UPDATE 2-US judge calls Barclays settlement sweetheart deal

* Judge wants fuller answers at hearing set for Wednesday

* Justice Department attorney defends agreement

* Lawmaker says financial penalties not enough

By James Vicini and Jeremy Pelofsky
(Adds comments by judge, lawmaker, Justice Dept. lawyer)

WASHINGTON, Aug 17 (BestGrowthStock) – Barclays Bank Plc (BARC.L: )
won a “sweetheart deal” from the Justice Department in a
proposed settlement of criminal charges that accuse the bank of
violating U.S. trade sanctions, an angry federal judge said.

U.S. District Judge Emmet Sullivan said at a hearing on
Tuesday that he was concerned about the proposed deal in which
the London-based bank agreed to pay $298 million to resolve the
charges over its dealings with Cuba, Iran, Libya, Sudan and

“This is a sweetheart deal,” he said, adding that the
average American citizen who gets caught robbing a bank does
not get a deferred prosecution agreement, as Barclays did.

It marked the second day in a row that the Obama
administration has faced sharp questions from a federal judge
in Washington, D.C., over a settlement reached with a big

U.S. District Judge Ellen Huvelle on Monday refused to
approve Citigroup Inc’s (C.N: ) $75 million settlement with the
U.S. Securities and Exchange Commission of charges that it
misled investors by failing to disclose about $40 billion of
subprime mortgages. [ID:nN1683399]

In the Barclays case, Sullivan questioned whether it
amounted to a fine if the bank only paid back the money
involved, and he said he wanted fuller answers about the
penalties at another hearing scheduled for Wednesday.

Justice Department attorney Frederick Reynolds defended the
agreement and said the amount of money was “beyond what they
earned.” He said the judge would be satisfied with the answers
provided at the next hearing.

Barclays was charged with violating the International
Emergency Economic Powers Act and the Trading with the Enemy
Act as a result of $500 million in illegal transactions from
1995 through 2006, according to court documents filed on

The United States has imposed sanctions and trade embargoes
against Cuba, Iran, Libya, Sudan and Myanmar. Barclays was
accused of hiding transactions on behalf of banks in those

The Barclays case followed three similar earlier ones.

Credit Suisse Group AG (CSGN.VX: ) (CS.N: ) in December agreed
to pay $538 million to settle charges that it had hidden
thousands of transactions on behalf of clients in Iran, Sudan,
Libya and other nations. [ID:nN16116989]

Also last year, Lloyds TSB (LLOY.L: ) agreed to forfeit $350
million over charges that it faked records so that clients from
Iran, Sudan and elsewhere could do business in the U.S. banking

In May, ABN AMRO Bank NV, now largely part of Royal Bank of
Scotland Plc (RBS.L: ), agreed to forfeit $500 million to settle
charges that it conspired to violate U.S. sanctions and bank
secrecy laws. [ID:nLDE64A1B4]

Sullivan questioned why the government did not indict and
prosecute the foreign banks, rather than agreeing to the

He also asked whether any individuals from Barclays were
being held responsible, though no one else has been charged in
the case so far.

“One must wonder what the penalty is,” said Sullivan, who
has the final say on whether to approve the Barclays deal.

In Congress, Rep. Ileana Ros-Lehtinen of Florida, the
ranking Republican on the House Foreign Affairs Committee, said
the financial penalties were not enough in such cases.

“If banks knowingly violate U.S. sanctions,” she said,
“they should be punished to the fullest extent.”

“Barclays’ extensive and long-standing relationships with
not one, not two, but five nations under U.S. sanctions leads
one to conclude that some entities will cut a deal with
multiple devils if it makes them an extra buck,” she said.
(Additional reporting by Susan Cornwell; Editing by Gerald E.
McCormick and Lisa Von Ahn)

UPDATE 2-US judge calls Barclays settlement sweetheart deal