Ever had a nagging noise coming from your car? You know the one. You know you should take the car to the mechanic, but you keep telling yourself, “it will go away on its own,” or, “I’ll get to it later.” Time passes, you get used to what now has become a rattle that you can only hear if the windows are open. Then one day the car gives up on the way to an important business meeting or family event, and you’re in trouble.
The thing with little noises and cars is that they can become major problems. What starts as a minor hose leak, could become a major brake job or worse. This is exactly what is happening to BNP Paribas, the French banking giant currently facing the threat of a $10 billion fine for violating U.S. economic sanctions on Cuba, Iran, and Sudan.
Just yesterday, a former BNP Paribas executive who happens to also be an Orthodox Jew, filed a $40 million lawsuit against the company. The allegation? Get this, BNP Paribas paid to produce a film that portrayed the president of a competitor bank as Adolf Hitler. Because he raised concerns, the senior BNP Paribas official lost his job. The issue has been ongoing since at least 2012. I expect a lot more will be made public as this case progresses.
There are times, such as this one, that make me wonder if the Europeans remember the sacrifices the world made during Word War II. Propping up tyrants and bad actors, well, is not funny. And you’d think the Europeans, of all people, would think twice before using Hitler and the Nazis in corporate videos or doing business in places such as Cuba.
In 2012, Mercedes-Benz issued an apology over a marketing campaign that featured a very large image of Che Guevara. That same year, IKEA was the subject of U.S. scrutiny when allegations surfaced that it was using Cuban prison labor to assemble furniture in Cuba. As for BNP Paribas, there seems to be a lot of trouble with the corporate “car” because it has been making noises for some time.
For example, you would think that after the UN oil-for-food scandal, BNP Paribas would have a top-notch compliance program to deal with alleged economic sanctions violations. If they did, it seems they either ignored it or it was not a very good plan to begin with.
Want to know more about the oil-for-food mess? A 2005 Congressional hearing details BNP Paribas’s role in the sanctions evasion case that help Sadaam Hussein cling to power. And, yes, I’ve been hearing from colleagues that Congress may look at these new revelations. If you’re going to do business in the United States, access is a privilege, not a right.
As for BNP Paribas and the sanctions case, European capitals are up in arms that the United States has opted to prosecute yet another bank for violations of U.S. sanctions on places such as Iran and Cuba. This particular case could prove devastating for the bank. The proposed fine could wind out wiping out all of BNP Paribas‘ 2014 profits. There are talks that, as a retaliatory measure, General Electric may lose out on some very lucrative European energy contracts. That would be unfortunate, but we’ve come to expect no less from the global leaders (certain European political parties) for crony capitalism.
Europe needs to awaken from this slumber that they seem to be in, look inward and Eastward, and recall that all is not well in that part of the world. They should also realize that the United States has been bailing them out of trouble for some time (Side note: the U.S. is committing new money, several billion dollars, for NATO; but look at what a recent Dutch audit of NATO revealed). Respecting our laws, and when they can, supporting U.S. foreign policy in the Western Hemisphere, Europe, and beyond, is the least they could do.
If BNP Paribas survives this mess, they best take the corporate engine for a compliance and corporate culture overhaul. The company appears to be in need of new leadership.