Newspaper article International New York Times

Japan Bank Penalized for Deception on Iran

Newspaper article International New York Times

Japan Bank Penalized for Deception on Iran

Article excerpt

A $315 million settlement was announced after the Japanese bank was accused of compromised objectivity in a report assessing wrongdoings.

More than a year after paying a steep penalty for doing business with Iran, one of the world's biggest banks is back in regulators' cross hairs.

New York State's chief banking regulator on Tuesday announced a $315 million settlement with the Bank of Tokyo-Mitsubishi UFJ, accusing the bank of "misleading regulators" about its business with Iran and other countries blacklisted by the United States.

The latest action is an outgrowth of a separate settlement, reached in June of last year, that took aim at the Japanese bank for routing transactions with Iran through New York.

The initial settlement drew a $250 million penalty, a sum that was based in part on a report that assessed the extent of the bank's wrongdoing. The report, conducted by the consulting firm PricewaterhouseCoopers, was expected to be objective.

But the New York State Department of Financial Services, the agency headed by Benjamin M. Lawsky, now believes that the bank compromised that objectivity. Citing internal emails and documents, Mr. Lawsky argues that the bank "pressured" PricewaterhouseCoopers to "water down" and alter the report.

"It is clear that we -- as a regulatory community -- must work aggressively to reform the cozy relationship between banks and consultants, which far too often has resulted in shoddy work that sweeps wrongdoing under the rug," Mr. Lawsky said in a statement.

The Bank of Tokyo-Mitsubishi, which noted that it "voluntarily submitted the report" to regulators in 2008, said it was "committed to conducting business with the highest levels of integrity and regulatory compliance and to continually improving its policies and procedures."

The settlement deals the latest blow to the financial consulting industry, which operates as a sort of shadow regulator of Wall Street. Lawmakers, however, have criticized the industry for its inherent conflict of interest: The consultants are paid by the very banks they are expected to examine.

Mr. Lawsky's case against the Bank of Tokyo-Mitsubishi follows a separate action already taken against PricewaterhouseCoopers's consulting unit in the matter. …

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