Bloomberg News

Barclays, U.S. Say Libor Probe Doesn’t Affect 2010 Case

July 11, 2012

Barclays Plc (BARC) and the U.S. Justice Department said the bank’s settlement of allegations involving its manipulation of the London interbank offered rate has “no effect” on a 2010 deferred-prosecution agreement requiring the bank to stay out of criminal trouble.

Barclays’s conduct related to its submissions of benchmark interest rates occurred from about 2005 through 2009 -- before the bank signed the agreement, lawyers for Barclays and the U.S. said today in a filing in federal court in Washington.

“Because the conduct preceded the term of the DPA, which began on August 16, 2010, it does not affect whether Barclays is in compliance with the DPA,” according to the joint filing.

On June 27, Barclays was fined 290 million pounds ($449 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.”

U.S. District Judge Emmet Sullivan on June 28 ordered the parties to explain how the Libor settlement affected the 2010 agreement, which involves a $298 million settlement with the U.S. over illegal dealings with such nations as Sudan and Iran.

Alisa Finelli, a Justice Department spokeswoman, and Mark Lane, a spokesman for London-based Barclays, declined to comment on the filing.

Terms of Deal

Barclays, Britain’s second-biggest bank by assets, must comply until Aug. 16 with the terms of the deferred-prosecution agreement, which the judge approved on Aug. 18, 2010. 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.

‘Full Compliance’

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.”

Today’s filing points to a paragraph in the 2010 agreement that states “the discovery by the United States of any purely historical criminal conduct that did not take place during the term of the agreement will not constitute a breach” of the deal.

“Barclays remains in full compliance” with the agreement, the filing states.

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).

To contact the reporter on this story: Tom Schoenberg in Washington at tschoenberg@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net


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