WASHINGTON Dec 5 A U.S. investigation into
whether Barclays Plc paid bribes to win a banking
license in Saudi Arabia has spread to other banks that operate
in the region, according to a person familiar with the matter.
Barclays disclosed in late October that the U.S. Department
of Justice and the Securities and Exchange Commission were
investigating the British bank's relationships with third
parties who help it win or retain business, and whether such
relationships violate the Foreign Corrupt Practices Act.
Barclays did not name specific countries in its October
disclosure, but in November, responding to a newspaper report,
the bank said it did not make any illegal payment to get a Saudi
In addition to Barclays, U.S. investigators have begun
reaching out to several other banks that have licenses in Saudi
Arabia, said the person familiar with the matter, who was not
authorized to speak publicly about investigations.
It is unclear which banks the Justice Department has reached
out to and if the preliminary inquiry will develop into
Financial institutions including Credit Suisse,
Goldman Sachs, Standard Chartered, Deutsche Bank
, JPMorgan and KKR have received
licenses from the Saudi Capital Markets Authority since 2005.
All either declined comment or did not respond to a request
for comment. Barclays declined comment beyond its earlier
statements. A DOJ spokeswoman also declined to comment.
Barclays in August disclosed it is also under investigation
by British fraud prosecutors for its dealings with Qatar.
'FERTILE PLACE TO LOOK'
The Justice Department and the SEC have extracted record
penalties in recent years through enforcing the FCPA, a
1970s-era law that bars bribes to officials of foreign
Prosecutors have historically pursued several cases in
groups of companies, linked by a common business partner or
country at issue.
"The DOJ makes it very clear they will tug on a thread and
see where it takes them," said Alexandra Wrage, president of
TRACE International, an association that helps companies comply
with anti-bribery laws.
Many Justice Department inquiries involve a request for
information and a discussion with prosecutors, and are closed
after that, Wrage said, speaking generally.
The agencies have previously examined potential foreign
bribery issues in the financial service sector.
In early 2011, the SEC requested information from a handful
of banks and private equity funds about their dealings with
sovereign wealth funds. That investigation is continuing, and
the SEC is expected to begin interviews as part of that effort,
according to a second person familiar with the matter.
An SEC spokesman declined to comment.
The Barclays investigation and larger look at Saudi bank
licenses a ppears to be a separate undertaking, several people
familiar with the matter said.
"It's a market where you almost always have to work through
middlemen or locals ... and that gives you reason to think it is
a fertile place to look," former federal prosecutor Robertson
Park who is now in private practice at Murphy & McGonigle said.
Saudi Arabia began granting licenses in 2005, when Credit
Suisse was first licensed. Deutsche Bank won its license in July
2007, and Goldman Sachs and Standard Chartered received theirs
in the following two years. KKR received a license in June 2011
but hasn't opened for business there yet. JPMorgan was first
licensed in July 2007 for limited activities, and won a broader
license last month.
The Saudi Capital Markets Authority declined comment beyond
a statement it released last month in which it said it was not
aware of any investigations and had not received any related
inquiries from regulators. It also said it had received no
complaints about its license procedure since the agency was
established in 2005.