The British and American governments have criticized the $8.1 billion fine imposed on the nation’s leading telecommunication firm, MTN, by the Central Bank of Nigeria for alleged roles in alleged illegal dividend repatriation and other contravention of Nigeria’ s financial regulations. Speaking through John Bray, US Consul General, and Laura Beaufils, British Deputy High Commissioner to Nigeria, both countries said that foreign investors were discouraged by issues faced by MTN in recent times. They even alleged that some foreign investors had taken their investors to neighbouring countries.
Both envoys were reported to have spoken on the sideline at the just concluded 2018 International Investment Conference organized by the Lagos Chamber of Commerce as part of the activities marking the 2018 Lagos InternationalTrade Fair which held in Lagos.
According to Bray: “Apparently things are being resolved, but once you make an announcement like that, there are probably guys sitting back there and waiting to get on the plane and fly back to the JFK and say, I am not investing again. So, we just want to get more investors here and part of that is improving the regulatory environment, improving infrastructure and dampening their fears about insecurity.”
In his own comments at the event, Beaufils said: “Of course, investors are interested in regulations, policies and strategies, but ultimately, they look at signals like that and I think that was damaging. I think most people in Nigeria recognise that that was very damaging. There is a lot that is being done to address that and we are aware of that but sadly, investors also go beyond the headlines of such stories and my key point today is that we have to avoid such rash decisions at all cost in the interest of further investments that are absolutely essential to the economic development of the country, to job creation and to the vision that we all have of an incredibly rich and vibrant Nigeria.”
Without prejudice to the ongoing moves by the CBN and MTN to resolve the issue of the penalty in an amicable manner, it is pertinent to expose the hypocrisy of both governments of UK and US for engaging in cheap blackmail in a desperate move to promote impunity in Nigeria. By their highly prejudicial comments, both envoys have given the misleading impression that the British and American governments would condoned the violations of extant financial regulations in order not to discourage investors. As far as both envoys are concerned, while financial regulations are strictly enforced in advanced capitalist countries, even if the heavens would fall, they should be conveniently breached in a peripheral capitalist country like Nigeria.
It is curious to note that both envoys neither commented on the penalties imposed on Nigerian banks for their involvement in the illegal capital exportation nor dismissed the alleged breaches of Nigeria’s financial regulations by MTN. It is doubtful if both envoys are not aware that the regulatory agencies in Western countries, including the UK and US, have, in the last nine years, imposed penalties of over $113 billion on banks and other corporate bodies for committing money laundering offences and for violating financial regulations. In view of the patronizing intervention of the UK and US in the MTN $8.1 billion fine we are compelled to draw attention of the Nigerian people to the fines and penalties imposed by the UK and US Financial Regulators from 2009-2018:
1. Libor Rigging Scandal and Fines post 2008 financial crisis:
In 2012, UBS cooperated with a United States Department of Justice (DOJ) investigation in order to avoid criminal charges in connection with currency rigging.
Total fines: $545 million.
$203 million criminal fine to the DOJ in connection to LIBOR rate rigging.
$342 million to the Federal Reserve in connection with its forex investigation (no criminal charges).
Total fines: $2.4 billion
Eight additional employees fired for their roles in forex manipulation.
$650 million criminal fine to the DOJ, plus an additional $60 million fine for violating a non-prosecution agreement. So $710 million to the DOJ total.
$342 million to the United States Federal Reserve in connection with its forex investigation.
£284 million (about $443 million) to the UK’s Financial Conduct Authority.
$485 million to the New York State Department of Financial Services.
$400 million to the United States Commodities Futures Trading Commission
Fines: $1.26 billion.
$925 million criminal fine to the DOJ.
$342 million to the Federal Reserve in connection with its forex investigation.
$550 million criminal fine to the DOJ; and
$342 million to the Federal Reserve in connection with its forex investigation.
e. Royal Bank of Scotland
Fines: $669 million
$395 million criminal fine to the DOJ.
$274 million to the Federal Reserve in connection with its forex investigation.
f. Bank of America
$205 million civil monetary penalty to the Federal Reserve
2. JPMorgan Chase and four other Banks: $26 billion
In February 2012, 49 states and the federal government reached an agreement, in what is now known as the National Mortgage Settlement, with the five largest banks in the country, including JPMorgan Chase. The settlement was the second largest civil suit settlement in US history, only losing out to the Tobacco Master Settlement Agreement of 1988.
The five banks agreed to pay out a total of $26 billion in fines; $5.29 billion of which came from JPMorgan Chase. One of the primary offences the banks were accused of was participating in the practice of robo-signing.While this term meant different things to different banks, the end result was the same: Documents were being signed and notarized prior to the financial crisis without any verification procedures in place for what was being attested to.
3. Credit Suisse: $5.3 billion
Before he left office, President Obama’s administration made a major push to resolve the final investigations persisting from the great recession. One of these final settlements was with Credit Suisse, which agreed to fork over $5.3 billion to finally resolve the investigations stemming from the selling of toxic debt prior to the financial crisis. About $2.48 billion of the settlement will be paid as a civil penalty and $2.1 billion will go toward consumer relief.
4. Wells Fargo: $5.35 billion
Wells Fargo’s contribution to the $26 billion National Mortgage Settlement was just a shade more than JPMorgan’s above. Besides “robo-signing,” the banks in the settlement were accused of cutting corners on and even losing important mortgage paperwork. Every single state in United States and the District of Columbia, with the exception of Oklahoma, participated in the lawsuit.
5. Deutsche Bank: $7.2 billion
In December 2016, Deutsche Bank agreed to cough up $7.2 billion for selling toxic assets in the lead up to the housing crash. As of September 2016, Deutsche Bank had set aside about $6.2 billion for legal costs. Not all of this will be paid as a fine to the US Department of Justice, however, since about $4.1 billion will be directed toward loan modifications and consumer relief spread out over the next five years. After the settlement was announced, Deutsche Bank announced in a memo to employees that it did not expect the news to affect the bank’s credit rating or its operations in the U.S. At least one portfolio manager was bullish on the news, calling the hit to Deutsche Bank’s capital “modest.
6. Bank of America: $8.5 billion
In 2008, Bank of America acquired Countrywide, the largest home lender in the United States prior to the financial crisis. In 2011, Bank of America agreed to shell out more than $8.5 billion to finally absolve Countrywide’s sins in selling $174 billion worth of subprime mortgage-backed assets.
7. BNP Paribas: $8.9 billion
In 2015, this huge French bank pled guilty to violating the International Emergency Economic Powers Act and the Trading with the Enemy Act. Essentially the bank had violated the sanctions in place against Cuba, Iran, and Sudan from 2004 to 2012. To avoid U.S. authorities’ suspicions it omitted information in wire transfers as funds from the sanctioned countries entered the U.S. financial system.
8. Bank of America: $11.8 billion
Bank of America paid out the most money from the 2012 National Mortgage Settlement – a whopping $11.8 billion. Approximately $1 billion of this settlement was paid to the United States Federal Housing Authority to address charges that Bank of America’s subsidiary, Countrywide Financial, conned the Agency. Besides this additional fine, Bank of America’s principal mortgage deductions came in at $100,000 per mortgage while the other banks’ same reductions only averaged $20,000. In addition to fines and principal reductions, much of the settlement went toward offering homeowners refinancing options.
9. JP Morgan Chase: $13 billion
In October 2013, JP Morgan reached this massive settlement with United States federal regulators. JPMorgan bought Bear Stearns and Washington Mutual at fire sale prices during the depths of the recession. Unfortunately for JPMorgan, it also took on all existing and future legal obligations of these two banks when it did so. Both Bear Stearns and Washington Mutual were heavily involved in bundling and reselling subprime mortgage securities to investors in the run-up to the financial crisis of 2008 and, indeed, this is what practically caused the crisis. Two of the biggest investors in these securities were none other than Fannie Mae and Freddie Mac.
10. Bank of America: $16.65 billion
The enormous penalty was the largest settlement in United States’ history between a corporation and the U.S. government. The payment was levied against Bank of America for packaging mortgage-backed securities that were not nearly as financially sound as investors were led to believe. Many of these subprime mortgages were sold by Countrywide and Merrill Lynch before the two companies were acquired by Bank of America. As for the settlement itself, $5 billion of it was a penalty under the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA). Another $7 billion was directed to relieve U.S. homeowners and borrowers victimized by the bank’s misdeeds. At the time of the agreement, Attorney General Eric holder stated: “This historic resolution-the largest such settlement on record-goes far beyond ‘the cost of doing business.’ Under the terms of this settlement, the bank has agreed to pay $7 billion in relief to struggling homeowners, borrowers and communities affected by the bank’s conduct. This is appropriate given the size and scope of the wrongdoing at issue.”
11. U.S. slaps $1.3b in penalties on Swiss banks
In January 2016, the United Department of Justice announced the imposition of penalties on Swiss banks suspected of helping American clients evade taxes by hiding income offshore. The Department imposed more than $1.3 billion in penalties on 80 banks in settlements involving more than 34,000 accounts that held as much as $48 billion.
12. $41 million in banking fines against Deutsche Bank
In May 2017, Deutsche Bank was fined $41 million by the United States’ Federal Reserve for failing to adequately protect against money laundering. The FED found that the German Bank’s did not fully comply with the Bank Secrecy Act and that it had ‘unsafe and unsound practices’. This is in addition to a $7.2 billion settlement, which is one of the largest banking fines, the bank had to fork out in January for the mortgage bond securities. For such a big bank, though, $41 million is a drop in the bucket.
13. $246 million in banking fines against BNP Paribas
Between 2007 and 2013, forex traders within the bank had been discussing their trade positions with their competitors. This amounted to unsound practices within the forex markets, and even the bank accepted that it was on the wrong side. In July 2017, the bank was therefore fined $246 million for the offense. The fine comes after another fine in May of 2017, of $350 million, also for currency manipulation. Apart from BNP Paribas, the FED also fined other banks for manipulating prices in the forex market including Deutsche Bank, UBS and Barclays.
14. 18 Financial Institutions Fined $3.4 billion in March 2018
Total fines, penalties and settlements (f/p/s) paid out by the 18 largest financial institutions headquartered in the U.S. and Europe in the first quarter of 2018 was $3.4B. Comparatively, total f/p/s for the first three months of 2017 was $1.6B. Most fines for the first quarter of 2017 were related to rate rigging, RMBS and AML concerns. The nine f/p/s for the first quarter of 2018 included a financial crisis era settlement, several rate rigging probes, two anti-money laundering program shortcomings, an improper credit card rate adjustment and a whistleblower suit.
. Falana a Senior Advocate of Nigeria, is the President, People’s Alternative Front.