Friday, November 11, 2005
The United States Attorneys' Offices for the Southern and Eastern Districts of New York entered into a "non-prosecution agreement" with Bank of New York. This "non-prosecution" agreement calls for the Bank of New York "to pay $38 million in penalties and victim compensation." (Press Release here). Of this amount $26 million will be paid to the US and 12 million will be restitution to victims. The press release of the US Attorney's Office for the Eastern District of New York states that:
"The SDNY investigation uncovered a scheme, which was facilitated by a corrupt BNY vice president, involving the unlicensed transmission of billions of dollars originating in Russia through BNY accounts in the United States to third-party transferees around the world.
"The EDNY investigation uncovered a scheme involving the submission by a BNY commercial customer of fraudulent loan applications that were supported by sham escrow agreements executed by a corrupt BNY branch manager, and that resulted in millions of dollars in losses to victim banks throughout the United States."
In addition to the money that will be paid by Bank of New York as a part of the "non-prosecution agreement," the press release notes that "BNY also waived the attorney-client and work-product privileges to assist the investigations, adopted remedial measures, and made available numerous witnesses for government interviews."
Deferred/Non-prosecution agreements with the government seem to be containing more and more provisions providing for the waiver of attorney-client privilege and work product doctrine. One has to wonder if any executives within a corporation or business are still talking with the corporation's attorney. After all, why should they - as confidentiality seems to no longer exist.