France has stepped up its protests to the US over a possible US$10bn-plus fine levied on its biggest bank, BNP Paribas, for doing business with Sudan and other countries blacklisted by the US.
French foreign minister Laurent Fabius warned that a fine of such magnitude for sanctions busting could adversely impact on transatlantic free trade talks. The warning came ahead of president Obama’s meeting with French president Francois Hollande, which is also expected to cover issues ranging from General Electric’s takeover approaches to French engineering group Alstom to differences over the approach to conflict in Syria and sanctions on Russia.
Previously, Hollande’s senior ministers avoided commenting on BNP’s negotiations with U.S. authorities, who are investigating whether the bank violated US sanctions relating primarily to Sudan, Iran and Syria between 2002 and 2009.
BNP has maintained that it lacked the intent to commit a crime, but followed advice from a law firm that suggested the bank could legitimately process certain transactions for Sudan, provided that its New York-based employees were not involved.
In an interview with France 2 TV, Fabius suggested that progress towards a free-trade pact could be impeded if BNP’s business was damaged. “If there is an error or a violation then it’s normal that there is a fine, but the fine has to be proportionate and reasonable,” he said.
“Here you would have an example of an unfair and unilateral decision. It would be an extremely serious problem. You can’t consider reciprocity to be the rule, when at the same time you have a decision like this. It’s an extremely serious question that the Americans must handle in a spirit of partnership and not unilaterally.”
Reports suggest that the fine could exceed US$10bn, which would swallow up most of BNP’s 2013 pretax income of €8.2bn (US$11.2bn).
While the US prohibited transactions with Sudan and Iran, such deals have always been legal in France. Additionally, until 2008 when a loophole was closed, certain transactions with Iran were also allowed in the US. The Iranian exception allowed foreign banks like BNP to transfer money through their US branches for Iranian clients as long as the money was immediately transferred to a different foreign institution.
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