Bank fine by U.S. stirs French ire toward Hollande

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PARIS -- The French are crying foul.

A potential $10 billion U.S. penalty against France's largest bank BNP Paribas SA, for its alleged dealings with Iran and other sanctioned nations, is stirring outrage in the country. It is putting pressure on French President Francois Hollande, who hosts President Barack Obama this week to mark the 70th anniversary of D-Day, to protect the bank from the American onslaught.

Le Monde in its Saturday edition called the possible fine a "masterful slap." Le Figaro newspaper said the U.S. was making an example of BNP to deflect criticism it had been "lenient with the American banks responsible for the financial crisis." The weekly L'Express said that banks involved in money laundering and tax evasion paid much-lower penalties. "Is the U.S. hitting too hard?" it asked.

And a junior minister in Mr. Hollande's government criticized a U.S. criminal probe against BNP Paribas on Sunday, saying France would not allow itself to be pushed around by its ally.

"The United States cannot act in a unilateral way ... The United States cannot treat its allies like this and subordinate them to its geostrategic interests," Jean-Marie Le Guen told BFM TV.

U.S. authorities are seeking to impose the fine to settle allegations that BNP transferred funds for clients in violation of sanctions against Sudan, Iran, and Cuba, according to people familiar with the investigation. The fine could be the largest criminal penalty in the U.S., eclipsing BP Plc's $4 billion accord with the Justice Department last year.

"If this results in a guilty plea, it is likely to increase debate in France and the rest of Europe about the essential fairness of U.S. criminal procedures," said Frederick T. Davis, a lawyer at Debevoise & Plimpton LLP in Paris and a former U.S. prosecutor.

Mr. Hollande, who during his 2012 campaign described the world of finance as "my real enemy," is now under pressure to seek leniency for BNP Paribas. The right-wing National Front, which beat France's two mainstream political parties in the May 25 European parliamentary elections, on Friday called on the government to "defend the national interest" in the case.

In a statement on its website, the National Front accused the U.S. of "racketeering," in an effort to weaken BNP and aid its American rivals. "We demand that the French government not stay idle," the statement said.

France's central bank has said the transactions did not violate French or European laws. The U.S. is claiming jurisdiction because the transactions were processed in dollars.

"This affair is part of Washington's hegemonic ambition in law and commerce," said Jacques Myard, a lawmaker from former President Nicolas Sarkozy's UMP Party. "Washington has the annoying habit of trying to apply its laws outside its jurisdiction and use its strength for commercial ends."

The French government hasn't been involved in the U.S. discussions over Paris-based BNP and views the case as a legal matter that must follow its own course, three people familiar with the government's position have said. The French Finance Ministry and BNP have declined to comment on the case.

Bank of France Governor Christian Noyer said last month that all of BNP Paribas's transactions "conformed with European and French laws and rules."

The fine against BNP would make it the first French bank to be penalized for doing business with sanctioned countries since Mr. Obama took office. The largest settlement for such a case was in 2012, when the U.K.'s HSBC Holdings Plc agreed to pay $1.9 billion.

"There is just one way and one way only to deal with this type of investigation, it's maximum cooperation from day one, anything else is an error," said Simon Maughan, head of research at financial-analysis firm OTAS Technologies in London. "The point is that if you use dollars and make dollar transfers, you've got to play by U.S. rules."

Reuters News Service contributed.

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