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Financial Services/Private Equity
Paris, France
Nationality of Foreign Officials: Libya
Summary of Allegations:
The U.S. Securities and Exchange Commission ("SEC") and U.S. Department of Justice ("DOJ") are examining investment deals by Société Générale made in the years leading up to Libya's 2011 revolution. At the time, western firms were racing to attract investment money from the North African nation, which was benefiting from oil sales and recently had opened to foreign investment.
According to the Wall Street Journal in February 2014, the U.S. probe is investigating a group of middlemen, known as "fixers," operating in the Middle East, London and elsewhere in relation to Société Générale. The fixers allegedly established connections between investment firms and individuals with ties to leaders in developing markets, including those in the Gaddafi regime. In some cases, the sovereign-wealth-fund fixers collected a "finder's fee."
In a case that is potentially related to the allegations underlying the U.S. investigation, the Libyan Investment Authority filed a USD 1.5 billion lawsuit against Société Générale on 1 April 2014 in the United Kingdom. The complaint accuses the firm of funneling tens of millions in bribes to associates connected to former Libyan dictator Muammar Gaddafi. The Libyan Investment Authority alleged that Société Générale paid about USD 58 million to Leinada for advisory services. The services were related to USD $2.1 billion of derivative trades that the Libyan Investment Authority had entered into with Société Générale between late 2007 and 2009.
The Libyan Investment Authority is seeking to void the Société Générale deals, which had lost roughly half of their value by the time the Libyan revolution began in February 2011. The Libyan Investment Authority alleges that Mr. Giahmi, who controlled Leinada and was close to the Gaddafi family, personally benefited from the investments made with the Libyan Investment Authority.
Court documents describe the payments to Leinada as bribes, noting that neither Mr. Giahmi nor the company had any known expertise in financial advising or restructuring, and the payments offered no apparent value for either Société Générale or the Libyan Investment Authority.
04 June 2018 - A DOJ resolution press release confirmed that Societe General had admitted to paying USD 90 million in bribes to Libyan officials via an intermediary broker between 2004 and 2009, during the Gaddafi regime. In exchange for the bribes, SocGen was awarded 14 investments valued at USD 3.66 billion from Libyan state-owned financial institutions, resulting in profits of USD 523 million to SocGen.
Approximate Alleged Payments to Foreign Officials: USD 90 million
Business Advantage Allegedly Obtained: In exchange for the bribes, SocGen was awarded 14 investments valued at USD 3.66 billion from Libyan state-owned financial institutions, resulting in profits of USD 523 million to SocGen.
Agencies: France: Parquet National Financier, United States: Department of Justice
Results: Compliance Monitor, Criminal Fine, Deferred Prosecution Agreement, Disgorgement
Year Resolved: 2018
Compliance Monitor: L’Agence Française Anticorruption
Ongoing: No
Details:
6 November 2017 - Société Générale announced in its Sept. 30 2017 quarterly report that France’s Parquet National Financier had made two judicial requests for information in September and October 2017 in a preliminary investigation into possible corruption in the company's work with the Libyan Investment Authority.
04 June 2018 - The DOJ announced that Société Générale S.A. (“SocGen”) and its U.S.-based subsidiary, SGA Société Générale Acceptance N.V., have agreed to pay a total of USD 585 million to the DOJ and the Parquet National Financier (“PNF”) in France to settle FCPA-related charges. This is the DOJ’s first coordinated resolution with French authorities in a foreign bribery case.
The DOJ announced that SocGen will enter into a deferred prosecution agreement in connection with a criminal information charging the company with one count of conspiracy to violate the anti-bribery provisions of the FCPA (and one count of transmitting false commodities reports). SGA Société Générale Acceptance N.V., will plead guilty to a one-count criminal information filed in the Eastern District of New York charging the company with a conspiracy to violate the anti-bribery provisions of the FCPA. The deferred prosecution agreement and the plea agreement are subject to court approval. SocGen will pay the PNF USD 292.8 million, which is half of the total criminal penalty payable to the U.S., and will receive a credit against the U.S. fine.
In addition, SocGen has agreed to pay a fine of USD 275 million (plus regulatory penalties and disgorgement to the Commodity Futures Trading Commission) for violations arising from its manipulation of the London InterBank Offered Rate (LIBOR).
SocGen will undergo ongoing monitoring by L’Agence Française Anticorruption, so the DOJ did not order it in the US.
Agencies: United Kingdom: Civil Lawsuit
Results:
Year Resolved: 2017
Compliance Monitor:
Ongoing: No
Details:
The Libyan Investment Authority, Libya's sovereign-wealth fund, filed suit against Société Générale in 2014 in London's High Court, alleging that the bank had paid USD 58.5 million in bribes to a middleman to secure approximately USD 2 billion in business from the fund. The suit also alleged that the bank defrauded the fund through derivative deals that were not profitable.
On 4 May 2017, Société Générale announced that it had agreed to settle the suit for EUR 963 million (USD 1.1 billion). In addition, the company apologized to the Libyan Investment Authority.
Agencies: United Kingdom: Serious Fraud Office
Results:
Year Resolved:
Compliance Monitor:
Ongoing: Yes
Details:
In May 2017, the UK Serious Fraud Office ("SFO") requested documents from Société Générale received during the disclosure period in its litigation with the Libyan Investment Authority. Attorneys for the Libyan Investment Authority have stated that the SFO is investigating Société Générale, while attorneys for the bank have stated that the document request was made on behalf of the U.S. Department of Justice. The Section 2 notice requests similar documents as a DOJ subpoena issued in 2014.
Agencies: United States: Securities and Exchange Commission
Results:
Year Resolved:
Compliance Monitor:
Ongoing: Yes
Details:
04 June 2018 - SocGen settled with the DOJ; it is not clear whether the SEC's investigations are still ongoing.