The Justice Dept. says Credit Suisse "accepted and acknowledged responsibility for its criminal conduct in violating the International Emergency Economic Powers Act." In other words, it fessed up. Case closed. Not a chance for the spinmeisters at Credit Suisse who took a self-congratulatory bow in the Dec. 16 press release about the deal.Attempting to make a silk purse from a sow's ear, Credit Suisse is "gratified" that the Justice Dept. gave kudos to its "prompt and substantial assistance and cooperation and its detailed review and remediation." What were the bank’s alternatives? Does it really expect a PR slap on the back for dropping business ties with countries sanctioned by the Office of Foreign Assets Control?
If it wanted to be in the good graces of the U.S. government, Credit Suisse shouldn't have done business with those characters in the first place. The bank now wants the world to know it is "committed to the highest standards of integrity and regulatory compliance in all its businesses, and takes this matter extremely seriously."
That should cheer the hearts of shareholders who probably aren’t too keen about shelling out half-billion dollar penalties and getting swatted on the reputation front. Credit Suisse "has enhanced its procedures to prevent practices of this type from occurring in the future." That's bad news for former customers, especially in Iran. Credit Suisse closed its Tehran office in 2007.
Left unsaid, Credit Suisse is the fine champ, paying the biggest tab of $1B in levies resulting from the U.S. probe of shady overseas transactions. The Swiss bank failed to disclose that the settlement includes a 24-month deferred prosecution arrangement. That means it could face a criminal probe if deals with Iran, Sudan, Cuba and Burma pop up.
Uncle Sam -- or at least Attorney General Eric Holder -- is keeping a close eye on Credit Suisse.
There is one measure of good to come out of the settlement. Financially challenged New York City and New York State are to receive half of the fine.
There is a way for Credit Suisse's PR department to build some goodwill here. It should pick up the tab for the New York City school bus/subway passes that are being threatened to be phased out by the Metropolitan Transportation Authority. The passes cost the MTA $170M in lost revenue.
That's chump change for the amount of goodwill Credit Suisse could gain as the "official transport provider for NYC's kids." The grateful City would eagerly slap promotional material on busses and underground touting Credit Suisse's generosity.
That truly would be something for Credit Suisse to be gratified about.
(Image via BankImplode)