Two financial institutions will each pay a hefty price to resolve claims related to their roles in a scheme to bribe Gadhafi-era Libyan government officials, the Justice Department announced Monday.
Société Générale S.A. was fined $1.3 billion for bribing members of Libyan dictator Muammar Gaddafi’s government and for manipulating global interests rates.
Separately, Legg Mason will hand over $64 million for partnering with Société Générale in the scheme.
Société Générale took the largest hit. The Paris-based bank will pay $860 million to U.S. and French authorities to resolve criminal charges and an additional $475 million in penalties to the Commodity Futures Trading Commission for trying to rig the LIBOR rate, the Justice Department said.
Both companies were accused of violating the Foreign Corrupt Practices Act.
Between 2004 and 2009, Société Générale paid over $90 million in bribes to a “broker” to secure nearly $3.7 billion in business from the Libyan government, according to court documents. The earned a profit of $523 million off 13 investments and one restructuring of an undisclosed state-run business.
Prosecutors said Société Générale paid commissions through the broker to benefit a Legg Mason subsidiary, Permal, which managed funds invested by Libyan state institutions. Legg Mason, through Permal, managed seven of the 13 investments secured through the bribes, earning a profit of roughly $31.6 million, according to the Justice Department.
Société Générale also admitted that it submitted false LIBOR reports to make it look as if Société Générale was borrowing money at better interest rates that it had actually secured, court documents revealed. A senior executive at Société Générale ordered the false reports to fraudulently inflate the bank’s credit rating.
“For years, Société Générale undermined the integrity of global markets and foreign institutions by issuing false financial data and by fraudulently securing contracts through bribery,” said acting Assistant Attorney General John Cronan. “Today’s resolution — which marks the first coordinated resolution with France in a foreign bribery case — sends a strong message that transnational corruption and manipulation of our markets will be met with a global and coordinated law enforcement response.”
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