An article by Susan Beck in the New York Law Journal takes a look at the role of lawyers in the events leading to BNP Paribas’s $8.9bn settlement with the US Department of Justice (DoJ). The DoJ’s statement of facts filed with the plea deals discusses law firm opinions: one set from ‘Law Firm 1′ (Beck indicates this is probably Cleary Gottlieb Steen & Hamilton) and one opinion from ‘Law Firm 2′, identified by the article as Skadden Arps Slate Meagher & Flom; although neither firm has commented. The case is redolent of Standard Chartered Bank (where it is probably the role of general counsel, not outside counsel, which gives rise to most concern).
Beck puts it like this:
In an attempt to evade US enforcement actions, BNP executives avoided using BNP New York to process prohibited payments and used an unaffiliated US bank instead. According to the government, the French bank relied on incorrect advice in an October 2004 legal memo from Law Firm 1. This memo “suggested that BNPP may have been able to protect itself from being penalized by US authorities if it conducted these prohibited transactions through another US bank.”
The nature of the advice in Law Firm 1′s memo cannot be concluded based on a few excerpts selected by the government. The memo warned of other possible problems with this plan: While BNP might not be penalized, the memo said that US law would require the payments to be frozen or blocked by the US bank.
Still, BNP employees latched onto this legal opinion to justify processing banned transactions through an unaffiliated US bank, which is not identified.
