Judge approves Barclay's deal with US Justice Department

A judge who questioned whether Barclays Bank was getting off too easily nonetheless approved a deal likely to enable the bank to avoid prosecution over claims that it engaged in $500m (€390.4m) in illegal transactions with banks in Cuba, Iran, Libya, Sudan and Burma for more than a decade.

Under the arrangement with the US Justice Department, Barclays will pay $298m (€232.6m) – half of it to the United States and the rest under an agreement with the Manhattan district attorney’s office in New York.

In exchange for the bank’s continuing co-operation, the two criminal charges the bank faces will be deferred and ultimately dropped as long as the financial institution demonstrates that it is complying with all US laws.

US District Judge Emmet Sullivan expressed concern that no-one working at the bank was charged criminally and that the money would come out of the pockets of Barclays’ shareholders.

It looks like the bank is “getting a free ride here; that is what the average person probably concludes”, Judge Sullivan said.

Justice Department lawyer Kevin Gerrity said the deferred prosecution agreement represented a fair and appropriate resolution of the case, balancing the serious nature of the criminal charges and “doing the right thing”.

Mr Gerrity said “we looked very hard” to find individuals at the bank who engaged in the alleged criminal conduct.

“There was no paper trail?” asked Judge Sullivan. “Senior management has to know who is responsible. Someone has to mastermind this.”

“We did not find anyone,” Mr Gerrity replied. According to court papers in the case, senior management discovered what was going on in 2006 and disclosed it to the Justice Department, while low-level employees who carried out the transactions lacked criminal intent.

Judge Sullivan said “I am not trying to micromanage” the Justice Department, but suggested that prosecuting the bank might have brought pressure to bear in terms of uncovering who was responsible for the alleged criminal conduct.