The BNP Paribas Watch - from
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Updated June 9, 2014
On May 14, 2004, Inner City
Press / Community on
the Move and the Fair Finance Watch (together, "ICP") filed a
ten-page
comment
opposing the proposal by BNP Paribas and its Bank of the West to
acquire Community First
National Bank and expand BNP's business practices into ten more
states.
ICP's timely
comments, summarized below, have been filed with the U.S. Federal
Reserve Board in
Washington, and with the Federal Reserve Bank of San Francisco.
See
also, "Watchdog
Challenges
Community First Merger: Consumer Group Seeks Fed Hearing on
Minority Loans,"
by Bob Mook, The Coloradoan, May 18, 2004. In this space, we
will
continue running
updates. For or with more information, contact us.
Update of June 9, 2014: BNP
Paribas
cynically
violated
sanctions on
Sudan while
the French
government and
others were
accusing
Khartoum of
genocide. Now
French
president
Francois
Hollande comes
to BNP's
defense,
saying not to
fine it too
hard or he
will look
askance at
T-TIP. So be
it - these
trade deals
would globalize
for example
censorship
under the
Digital
Millennium
Copyright Act.
Good riddance!
Update
of November 30, 2009: No honor among thieves:
Deutsche Bank AG
and a
unit of BNP Paribas SA separately sued Bank of America
Corp. on
Wednesday, alleging that the bank has failed to repay
about $1.7
billion in secured notes issued by a special-purpose
entity. The
breach-of-contract lawsuits, filed in U.S. District Court
in
Manhattan, allege that Bank of America has failed to
redeem $480.7
million in secured notes held by BNP Paribas and $1.2
billion held by
Deutsche Bank. The notes were issued by Ocala Funding LLC,
a
special-purpose entity that provided short-term liquidity
funding to
Taylor, Bean & Whitaker Mortgage Corp..."
Update of November 17, 2008:
Global
fragment of the predatory lending meltdown -- What oversight
will be
given to BNP
Paribas and its involvement in subprime lending?
Update of May 5, 2008: in
the
Czech
Republic, BNP's Cetelem CR granted loans worth Kc2.8bn to
clients in Q1
2008, 18
percent more than a year ago. Cetelem CR operates in the Czech
Republic
since
1996, and is one of the 20 subsidiaries of BNP's Cetelem S.A.... The calm
before the storm?
Update of June 5, 2006: Thwarted in its
attempt to buy Russian Standard Bank in 2004, BNP Paribas
announced
plans to spend $700 million between 2006 and 2012 developing a
network
of 150 branches in Russia's major cities and the all-important
Moscow
region. For or with more information, contact us.
Update of October 31, 2005:
Last
week’s Volcker
report on the UN’s Oil for Food program devotes an entire chapter
to
BNP Paribas
(Chapter Four: The Escrow Bank and Conflicting Interests),
detailing at
least $10 million
of surcharge payments made through accounts at BNP, including scam
oil
sales to ACTEC of
Russia and Bulf Oil of Romania. Where and when will BNP suffer the
consequence?
Developing...
Update of October 17, 2005:
This
week we quote from
the Omaha World-Herald: “John Stafford, a spokesman for Bank of
the
West, said
Wednesday that the companies are still finalizing plans for
post-merger
functions that
would be located in Omaha, where Commercial Federal has more than
1,000
employees.... Last
month, Bank of the West increased its pledge of community
financial
support from $30
billion to $75 billion through 2015. Community financial service,
such
as home mortgages,
small-business loans, farm loans and charitable contributions, is
one
factor the FDIC
considers in proposed mergers. ‘Once they increased that pledge,
I'm
not surprised
that it's been approved,’ ICP said. ‘We're somewhat dubious (about
Bank
of the
West's community lending), but we're not entirely negative.’ [ICP]
still has
questions about the conduct of Bank of the West's parent company,
BNP
Paribas of Paris, in
the United Nations' oil-for-food program in Iraq. Bank of the
West's
Stafford said the
FDIC reported that it had found ‘no inconsistencies’ with the
banks'
community
financial services and, in approving the sale, also took into
consideration the
effectiveness of the banks' anti-money-laundering policies at
domestic
and overseas
offices. He said the FDIC's report on the approval did not
specifically
mention the
oil-for-food program.” In fact, the FDIC so far has refused to
release
any of its
reasoning. Meanwhile, BNP is trying to buy a stake in Nanjing
City Commercial Bank in China.
Update of October 3, 2005:
BNP Paribas’ CEO Baudouin Prot told Le Figaro
last week that BNP is not considering any deal with Soc Gen.
"I would consider such an operation to have
many
considerable risks. It
is excluded from my field of thoughts," he said. We’ll see.
Update of September 26, 2005:
BNP
and lack of
standards. BNP Paribas on September 23 confirmed it is in talks
aimed
at securing a
roughly 18.5% stake in China's Nanjing City Commercial Bank.
China's
Morning Post had
reported the two banks are slated to sign a nearly $100 million
purchase agreement by
mid-October...
Update of September 5, 2005: From Ireland (dot com) - “A row has
erupted
within the Dublin branch of BNP Paribas over a decision by the
French
bank to alter the
pension entitlements of a number of employees. Up to 30 of the
bank's
Dublin-based staff
who are currently members of a defined benefit scheme have been
told
they are to switch to
a defined contribution scheme from September 1st. They have
accused the
bank of
unilaterally changing their terms and conditions of employment.
They
have also demanded
that the bank's Paris-based head of human resources be summoned to
Dublin to explain why
staff there are being treated differently from their colleagues in
Norway.”
And so how would
they
treat workers in Nebraska and elsewhere in the Commercial Federal
“footprint”?
Update of August 15, 2005: On August 13,
ICP/Fair
Finance Watch
submitted a timely comment opposing BNP Paribas' application to
the
FDIC to acquire
Commercial Federal. A summary is below.
August 13, 2005
VIA TELECOPIER
Federal Deposit Insurance Corporation
Attn: Mr. John F. Carter, Regional Director,
and Ass’t Reg. Dir. J. George Doerr, David Promani, et
al.
25 Jessie Street, Suite 2300
San Francisco, California 94105-2780
Re: Timely
comment
opposing the applications/notices of Bank of the West and its 100%
owner BNP Paribas, SA
acquire Commercial Federal Bank (20051945)
Dear Messrs. Carter, Doerr, Promani, and
others:
On behalf of Inner City Press/Community on the Move and its
members and affiliates,
and the Fair Finance Watch (collectively, “ICP”), this is a timely
comment
opposing and requesting evidentiary hearings on the
applications/notices of Bank of the
West and its 100% owner, BNP Paribas (with affiliates
collectively,
“BNP”) to
acquire Commercial Federal Bank. The comment period on the FDIC’s
web
site runs
through Saturday, August 13, 2005; this
comment
is timely.
Below, ICP identifies some of the disparities in BNP's Bank
of
the West's and First
Hawaiian Bank’s mortgage lending in the most recent year for which
HMDA
data is
available: 2004. First, however, ICP wishes to emphasize to the
FDIC
BNP’s troubling
involvement in the still-unfolding Iraqi Oil-for-Food scandal, and
BNP's Bank of the
West's documentable support of fringe finance: for example, a
rent-to-own store (Choice
Rent To Own of Salem, Oregon) and a check cashier (in Sacramento,
California), as well as
a pawn shop (Pawn 1, Inc. of Spokane, Washington) and even a gun
repair
shop (in Forest
Grove, Oregon). The first two of these are attached hereto for
inclusion in the record,
and appropriate action by your agency.
Given Bank of the
West's demonstrable
(through the most recent publicly-available HMDA data, see
infra) disproportionate exclusion of lower
income neighborhoods and communities of color from its offers of
normal
interest rate
credit, BNP's Bank of the West's funding of rent to own stores,
check
cashiers and other
providers of high-cost fringe finance (and gun repair) is
particularly
troubling, and
predatory.
In 2004, BNP’s Bank
of
the West denied
fully 49.62% of applications from Latinos, and 42.31% of
applications
from African
Americans, versus 35.71% of applications from whites.
In 2004, BNP’s First Hawaiian Bank denied 11.34%
of the
applications of
Pacific Islanders, versus only 4.63% of applications from whites.
That
is to say,
BNP’s First Hawaiian Bank denied Pacific Islanders 2.45 times more
frequently than
whites.
There is a pattern,
and a history, here.
[Analysis of previous years omitted in this format.] This proposal
would impose BNP’s
practices on (as Pierre Mariani put it in the analysts’ conference
call
on this
proposal) on “BancWest footprint in Colorado, Nebraska,
(indiscernible)
and Iowa
particularly, but also providing a strong presence in new markets,
new
states, Missouri,
Kansas and Oklahoma. On top of all this, this deal is allowing us
to
improve significantly
the profitability of the Bank through meaningful synergies, which
allows for BNP Paribas
EPS accretion and also value creation from 2006 and on. Due to the
strong experience at
BancWest, it's for us a low-risk transaction.”
Not
so, however, for the impacted communities. Beyond the adverse
issues
raised above and
below in this timely Comment, Mr. Mariani continued: “We have
included,
in our models
and our estimates, the conservative 21% reduction of the
Commercial
Federal expense
base.” Reducing service by 21% militates for public hearings, and
more.
As set forth above, BNP's Bank of the West is a disparate
lender. Similarly, the
public record makes clear that BNP Paribas Securities securitizes
and
enables problematic
subprime mortgage loans. See, e.g., Assets
Backed Securities Corporation's August 20, 2003, Prospectus, for a
pool
of subprime loans
(HOME EQUITY LOAN TRUST, SERIES 2003-HE5), originated by the
subprime
lender New Century,
with BNP Paribas as underwriter. In
fact,
BNP
Paribas' role in subprime lending goes further: see, e.g., the
January
27, 2004, SEC Form
S-3 of the subprime lender New Century -- of which BNP Paribas
owns
4,037,000 shares.
BNP has answered previous FRB questions concerning BNP’s
business
relationships with subprime lenders, and standards and safeguards
in
connection therewith,
by listing relationships with more than twenty six subprime
lenders. A
number of these
lenders have been sued by government entities, or subject to cease
and
desist orders (in
the case of CitiFinancial, a C&D order by the FRB), leaving
open to
question whether
BNP's screening and/or safeguards are sufficient.
Simply
as examples, BNP lists business relationships with American
General,
which was recently
subject to an enforcement action by state authorities in New
Jersey. See, e.g., National Mortgage News of
April 5,
2004...
For the record,
BNP's
involvement in the
now-widening Iraq Oil-for-Food scandal is not "blowing over" --
see,
e.g., MX
(Melbourne, Australia) of June 24, 2004: "A U.S. Senate
sub-committee
has...
subpoenaed documents from BNP Paribas, a French bank the UN used
for
the food-for-oil
program. 'We're going to follow the money,' sub-committee chairman
Norm
Coleman
said." See also, the International
Herald
Tribune of June 24, 2004, " The great oil-for-food cash cow,"
reporting
that BNP
was issuing up to 150 letters of credit a day, and making calls
"to get
Cotecna to
issue a [Confirmation of Arrival] to release the money."
From these reports, it would seem that BNP knew or
should have known that what it was doing was problematic, to say
the
least -- and this is clearly relevant
under the
managerial resources and other factors of the Bank Merger Act. For
the
record:
HEADLINE: French Bank
Admits Oil-for-food
'irregularities' But Fraud Link
The French bank BNP-Paribas on Thursday admitted that there had
been
some irregularities
in payments it processed for the scandal-tainted UN oil-for-food
program in Iraq but
insisted it was not linked to any diversion of funds.
The bank revealed the problems in a statement as top officials
appeared
before a US
Congress hearing on the scandal.
"It appears from an extensive, ongoing review being conducted by
the
bank, that a
small fraction of payments under the program were made to persons
other
than letter of
credit beneficiaries orbanks making them direct loans," the French
bank
said in a
statement.
"However, based upon our review to date, the overwhelming number
of
payments were
made to beneficiaries and their banks," it added.
At a House of Representatives hearing in November, Republican
Congressman Henry Hyde
accused BNP-Paribas of negligence which might have aided the
manipulation of the
oil-for-food program by Saddam Hussein's regime.”
(Liquid Africa, April 28, 2005)
And
see,
BNP May Have
Violated UN Oil-For-Food Rules, DOW JONES NEWSWIRES, April 28,
2005...
Also, South
Korea’s financial regulator, the Financial Supervisory Commission,
last
month
penalized the Seoul office “over inadequately advising state-run
companies over the
risks involved in derivatives trading. (Associated Press, July 22,
2005).
Indicative of BNP Paribas’ lack of standards with regards
to
human rights,
anti-money laundering and the environment, see, e.g.,
Africa
Energy Intelligence of October 15, 2003: “Equatorial Guinea's
government is
set to shortly announce the results of an invitation to banks to
bid
for a contract to
provide funding to pay for Malabo's share in Marathon's project to
build a LNG plant on
Elba Island. All of the banks responding to the call - including
BNP-Paribas.” As you know, the
Equatorial
Guinea accounts played
a large role in the collapse and sale of Riggs Bank...
We have more to say, but will await a copy of Bank of the
West’s
application,
and copies of the questions that the FDIC should put to BNP
Paribas /
Bank of the West
(and Commercial Federal) and the institutions' responses thereto.
If you have any questions, please
immediately
telephone the undersigned, at (718) 716-3540.
Very Truly Yours,
Matthew Lee, Esq., Executive Director
For or with more information, contact us.
Update of June 20, 2005: On June 14, BNP’s Bank
of
the West
unveiled a proposal to buy Commercial Federal Corp. for
$1.36 billion. "It's a logical extension of Bank of the
West's
expansion into
the Midwest which began with last year's acquisition of Community
First
Bankshares,"
BancWest’s Don McGrath said-in-a-statement. "We'll add
dramatically to
our
market share in Denver -- we'll have nearly 100 Colorado branches.
We
will also become one
of the leading banks in Omaha and Des Moines," McGrath bragged.
We’ll
have more
on this... For or with more information, contact us.
Update of
May 2, 2005: Better late than never. On April 28, BNP
Paribas
admitted
that payments it approved under the U.N. oil-for-food program may
have
violated its own
guidelines. While recognizing some
"avoidable errors," bank officials told a congressional panel that
BNP
had
followed standard financial practices. In a report to the
committee,
the bank said its own
review so far has identified 403 payments that were made to
parties
other than a
contractor or the contractor's bank. Everett Schenk, chief
executive of
BNP Paribas-North
America, claimed that the agreement was ambiguous about whether
these
transactions were
permitted. But he said some of those payments shouldn't have been
allowed under BNP's own
procedures. He said in processing transactions "some mistakes were
made." BNP
still has not been able to explain 80 transactions, including
three
payments for a company
called Al-Riyadh International Flowers were made instead to
another
called East Star
Trading. The subcommittee has since learned that Al-Riyadh
International Flowers is owned
by Prince Bandar bin Mohammed, a member of the Saudi royal family,
and
that a 2003 Defense
Contract Audit Agency review found it may have overcharged by more
than
$8 million for
oil-for-food transactions.
Update of February 14, 2005: The
state of Missouri on Feb. 7 confirmed it had
fired Paribas Capital as an approved broker-dealer for its $2.9
billion
pension fund
because of its French parent's role in the Iraq oil-for-food
scandal.
Missouri's state
treasurer investment committee on Feb. 4 voted 5-0 to remove
Paribas
Capital as one of
nine primary dealers through which the state placed short-term
investments. BNP’s
unit was the state's largest broker-dealer for short-term
investments,
with $185 million
in open accounts in December. Edwina Frawley, a New York-based
spokeswoman for BNP
Paribas, declined to comment... BNP did, however, brag on Feb.
11 that
it has
consummated its acquisition of 50% of the holding company that
controls
Turkish bank Turk
Ekonomi Bankasi. The deal, for $217 million, was first announced
last
November. Fast
closing -- too fast for appropriate review, it might seem,
particularly
given the scandals
swirling about BNP...
Update of February 7, 2005: Last week’s UN Oil-for-Food report
detailed
how Boutros Boutros-Ghali broke one UN rule after another to
ensure
that BNP Paribas got
the contract to handle the billions in oil sales -- he simply
ignored
all other
recommendations and in the words of the report, "he contacted the
government of Iraq
and asked for its choice [of bank]". Saddam chose BNP.
Developing...
Update of December 20, 2004:
Beyond dodging the
unfolding oil-for-food scandal, BNP Paribas is bulking up its
consumer
finance business in
Brazil. Last week it
announced a deal to buy 6
billion reais ($2.2 billion) of loans from Brazil's Banco BMG
over the
next five years.
The BNP unit, Cetelem, will purchase at least 100 million reais
a month
in credits
administered by the Brazilian bank until it reaches the 6
billion reais
total. Cetelem will specifically
buy BMG
loans being paid
back by direct discounts from government pension payments. A
nearly
guaranteed funding
stream, they figure...
Update of November 29, 2004:
BNP Paribas last week announced a proposal to buy a 50%
stake in holding group TEB Mali Yatirimlar A.S. for $217 million.
BNP
said-in-a-statement
that TEB Mali controls 84.25% of Turk Ekonomi Bankasi (TEBNK.IS),
or
TEB, the
tenth-largest private Turkish bank in terms of assets.
Bonne chance (you'll need it).
Update of November 22, 2004:
the
news of BNP’s
involving in the Oil-for-food scandal keeps getting worse: and yet
the
Fed did nothing
about it, allowing BNP to keep buying banks in the U.S....
Update of October 18, 2004:
The
Federal
Reserve’s Oct. 15 BNP Paribas order reports that ICP
citing press
reports, also expressed
concerns about BNP’s role in handling payments for the United
Nations’
Oil-for-Food program with Iraq. As part of its review and
assessment of
the managerial
resources of BNP, the Board reviewed records of BNP’s New York
branch
concerning this
program in conjunction with state regulators. The Board notes
that
BNP’s role in this
program was to act as the exclusive bank to facilitate payments
under
an agreement with
the United Nations, which currently is conducting its own review
of
this program. The
Board will continue to monitor the progress and results of
investigations of the
Oil-for-Food program by the Congress and by the United Nations.
The commenter also expressed concern
about
lending by Bank of the West and CFB Bank to unaffiliated retail
check
cashers and pawn
shops. Applicants responded that Bank of the West and CFB Bank
provide
credit to pawn
shops and retail check cashers but that neither bank plays any
role in
the lending
practices or the credit review processes of those borrowers.
These
businesses are licensed
by the states where they operate and are subject to applicable
state
law.
In addition, the commenter expressed concern about instances in
which
BNP may have
underwritten the securitizations of subprime loans. BNP
acknowledged
that its U.S.
broker-dealer subsidiary may from time to time underwrite
securitization of assets that
include subprime loans but stated that the subsidiary plays no
role in
the lending
practices or credit review processes of any lender involved in
the
transaction. BNP has
indicated that the due diligence implemented by its
broker-dealer
subsidiary would include
consideration of whether the lender is known to have experienced
legal
or regulatory
compliance problems.
We’ll
see..
Update
of October 11, 2004: Last week a House subcommittee
issued
subpoenas to the
Federal Reserve Bank of New York in the same scandal. The
New
York Fed manages
the Development Fund for Iraq, an account in which Iraqi oil money
and
other funds
earmarked for Iraq's reconstruction are held. The New York Fed
held the
account into which
Iraq's oil revenues were transferred after Saddam's regime fell.
The
subcommittee hopes to
use the FRBNY's account records as a window into the CPA's largely
opaque management
practices. At the underlying House hearing,
BNP’s representative, in a crisp British accent, claimed that BNP
“has
had no
discretion over how money has been spent or invested under the
(oil-for-food)
program." It might be time for
the
Fed to suspend processing of BNP Paribas’ applications...
Update
of
October 4, 2004: Last week,
ICP filed a sixth comment, summarized below:
Re: Sixth
comment
opposing
the applications/notices of BNP Paribas, SA and BancWest
Corporation to
acquire Community
First Bankshares and Community First National Bank
(and
USDB Bancorp)
Dear Chairman Greenspan, Governors, Secretary
Johnson, et al.:
On behalf of Inner City Press/Community on the Move and its
members and affiliates,
and the Fair Finance Watch (collectively, “ICP”), this is a sixth
comment, in
extraordinary circumstances, opposing and requesting evidentiary
hearings on the
applications/notices of BNP Paribas, BancWest Corporation and
their
affiliates
(collectively, "BNP") to acquire Community First Bankshares and
USDB
Bancorp and
their subsidiaries.
On June 21, 2004,
ICP
submitted to the FRB,
and faxed to BNP and its counsel, timely information regarding inter alia BNP's involvement in the now-widening
Iraq Oil-for-Food scandal. It is very surprising to ICP that in
the ONE
HUNDRED days
since, BNP has not seen fit to submit any response on this
important
issue. The issue is
not "blowing over" -- see, for the record and in extraordinary
circumstance, the
N.Y. Post of September 28, 2004, “OIL-FOR-FOOD PROBERS EYE FRENCH
BANK,”
reporting that BNP is
under
investigation
for allowing Saddam
Hussein to launder money, it was revealed yesterday.
Investigators
told The Post that three congressional committees as well as the
Federal Reserve of New
York and Manhattan District Attorney Robert Morgenthau have opened
probes into the New
York branch of the French banking giant BNP Paribas, based on
documents
that have recently
emerged from Baghdad. Congressional
and
law-enforcement officials said the allegations being investigated
include whether lax
procedures at the bank allowed Saddam to carry out numerous
illegal
business deals and
launder money from the huge humanitarian program for his own
personal
and political gain.
House International Relations Committee Chairman Rep. Henry Hyde
(R-Ill.) said he
subpoenaed records from the bank in August because of "concerns
expressed about the
bank's know-your-customer rules and similar laws enacted as part
of the
Patriot Act." Those rules require the
banks to oversee customers'
business dealings to detect money-laundering and other financial
crimes.
The N.Y. Sun of
September 28, 2004, reported
on
three
separate
federal
investigations into foreign and domestic banks and companies
that could
lead to serious
charges against individuals who participated in Saddam's
multibillion-dollar swindle.
Already under way are investigations from U.S. attorneys in the
District of Columbia, New
York, and Texas, according to sources familiar with these
tightly held
probes. The Sun
learned of the federal investigations as congressional
investigators
began poring through
a new batch of documents from a French bank, which held in
escrow $60
billion in Iraqi oil
revenues in trust for the U.N. oil-for-food program. The bank in
question, 331 1395 413
1407BNP Paribas, has released a statement saying it is not the
target
of any
investigations but plans to cooperate with congressional
committees
investigating the
matter.
The bank has already received subpoenas from both the Senate and
House
governmental
affairs committees, which are conducting concurrent
investigations into
the banks and
companies that worked with Saddam's Iraq when he was supposed to
be
using his oil revenues
for food and medicine only. In the past year, documents have
come to
light suggesting that
most of the contracts for food and medicine that Saddam offered
were
for shoddy goods paid
for at inflated prices, the hallmarks of a kickback scheme. In
January,
a new Iraqi
newspaper, al-Mada, published a list of 270 companies and 50
people who
it said received
vouchers from Saddam Hussein to purchase oil. Congressional
sources
said they are looking
into the list, but insist that these are only allegations and
the list
is not the sole
basis of the investigations.
With three federal investigations, companies and business people
that
benefited from
Saddam's corruption could be facing stiff penalties and even
prison
time. Sources familiar
with the federal probes would not disclose the targets of the
investigations, but did say
that U.S. attorneys were looking into some American companies
and their
role in the
oil-for-food program.
Two sources said attorneys were investigating possible
violations of
the USA Patriot Act
and the Foreign Corrupt Practices Act. Companies that
participated in a
scheme to bribe
Iraqi officials could also be in violation of federal laws that
prohibit fraud through
interstate commerce.
"Under the definition of mail and wire fraud, all you need is a
scheme
that is
vaguely dishonest and it can be indicted," a criminal defense
lawyer
headquartered in
Boston who is an expert in federal fraud statutes, Harvey
Silverglate,
said in an
interview yester day. "In my view, a violation of U.N. rules
could be
seen as a crime
in the facility of interstate commerce, through the phone or
mail. If
foreign companies
have used the means of interstate communications in fraud, then
they
could be
indicted."
While the three federal investigations are not directly related
to
congressional inquiries
into corruption in the oil-for-food program, evidence collected
by
congressional panels
could be used by federal prosecutors to advance their
investigations,
and sources close to
the investigations said investigators have been willing to share
information.
There is a precedent for such cooperation. The permanent
subcommittee
on investigations of
the Senate Committee on Government Affairs recommended the
indictment
of Riggs Bank in
connection with its inquiry into the bank's alleged hiding of
money for
Third World
dictators. "This is a very comprehensive investigation from the
permanent
subcommittee on investigations," a spokesman for Senator
Coleman, a
Republican of
Minnesota, told the Sun yesterday. Mr. Coleman is chairman of
that
subcommittee.
"Senator Coleman has reiterated that he will follow the money
wherever
it leads, to
corporations, the United Nations and even to countries. Wherever
the
money trail
leads," the spokesman said. The spokesman, Tom Steward, also
said Mr.
Coleman's
investigators are in possession of more than a million pages of
documents. That panel has
an FBI agent and two IRS officials working on its probe.
Already,
according to a Senate
staff member, the panel has sent out at least six subpoenas for
records
and 12 letters to
potential witnesses who have said they would cooperate with the
probe.
Two companies said to be cooperating with the Coleman
investigation are
BNP-Paribas and
Cotecna, a consulting firm that the United Nations used to
certify that
food and medicine
Iraq purchased with its oil revenues had arrived in the country.
This
spring, news reports
disclosed that Cotecna had hired U.N. Secretary-General Annan's
son
Kojo between 1995 and
1998. The House counterpart of the Senate committee is also
looking
into BNPParibas and
Cotecna. Rep. Christopher Shays, the Republican from Connecticut
who is
chairman of that
panel, has promised hearings next month on the oil-for-food
program.
Mr. Coleman's
committee is trying to schedule hearings for November.
A spokesman for the House International Relations Committee told
the
Associated Press
yesterday, "The subpoena for BNP Paribas
stems from concerns expressed about the bank's compliance
with existing
'know your
customer' rules and similar laws enacted as part of the
Patriot Act."
The new records submitted by the French bank could open up
further
leads for investigators
as the bank's records would provide further detail into how
Iraq's oil
money was spent
under the U.N. program. (Emphasis
added).
We have more to say, but will await the question and
answers
called for above. If
you have any questions, please immediately telephone the
undersigned,
at (718) 716-3540.
Very Truly Yours,
Matthew Lee, Esq., Executive Director, Fair
Finance Watch
cc:
BNP Paribas,
Mr.
Pierre Mariani, et al.
Update
of
September 20, 2004: By letter
dated September 14, BNP answered another round of questions from
the
Fed, concerning
BNP’s Community First and USDB proposals, and each bank’s
“programs to
monitor compliance with fair lending and consumer compliance
laws...
including pricing,
overrides, and exceptions.” The
answers
are convoluted and not persuasive... For or
with
more information, contact
us.
Update of August 30, 2004: the London Telegraph
of
August 26 reported,
"Congressional committees investigating the allegations have
subpoenaed
records from
several institutions, including French bank BNP Paribas. The bank
managed billions of
dollars that came from Iraqi oil revenue, though there is no
official
suggestion that it
was involved in wrongdoing. A BNP Paribas spokesman said: 'It is
understandable given the
publicity surrounding the UN oil-for-food program, that US
authorities
would wish to
understand details about the program. As is customary, BNP Paribas
will
fully co-operate
with the authorities. We are not the target of any
investigation.'"
We'll see...
Update of August 23, 2004: Numerous inquiries
have
been made about BNP
and its applications to the Fed.
Cryptic: keep a watch on developments in the Iraq/UN [/ BNP] Oil
for
Food scandal....
Update of July 26, 2004: BNP is no longer ahead
of
the pack, even in
terms of disclosure. In the same week that its peer SunTrust
Banks,
Inc. announced it
would no longer fund payday or car title lenders, BNP asked for
confidential treatment for
even the names of the check cashers and pawnshops funded by its
Bank of
the West unit (and
its proposed merger partner, Community First National Bank).
Earlier in
the proceeding,
BNP had released the names of subprime mortgage lenders with which
it
does business. There
appears to be no substantive distinction between the two, except
perhaps that the list of
BNP-funded pawnshops and check cashers is more embarrassing. It’s
good,
we think,
that the Fed asked BNP about its links with pawnshops and check
cashers. But BNP cannot be
allowed to withhold even the names of these companies. And, as
noted
earlier in the
proceeding, how this secretiveness on an issue touching on the
two-tier
financial system
is consistent with BNP’s supposed allegiance to the UN’s "Global
Compact" remains to be seen.
Update of June 21, 2004: ICP has submitted a
fourth
comment, replying
to BNP's submissions of June 16 and June 18, 2004. In its June 16
Submission, BNPresponds
to the FRB's June 3 questions concerning their business
relationships
with subprime
lenders, and standards and safeguards in connection therewith. BNP
lists relationships
with more than twenty six subprime lenders. A number of these
lenders
have been sued by
government entities, or subject to cease and desist orders (in the
case
of CitiFinancial,
a C&D order by the FRB), leaving open to question whether
BNP's
screening and/or
safeguards are sufficient. Simply as examples, BNP lists business
relationships with
American General, which was recently subject to an enforcement
action
by state authorities
in New Jersey... BNP lists NovaStar, recently subject to an
enforcement
action in Nevada. See,
e.g., the Las Vegas Review-Journal of Feb. 26, 2004,
"Mortgage
Lenders Dealt
Fines," regarding NovaStar getting fined and being subject to a
cease
and desist
order for "unauthorized mortgage broker activity." BNP lists
Household
Financial
Services and Household International (click here for more
about
Household --
despite all that's there, Household apparently passes muster with
BNP
-- showing that BNP
has essentially no standards.
BNP's June 18 Submission claims that because the Yusufeli
Dam
project is
currently going nowhere, BNP has sufficient safeguards in place
(along
with its membership
in the U.N.'s "Global Compact," see BNP's June 18
Submission at
2-3). It
is unclear to ICP how BNP's business relationships with subprime
lenders charged by
government agencies with predatory lending is consistent with
BNP's
commitments under the
Global Compact. Also, for the record, consider these recent
reports:
"Iraqi-Born
Billionaire Has Big Stake in Bank That Holds Baghdad's
Oil-for-Food
Funds," by
Timothy L. O'Brien, New York Times, April 30, 2003, Pg. A12 --
One of the largest private shareholders in BNP Paribas,
the
French bank that holds more than $13 billion in Iraqi oil
funds
administered through the United Nation's oil-for-food program,
is an
Iraqi-born businessman who once helped to arm Iraq in the
1980's and
brokered business deals with Saddam Hussein's government,
according to
public records and interviews. The involvement of the
businessman, the
British billionaire Nadhmi Auchi, raises questions about how
carefully
the United Nations has vetted the bank in its continuing role
as
repository of oil-for-food funds.... Although the United
Nations
pressed Iraq to allow banks other than BNP Paribas to be the
primary
repository for billions of dollars in oil revenue, Iraq
successfully
insisted that BNP Paribas remain the sole caretaker of the
program's
escrow account... Mr. Auchi, who declined to be interviewed
for this
article, holds his stake in BNP Paribas through a Luxembourg
concern he
controls called General Mediterranean Holdings. As recently as
2001,
General Mediterranean Holdings described itself in an annual
report as
one of largest single shareholders in BNP Paribas.
ICP note: BNP's involvement raises questions, relevant to
these proceedings,
under the managerial and other factors of the BHC Act, about
BNPP's
"vetting"
and other processes. See also, RCR Wireless News of April 26,
2004:
The $100 billion relief project-managed by the U.N. with
the help of French banking giant BNP Paribas-apparently proved
too
tempting. The accusations are serious: grift, kickbacks,
bribes and
looting, allegedly benefiting everyone from former Iraqi
officials to
hundreds of prominent international figures to top U.N.
officials.
BNP, besides being a major moneylender to Saddam, was one of
the
financial institutions that teamed with top cellular-phone
manufacturers several years ago to create the Mobey Forum to
drive
mobile financial services. In March, Iraq's Governing Counsel
launched
a probe
From transcript of April 28, 2004, hearing:
ROSETT: BNP itself is entirely unforthcoming, certainly
as
far as questions from outside.... The further conflicting
statements I
have received -- and in keeping with what Ms. Pletka told you
-- are
that there are five or six banks. It would seem to me an easy
number to
keep track of. These are banks -- a program involving
billions.
CHRISTOFF: That is still a question that I don't have a
definitive
answer to. I know the U.N. external auditors recommended that
the U.N.
diversify and not just rely on BNP-Paribas.
Hearing of REP. HENRY J. HYDE (R-IL) ON THE U.N.
OIL-FOR-FOOD
PROGRAM IN IRAQ
It has been reported, again relevant to the factors to be
considering in this
proceeding, that BNP faces "subpoenas from three Congressional
committees for
detailed records of secret transactions involving the program."
N.Y.
Post of May 11,
2004. See attached - this issue must be developed in the record;
on the
current record,
BNP's applications could not legitimately be approved. For
or
with more information,
contact us.
Update of June 7, 2004: ICP has filed a third
comment on BNP Paribas /
BancWest - Community First:
June 7, 2004
Board of Governors of the Federal Reserve System
Attn: Chairman Alan Greenspan, Governors, Secretary Johnson
20th Street and Constitution Avenue, N.W.
Washington, DC 20551
Re: Third comment opposing the applications/notices of BNP
Paribas,
SA and BancWest
Corporation to acquire Community First Bankshares and Community
First
National Bank
including Reply to BNP / BancWest's May 28 "Response"
Dear Chairman Greenspan, Governors, Secretary Johnson, FRB:
On behalf of Inner City Press/Community on the Move and its
members
and affiliates, and
the Fair Finance Watch (collectively, "ICP"), this is a third
comment,
in
extraordinary circumstances and demanding consistency between the
FRS'
regions, opposing
and requesting evidentiary hearings on the applications/notices of
BNP
Paribas, BancWest
Corporation and their affiliates (collectively, "BNP") to acquire
Community
First Bankshares and Community First National Bank (and,
prospectively, USDB
Bancorp), including a reply, on the next business day, to BNP
BancWest's June 4, 2004,
Submission.
In their June 4 Submission, "the Applicants respectfully
request that the
Board take into consideration the following additional information
responsive to the
allegations relating thereto by ICP." Subm. at 4. Then, rather
than
address what
standards are applicable to their loans to pawnshops and check
cashers,
the Applicants
vaguely claim that such loans are somehow indicative of
"commitment to
the
communities which it serves and the provision of small business
financing in those
communities."
For the record, ICP is annexing hereto a pertinent portion
of
a recent (June 2)
submission by an applicant in the FRS' Second District, North Fork
Bancorporation, to
which following an ICP submission of a UCC filing regarding a
pawnshop,
the FRS asked on
May 20:
"For any business relationship (e.g. commercial lender,
warehouse lender, purchaser, custodian, etc.) that North Fork
or
GreenPoint or any of their affiliates have with any subprime
lenders
(including providers of non-traditional banking products, such
as check
cashers, title lenders, pawn shops, or rent-to-own
businesses): (i)
identify the relevant business parties and (ii) describe the
nature of
the business relationships... Additionally, to the extend not
already
covered in your May 10, 2004 response to the comments of the
Inner City
Press Community on the Move & Fair Finance Watch ('the May
10
response'), describe any due diligence that North Fork or
GreenPoint
typically conducts concerning any such subprime lender's
compliance
with applicable fair lending and consumer protection laws
prior to
North Fork or GreenPoint entering into these business
relationships,
including... (c ) any monitoring or other ongoing procedures
North Fork
or GreenPoint has adopted to access compliance with these
laws. Provide
a copy of such procedures that are used to determine whether
third
party originators are engaged in, or facilitating, abusive
and/or
predatory lending practices."
ICP asked, after BNP's May 28 submission, where is
the
response about, for
example, Pawn 1, Inc. of Spokane, Washington? BNP's June 4
submission,
which purported to
be responding to ICP's comments, again dodged the issues. It seems
clear that, given the
record and BNP's two evasive "responses" to date, that a similar
question must
be posed to BNP, including for the FRS' own consistency between
regions. Specifically,
this question:
"For any business relationship (e.g. commercial lender,
warehouse lender, purchaser, custodian, etc.) that Bank of the
West or
Community First or any of their affiliates have with any
subprime
lenders (including providers of non-traditional banking
products, such
as check cashers, title lenders, pawn shops, or rent-to-own
businesses): (i) identify the relevant business parties and
(ii)
describe the nature of the business relationships...
Additionally, to
the extend not already covered in your May 28, 2004 response
to the
comments of the Inner City Press Community on the Move &
Fair
Finance Watch ('the May 28 response'), describe any due
diligence that
Bank of the West or Community First typically conducts
concerning any
such subprime lender's compliance with applicable fair lending
and
consumer protection laws prior to North Fork or GreenPoint
entering
into these business relationships, including... (c ) any
monitoring or
other ongoing procedures Bank of the West or Community First
has
adopted to access compliance with these laws. Provide a copy
of such
procedures that are used to determine whether third party
originators
are engaged in, or facilitating, abusive and/or predatory
lending
practices."
Also, the public record makes clear that BNP Paribas
Securities securitizes and
enables problematic subprime mortgage loans. See, e.g.,
Assets
Backed Securities
Corporation's August 20, 2003, Prospectus, for a pool of subprime
loans
(HOME EQUITY LOAN
TRUST, SERIES 2003-HE5), originated by the subprime lender New
Century,
with BNP Paribas
as underwriter. In fact, BNP Paribas' role in subprime lending
goes
further: see, e.g.,
the January 27, 2004, SEC Form S-3 of the subprime lender New
Century
-- of which BNP
Paribas owns 4,037,000 shares. So, BNP should be asked the
questions
about due diligence
and securitization which other applicants have been asked. The May
25
question letter, no
copy of which was ever provided to ICP despite the FRB's own
rules, was
woefully
inadequate, and, as shown above, was inconsistent with what the
FRS is
asking other
applicants in other districts, on similar showings by ICP.
Thus far, all BNP has to say in response the reported
gender
discrimination, and
lending to dam projects widely criticized by environmental groups,
is
to cite to a thirty
year old court review of an FRB order, Western Bancshares Inc.
v.
Board of Governors,
480 F.2d 749 (10th Cir. 1973), claiming that these are "subject to
foreign
jurisdiction." This type of answer is indicative of one of the
reasons
ICP is
opposing BNP's proposal to export its practices to ten more U.S.
states. ICP reiterates
its hearing request, and that these BNP applications be denied.
If you have any questions, please immediately
telephone
the undersigned,
at (718) 716-3540.
Respectfully submitted,
Matthew Lee, Esq., Executive Director, Inner City Press / Fair
Finance Watch
cc: BNP Paribas, Mr. Pierre Mariani
BNP Bank of the West, c/o Pillsbury Winthrop LLP
To be continued; developing...
Update of June 1, 2004: ICP has filed a second
comment on BNP Paribas
/ BancWest - Community First:
June 1, 2004
Board of Governors of the Federal Reserve System
Attn: Chairman Alan Greenspan, Governors, Secretary Johnson
20th Street and Constitution Avenue, N.W.
Washington, DC 20551
Re: Second comment opposing the applications/notices of BNP
Paribas,
SA and BancWest
Corporation to acquire Community First Bankshares and Community
First
National Bank
including Reply to BNP / BancWest's May 28 "Response"
Dear Chairman Greenspan, Governors, Secretary Johnson, FRB:
On behalf of Inner City Press/Community on the Move
and
its members and
affiliates, and the Fair Finance Watch (collectively, "ICP"), this
is a
second
comment opposing and requesting evidentiary hearings on the
applications/notices of BNP
Paribas, BancWest Corporation and their affiliates (collectively,
"BNP") to
acquire Community First Bankshares and Community First National
Bank
(and,
prospectively, USDB Bancorp), including a reply, on the next
business
day, to BNP
BancWest's May 28, 2004, Response (the "Resp.").
The Resp. chooses to respond, with a description,
regarding
Al's Hardware and
Gun Repair, with reference to mountain ranges and "sportsman
(hunting)
activities." Resp. at 2. Where then is the response about, for
example,
Pawn 1, Inc.
of Spokane, Washington? What sportsman activity is BNP Bank of the
West
supporting with
this loan to a pawnshop? Meanwhile, rather than addressing its
funding
of check cashing,
it refers to an entirely separate program, involving a Cyber
Café (Resp. at 2). Such
selective responding should not be countenanced. We await an
answer
from BNP regarding its
pawn shop funding.
Similarly, the public record makes clear that BNP Paribas
Securities securitizes
and enables problematic subprime mortgage loans. See, e.g.,
Assets
Backed
Securities Corporation's August 20, 2003, Prospectus, for a pool
of
subprime loans (HOME
EQUITY LOAN TRUST, SERIES 2003-HE5), originated by the subprime
lender
New Century, with
BNP Paribas as underwriter. In fact, BNP Paribas' role in subprime
lending goes further: see,
e.g., the January 27, 2004, SEC Form S-3 of the subprime
lender New
Century -- of
which BNP Paribas owns 4,037,000 shares...
Outrageously -- particularly in light of its claim
in
the Resp. to be a
"responsible corporate citizen" -- all BNP has to say in response
the
reported
gender discrimination, and lending to dam projects widely
criticized by
environmental
groups, is to cite to a thirty year old court review of an FRB
order, Western
Bancshares Inc. v. Board of Governors, 480 F.2d 749 (10th
Cir.
1973), claiming that
these are "subject to foreign jurisdiction." This type of answer
is
indicative
of one of the reasons ICP is opposing BNP's proposal to export its
practices to ten more
U.S. states. ICP reiterates its hearing request, and that these
BNP
applications be
denied.
If you have any questions, please immediately
telephone
the undersigned,
at (718) 716-3540.
Respectfully submitted,
Matthew Lee, Esq., Executive Director, Inner City Press / Fair
Finance Watch
cc: BNP Paribas, Mr. Pierre Mariani
BNP Bank of the West, c/o Pillsbury Winthrop LLP
To be continued; developing... For or with
more
information, contact
us.
* * *
Board of Governors of the Federal Reserve System
Attn: Chairman Alan Greenspan, Governors, Secretary Johnson
20th Street and Constitution Avenue, N.W.
Washington, DC 20551
Re: Timely comment opposing the applications/notices of BNP
Paribas,
SA and BancWest
Corporation to acquire Community First Bankshares and Community
First
National Bank
Dear Chairman Greenspan, Governors, Secretary Johnson, FRB:
On behalf of Inner City Press/Community on the Move and
its
members and
affiliates, and the Fair Finance Watch (collectively, "ICP"), this
is a
timely
comment opposing and requesting evidentiary hearings on the
applications/notices of BNP
Paribas, BancWest Corporation and their affiliates (collectively,
"BNP") to
acquire Community First Bankshares and Community First National
Bank
(and,
prospectively, USDB Bancorp). The comment period on CFB on the
FRB's
Internet H2A runs
through May 14, 2004; this comment is timely.
Below, ICP identifies some of the disparities in BNP's Bank of
the
West's mortgage
lending in the most recent year for which HMDA data is publicly
available. First, however,
ICP wishes to emphasize BNP's Bank of the West's documentable
support
of fringe finance:
for example, a pawn shop (Pawn 1, Inc. of Spokane, Washington), a
check
cashier (in
Sacramento, California), and even a gun repair shop (in Forest
Grove,
Oregon). Attached
hereto for inclusion in the record, and appropriate action by your
agency, are:
--a Washington State UCC filing showing BNP's Bank of the West's
relationship with Pawn
1, Inc. of Spokane, WA -- note that the relationship runs at least
through November 13,
2005;
--a California Secretary of State UCC filing showing BNP's Bank
of
the West's
relationship with Quick Market & Check Cashing of Sacramento,
CA --
note that the
relationship runs at least through January 3, 2006;
--an Oregon Secretary of State UCC filing showing BNP's Bank of
the
West's relationship
with Al's Hardware and Gun Repair of Forest Grove, OR -- note that
the
relationship runs
at least through March 19, 2007.
Given Bank of the West's demonstrable (through the most recent
publicly-available HMDA
data, see infra) disproportionate exclusion of lower
income
neighborhoods and
communities of color from its offers of normal interest rate
credit,
BNP's Bank of the
West's funding of pawn shops, check cashiers and other providers
of
high-cost fringe
finance (and gun repair) is particularly troubling, and predatory.
In 2002 in the Los Angeles Metropolitan Statistical Area ("MSA"),
for
conventional home purchase loans, BNP's Bank of the West denied
the
applications of
Latinos 2.58 times more frequently than those of whites, and
denied the
applications of
African Americans 4.5 times more frequently than whites. This was
much
more disparate than
other lenders (the aggregate's denial rate disparities were 1.62
for
Latinos and 1.95 for
African Americans). Bank of the West's much higher disparities
were not
explained by any
greater-than-normal outreach to communities of color: among the
three
above-listed groups,
2.78% of BNP's Bank of the West's loans were to African Americans
(versus 7.4% for the
aggregate), and 27.8% of Bank of the West's loans were to Latinos,
versus (and lower than)
the aggregate's 31.6%.
BNP's Bank of the West's disparities also exist in refinance
lending, where using the
same methodology as above, only 2.7% of Bank of the West's
refinance
loans in this MSA
were to African Americans, versus (and lower than) the aggregate's
7.0%. Amazingly, for
home improvement loans in Los Angeles in 2002, BNP's Bank of the
West
made 36 loans to
whites, only one to a Latino, and none at all to African
Americans.
For home improvement loans in the Las Vegas MSA in 2002, Bank of
the
West made 16 loans
to whites, only one to a Latino, and once again non to African
Americans. Its denial rate
disparity for African Americans was incalculable (or infinite),
since
it denied 100% of
applications from African Americans. This was also true for
conventional home purchase and
home improvement loans in the Albuquerque, New Mexico MSA, and for
refinance loans to
Latinos in the Portland, Oregon MSA. BNP's Bank of the West is a
disparate lender.
Other issues that should be inquired into, including at the
timely
requested
evidentiary hearing, regard BNP's projected cost (and service)
cutting,
including possible
branch closing (for example, in Las Cruces, NM, Bank of the West
as at
795 S. Telshor
Blvd.; CFNB is at 1340 E. California St. and at 201 N. Church
St.). In
a conference call
on March 16 about this proposal (Fair Disclosure Wire Transcript #
031604ag.739), BNP's
Pierre Mariani projected "cost savings representing 24% of
Community...
in the range
of $15 million per annum." BancWest COO Don McGrath spoke
explicitly of
reductions:
"that's a little bit of feeding analogy because we merge the two
banks,
we are also
will be taking out administration but the[ir] branch model was a
little
bit more expensive
than ours. We have some more things centralized, we think we can
get
savings out of that
to take it." Questions need to be asked about the imposition of
Bank of
the West's
cheaper branch model.
In fact, the co-applicants here have publicly acknowledged the
disruptions that are
foreseeable here: the Fort Collins Coloradoan of March 5, 2004
quoted
Gerard Nalezny,
president of Community First National Bank, that "there is also
some
fallout from
bank acquisitions." [FN: Also attached hereto for inclusion in the
record, and
appropriate action by your agency, are: a Colorado Secretary of
State
UCC filing showing
Community First National Bank's relationship with Englewood Pawn,
Inc.
of Englewood,
Colorado; and an Arizona Secretary of State UCC filing showing
Community First National
Bank's relationship with Palomino Check Cashing, Inc. of Phoenix,
AZ,
with the
relationship runs at least through August 21, 2007. We also note
that
in 2002, for
example, in the Boulder, Colorado MSA, for conventional home
purchase
loans, Community
First National Bank denied 81.8% of loan applications from
Latinos,
versus only 52.4% of
application from whites. In the Las Cruces, New Mexico MSA,
Community
First National Bank
denied 30% of loan applications from Latinos -- and zero percent
(no
denials) for whites.]
As set forth above, BNP's Bank of the West is a disparate lender,
which also supports
such entities as pawn shops, check cashiers and even gun repair
shops.
It would be
contrary to the public interest to allow BNP / BancWest to expand
these
practices in ten
more states.
This is also true in light of the activities of Bank of the
West's
parent, BNP Paribas.
For the record, and in support of ICP's timely request for
evidentiary
hearings, the
London Daily Mail of April 3, 2003, "Banker's Bonus 'Slashed After
She
Became
Pregnant,'" reported:
Arianna McGregor-Mezzotero, 37, claims she was treated in a
'humiliating and offensive' way by executives at French bank BNP
Paribas.
She discovered her promised bonus for 2001 had been slashed by
80 per
cent while male colleagues received an average of nine times
more than
her. The married mother of two claimed she was shifted to a
different
division and given poor clients after she returned from
maternity leave
the first time in May 2000. And she claimed that when she
returned from
her second leave in November 2002 her post in the Northern
Europe
financial institutions group had been turned into a job share
and the
bank tried to 'freeze' her out.
Mrs McGregor-Mezzotero said: 'In the absence of any tenable
explanation
from the bank as to why I had received lower bonuses, my not
being
allowed to return to my prematernity leave position and other
treatment
issues, I can only conclude that this was due to my sex, and
particularly my pregnancies in 2000 and 2002.' Mrs
McGregor-Mezzotero,
who has worked in banking for more than 12 years, claims sex
discrimination, saying she was denied equal pay, and alleges
non-payment of wages. BNP Paribas denies the charges.
The tribunal in London heard how the banker was headhunted to
join BNP
Capital Markets in 1996 and was handed a discretionary bonus of
Pounds
200,000 for her work in 1999. In February 2000, she went on
maternity
leave.
When she returned to work on May 22 that year at the
newly-merged BNP
Paribas, she was told that she had to work in the Northern
Europe
financial institutions group an area she not familiar with. She
said
the switch meant she had only 'leftover clients' and an
'inactive,
low-volume client base'. That year she received a bonus of
Pounds
125,000 while male colleagues allegedly received an average
bonus of
Pounds 205,000. She claimed one colleague's financial
contribution to
the firm was more than double her own but his bonus was five
times as
great as hers.
In July 2001, Mrs McGregor-Mezzotero was told she could expect a
discretionary bonus of Pounds 175,000 but after telling her
bosses she
was pregnant for the second time this allegedly plumeted to
Pounds
31,000. She received emails from her boss Paul Hearne such as
'you are
on a roll' and 'keep 'em coming regarding deals', but her bonus
sank
while those of male colleagues rose to an average of Pounds
287,000.
After returning from maternity leave on November 11, 2002, she
was
expected to share her original job because Chris Babington, who
had
taken over from her while she was away, had 'done so well'.
She said: 'This was a fundamental change to my job function, a
breach
of contract, humiliating, offensive and amounted to a deliberate
undermining of my position and would have been recognised as
such by
other staff members and clients.
'It is my belief that it was still the bank's intention to make
my
position untenable in the hope I would leave and they could
revert to
the one person they wanted in that role.' When she complained
she was
put on 'gardening leave' and spent five months, until May last
year, at
home.
In July, she was shifted to the Italian Corporates division,
'another
dud role'. She said she felt insulted after colleague Peter Van
der
Velden told her market conditions were tough and said: 'You
should have
stayed on maternity leave for another nine months. Actually, you
should
get pregnant again.' She said: Mr Van der Velden's comments were
'particularly hurtful as I was feeling abandoned and
humiliated'.
'I couldn't understand why the bank was treating me in this way.
Was it
because I was now a mother with two children? There seemed no
other
viable explanation.'
The above raises managerial resources (and gender discrimination)
issues that are
relevant to this proceeding; that a matter is being litigated does
not
make it irrelevant.
Note that BNP has already lost an appeal related to the above: see,
e.g., Reed
Business' publication Personnel Today of May 4, 2004:
The danger was demonstrated by the sex discrimination
case
last week, which heard evidence from a 'without prejudice'
meeting
regarding the termination of employment. The legal team
representing
the employer, the BNP Paribas bank, appealed against the
decision to
include the material, but this was not upheld.
In the recent case of BNP Paribas v Mezzotero, the Employment
Appeals
Tribunal (EAT) provided some important clarification to
employers on
the scope of the 'without prejudice' rule.
On the facts of this case, the employee had brought a
grievance
relating to her treatment following her return from maternity
leave.
Mid-way through the grievance process, the employer held a
meeting with
the employee which it expressly stated was on a 'without
prejudice'
basis.
The employer explained that the content of that meeting could
not be
used for legal purposes. The employer further explained that
there was
no longer a job for the employee, and offered her a settlement
package.
She did not agree to the settlement terms, and later brought a
claim at
the Employment Tribunal, where she sought to rely upon the
content of
the meeting as evidence.
The EAT decided that the meeting was not 'without prejudice',
and
therefore was not privileged, because at the time of the
meeting there
was not actually a dispute - rather, the dispute arose from
the meeting.
This case highlights the common practice of employers meeting
with
employees they wish to dismiss in an effort to convince them
to sign
away their employment rights in return for a settlement
package. This
is a quick and easy way of dismissing employees and if it
works, there
is no need to follow the correct procedures, because any
potential
claim at the employment tribunal will be compromised.
However, if the plan goes wrong and an employee does not sign
up to the
settlement terms proposed, they may later be able to rely upon
the
content of the meeting to demonstrate that any concurrent
'open'
procedures were a sham, and that the dismissal was unfair.
The above appears to be part of a pattern: see,
e.g.,
Euroweek of August 15, 2003, "Iveson Leaves BNPP; Claims
Discrimination" --
Ann Marie Iveson, head of European corporate debt
capital
markets for BNP Paribas, has left the bank some three months
after
lodging a complaint with an employment tribunal against the
bank and
Paul Hearn on the grounds of sexual discrimination. Paul Hearn
is head
of global primary credit at BNP Paribas in London and Iveson
reported
to him. The complaint was lodged with the tribunal on April
29.
Iveson's lawyer told EuroWeek that neither she nor Iveson
wanted to
comment. None of those involved wanted to confirm which
party
terminated Iveson's employment contract or whether the
tribunal case
was a factor in her departure. "[Ann Iveson] has left the bank
and her
last day of employment was July 18," said a spokesperson for
BNP
Paribas, "We can confirm Ms Iveson has issued proceedings
against BNP
Paribas, which we are vigorously defending." The spokesperson
also said
a replacement was not yet in place and that an announcement
would be
made in September. A bearing date has yet to be set but will
be
scheduled for some time between February 4 and 20 next year.
The
grounds for the case have not yet been made public, but more
details
will be released once the hearing is held.
In April former Investec analyst Louise Barton won an appeal
in an
equal pay and sexual discrimination case when she accused her
bosses of
paying her less than her male colleagues.The case was a
considered by
lawyers a milestone in the fight against inconsistencies in
pay within
the investment banking community.Iveson is pursuing her case
under the
Sex Discrimination Act, which covers unfair treatment. In the
UK,
complaints about unequal pay are brought under the
jurisdiction of the
Equal Pay Act and Article 141 of the Treaty of Rome, which
covers
sexual discrimination.
On lack of environmental standards, see Al-Bawaba of
December 23, 2002,
"Another Firm [not BNP] Pulls Out of Controversial Turkish Dam
Project"
--
French engineering group Spie Batignolles TP has pulled out of
the
$600 million Yusufeli Dam and Hydroelectric Power Plant scheme
on the
Coruh river in northeast Turkey, which has long enraged
environmental
and human rights groups.
The project is developed by an international joint
venture-including
Dragados and FCC Construction of Spain, Besix of Belgium and
Dogus of
Turkey-on behalf of Turkey's General Directorate of State
Hydraulic
Works (DSI). The consortium was led by Spie.
In March 2002, the British group Amec, which holds a 46 percent
share
in Spie, withdraw from the consortium planning to construct the
dam.
Balfour Beatty previously announced that too it will not
participate
further with the proposed project. French company Alstom remains
committed to the scheme, and reportedly so are financiers
Barclays and BNP Paribas. (Emphasis added). [FN: BNP
is also
listed as a major unaccountable play in Angola's oil industry,
see,
e.g., the reports "All the President's Men" (focused on Angola),
and
the more recent "Time for Transparency."
Note also that BNP Paribas as regards the Enron scandal:
the
Daily Telegram
(London) of February 28, 2002, reported:
Daniel Scotto, an analyst at BNP Paribas who claims he was
fired
for his negative stance on Enron, said yesterday: "There was a
tremendous amount of pressure to like this company, to say it
was the
best in the energy field."
ICP is timely requesting an evidentiary hearing on these matters,
and that, on the
current record, BNP's applications be denied. If you have
any
questions, please
immediately telephone the undersigned, at (718) 716-3540.
Respectfully submitted,
Matthew Lee, Esq., Executive Director, Inner City Press / Fair
Finance Watch
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