French Bank Fined $1 Billion for Bribes in Libya

BROOKLYN (CN) — The French bank Societe Generale will pay more than $1 billion in penalties for bribing Libyan government officials during the rule of Muammar Gaddafi, the U.S. Department of Justice said Monday.

The United States and France cooperated to resolve the foreign bribery case, the first time the two countries have done so. The resolution includes a guilty plea, to be entered Tuesday by Societe Generale Acceptance, a subsidiary of Societe Generale S.A., in the Eastern District of New York, before U.S. District Judge Dora L. Irizarry.

The Paris-based bank admitted it doled out more than $90 million in corrupt payments from 2004 to 2009. It cooperated with authorities.

"We regret these past misconducts, which are contrary to our values and ethical standards that led to these settlements,” Societe Generale CEO Frederic Oudea said in a statement. The bank’s former deputy CEO, Didier Valet, resigned in March.

The Department of Justice said the bank paid more than $90 million in bribes to a Libyan “broker” from 2004 to 2009 for help in securing investments from state financial institutions in Libya. The broker passed along some of that money to “high-level Libyan officials.” Societe Generale scooped up 13 investments and earned $523 million in profits from the scheme, the Justice Department said.

“For years, Societe Generale undermined the integrity of global markets and foreign institutions by issuing false financial data and by fraudulently securing contracts through bribery,” Acting Assistant Attorney General John Cronan said in a statement Monday.

“Today’s resolution … sends a strong message that transnational corruption and manipulation of our markets will be met with a global and coordinated law enforcement response.”

Societe Generale also falsely deflated U.S. dollar London Interbank Offered Rate (Libor) submissions to make it look “stronger and more creditworthy than it was,” according to the Justice Department.

The FBI and federal prosecutors cooperated with officials in France, the United Kingdom and Switzerland on the matter.

Maryland-based investment-management firm Legg Mason faced an investigation in Brooklyn as well related to the Societe Generale scheme, but it agreed in a nonprosecution agreement Monday to resolve those allegations with a $64.2 million  penalty.

The Justice Department contends that middle- and lower-level employees at Legg Mason subsidiary Permal Group partnered with Societe Generale in the plot to garner business from Libyan investors between 2004 and 2010. Though Legg Mason did not immediately disclose the misconduct, it cooperated with the investigation and has no history of such behavior.

“Let me be very clear: the misconduct by former employees of the legacy Permal business that the government found was totally unacceptable,” Legg Mason CEO and Chairman Joseph Sullivan said in a letter to stakeholders Monday. “It violated our high standards, our long-held core values and our ‘no-chalk’ culture.”

France and Britain controlled Libya from 1943 to 1951, when the country declared independence. Gaddafi, who took control in a 1969 coup d’etat, was killed by  his own citizens in 2011.

Officials with the Societe Generale did not immediately return requests for comment Monday. A spokesman for the Justice Department declined to comment beyond this morning's statement.

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