The Department of Justice resolved another massive criminal investigation yesterday, as French banking giant BNP Paribas pled guilty
to willfully evading U.S. embargoes on Iran, Sudan and Cuba. BNP agreed to pay an $8.9 billion fine, one of the largest in U.S. history, and admitted that it had taken steps to conceal the true nature of the banking transactions it executed in violation of the embargoes.
The BNP settlement is notable not just for its huge size and the Department of Justice’s insistence that the bank admit guilt, but also because the investigation appears to have been substantially aided by whistleblowers. According to the New York Times
, a whistleblower alerted authorities that BNP was violating U.S. embargoes in 2009. The investigation was also assisted by Stephen Flatlow, who uncovered the fact that a purported charity in New York was actually a front for the Iranian government while pursuing civil charges against Iran for the death of his daughter in a bus bombing. Likewise, the Statement of Facts
filed by the Department of Justice suggests that an internal whistleblower (along with several compliance officials and some outside lawyers) expressed concern within BNP about its illegal conduct, but that these warnings were ignored.
While the BNP case is not an SEC action, this case underscores the extremely meaningful impact that just one whistleblower can make. It also shows that companies like BNP should give careful attention to internal whistleblowers, who often give companies a valuable opportunity to resolve problems before they reach disastrous proportions.