Of all the coverage coming out of the recent judgment on the Bank of New York Mellon money laundering case, Fortune’s coverage appears to be the most thorough so far, not to mention that it immediately won me over with its headline: “Russia settles suit against U.S. bank for a pittance”.
So that we’re all on the same page here, the $14 million settlement sum is exactly 0.0622 percent of the $22.5 billion Russia was seeking. NOT 6.22%, but slightly more than six hundredths of 1%.
Having said that, two passages from the Fortune article strike me. The first, on the amount itself:
Though federal prosecutors investigated the bank for complicity, they chose not to prosecute. Instead, in November 2005 the bank accepted “responsibility” for having failed to adequately monitor Edwards and agreed to pay the U.S. government a $14 million fine, representing ten times its revenue from the wire transfer fees ($1.4 million) generated by Edwards’s scheme. (The $14 million the bank will now pay the Russian government is obviously a conscious echo of the sum paid the U.S. government.)
Given what seems to be the even-handed treatment of this final sum, the absurdity of the $22.5 billion solicitation is laid rather bare.
Piecing together wire service accounts from Reuters and Novosti RIA, Kudrin appears to have said the following in his remarks this morning to the Duma:
“Previously, the US Government had brought a case against Bank of New York for money laundering but never found the bank to be guilty of laundering. . . . As a result Bank of New York paid the Government for costs associated with the court case, for mistakes made by some of its employees. This was not a payment in recognition of having committed laundering; in this case the sum would have been much greater. . . . Subsequently, the Russian Federal Customs Service decided to try to prove in a Russian court that laundering took place in the United States with the alleged participation of Russian companies. This type of data or material, simply on the basis of the original legal proceedings in the United States, is insufficient to win this kind of court case. This is why at the moment, as far as I know, the two sides needed to settle, and to pay for certain costs.”
Kudrin also characterized the bank’s commitment to make the trade-finance agreement as an “act of good will, to demonstrate the bank’s desire to work with Russia.” He added, “guilt has not been proven and the settlement will be signed.
What occurs to me here is that unsurprisingly everyone is trying to save face. Did they?