BY JOSEPH GOLDSTEIN – Staff Reporter of the Sun
In recently released reports for 2007, Lloyds TSB and Barclays say they have received inquiries from both the Manhattan district attorney, Robert Morgenthau, and the U.S. Department of Justice. The federal and local authorities, sources say, are focusing on whether foreign banks deleted from wire transfers information showing that the money was originating from Iran or heading there. Stripping wire transfers of that information could allow the transfers to escape scrutiny when passing through New York banks.
A similar federal investigation several years ago led to an $80 million fine against the Dutch bank ABN Amro for a range of violations, including evasion of sanctions against Iran and Libya. That fine is the largest of its kind.
The current investigation by Mr. Morgenthau and the Justice Department appears to be conducted jointly. It does not appear limited to British banks, although Lloyds and Barclays are the only two banks so far to publicly confirm that they are targets of the inquiry. One source with knowledge of the investigation said that it includes at least one bank in Switzerland.
Two sources say transactions involving Iran are the focus of the investigation. One source said authorities believe the suspect transfers were likely used to purchase industrial equipment for use in Iran that appeared on a list of banned equipment under the sanctions. Another source said that some of the transactions under suspicion include purchases of oil from Iran. The purchases originated outside America, the source said.
The investigation is not limited to transfers involving Iran, the sources say. It extends to violations of sanctions against other countries, including Sudan. Although American sanctions against Libya were eased in 2004, transactions involving Libya from before then are still fair game for American prosecutors.
The disclosures by Barclays and Lloyds TSB say little specifically, beyond confirming an investigation. Neither bank said whether investigators are focused on transactions linked to a specific country.
Lloyds TSB said in its report that it has “been conducting a review of its conduct with respect to historic US dollar payments involving countries, persons or entities subject” to the American sanctions.
The bank, according to the report, “is involved in ongoing discussions with these authorities with respect to agreeing a resolution of their investigations.”
The Barclays disclosure, first reported last week in The New York Sun, is similar.
A spokesman for Baclays did not return several calls for comment in December.
“We won’t be making any further comment,” a spokeswoman for Lloyds TSB, Kirsty Clay, said.
American sanctions against state sponsors of terrorism are complicated. Under certain circumstances, banks in the U.S. can still process “U-turn transactions” that involve certain banks in countries under the sanctions. In those transactions, money can be briefly routed through America before returning to European banks as part of larger transfers involving Iran.
The investigation is now at least eight months old. Neither Barclays or Lloyds TSB indicate in their reports that they had received a subpoena as part of the investigation.
