Judge OKs Barclays $298 million settlement

WASHINGTON Wed Aug 18, 2010 2:48pm EDT

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WASHINGTON (Reuters) - A U.S. judge approved on Wednesday giant British bank Barclays Plc's $298 million settlement of charges that it had violated U.S. trade sanctions, a day after he criticized the agreement as a "sweetheart deal."

U.S. District Judge Emmet Sullivan endorsed the deal, in which the bank will pay the money as part of a deferred prosecution agreement over charges that it violated U.S. sanctions by doing deals with Cuba, Iran, Libya, Sudan and Myanmar.

The judge approved the agreement after an hour-long hearing in which he expressed concerns that Barclays was not pleading guilty; that no individuals were being prosecuted; and that the $298 million would be paid by shareholders, not corporate executives.

U.S. Justice Department lawyer Kevin Gerrity defended the agreement as a "fair and appropriate resolution." He told the judge that the bank's internal four-year investigation had cost it an additional $250 million.

Barclays was charged with violating the International Emergency Economic Powers Act and the Trading with the Enemy Act in its dealings that involved $500 million from 1995 until September 2006, according to court documents.

The United States has imposed sanctions and trade embargoes against Cuba, Iran, Libya, Sudan and Myanmar. Barclays was accused of hiding transactions on behalf of banks in those countries.

At its London headquarters, Barclays announced the settlement with U.S. authorities and said no further action would be taken against the bank if it complied with the agreement.

It said it "is committed to the highest levels of integrity and regulatory compliance across all of its operations. Barclays has taken significant steps to enhance further its compliance programs."

Under the deal, Barclays will pay $149 million to the U.S. government and a separate $149 million in a deferred prosecution agreement with the district attorney in New York, according to the documents.

The prosecution agreement will last 24 months and if Barclays complied with the terms, the charges would be dismissed in two years.

JUDGE SETS NEXT HEARING IN CASE

Sullivan set the next status hearing in the case for mid-November and will hold regular hearings to make sure Barclays is complying with the agreement.

He endorsed the deal despite expressing concerns during the hearing, voicing earlier criticism of the agreement as a "sweetheart deal" and raising questions about whether the penalties were sufficient.

Sullivan delayed action for two days on the deferred prosecution agreement he was presented by prosecutors so that Barclays general counsel Mark Harding, who signed the pact, could fly to Washington from London to attend the hearing.

Harding appeared before the judge. He said that he understood the agreement; that he was authorized by the bank to enter into the deal; and that the facts of the case, as outlined by the U.S. Justice Department, were correct.

It was the third major settlement agreement in recent months that federal judges have questioned. Judges raised concerns about deals between securities regulators and Bank of America Corp, as well as Citigroup Inc.

(Additional reporting by Matt Scuffham in London; editing by Gerald E. McCormick and Andre Grenon)

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