met.
The accord states that if the Justice Department determines that Barclays has committed “any federal crime,” the bank may be subject to prosecution for facilitating money transfers that violated U.S. sanctions against Cuba, Libya, Burma, Sudan and Iran from about March 1995 through September 2006.
In a report to Sullivan on May 30, the department said Barclays was in compliance with the agreement.
“To date, the United States is not aware that Barclays has committed any federal crime during the term of the DPA,” Daniel Marposon, a trial attorney in the Justice Department’s asset forfeiture and money laundering section, wrote in the report.
In its own May 30 report, Barclays said it was “aware of no determination by the United States that it has committed any federal crime during the term of the DPA.”
A day before approving the Barclays accord two years ago, Sullivan called it a “sweetheart deal” and demanded more information from the bank and prosecutors. He criticized the Justice Department for failing to go after individuals and punishing only the company’s shareholders.
In his order approving the agreement, the judge said both sides were required to file status reports that “shall inform the court what progress has been made under the terms” of the agreement.
In particular, Sullivan said he wanted to know what steps Barclays was taking to make its current and former officers, consultants, and employees available to federal investigators and the progress of implementing compliance procedures.
The case is U.S. v. Barclays Bank Plc., 10-cr-00218, U.S. District Court, District of Columbia (Washington).
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