April 18, 2024

DealBook: Senior R.B.S. Executive in Japan Expected to Resign in Libor Scandal

Japanese authorities are seeking to punish Royal Bank of Scotland over its role in Libor manipulation.Peter Macdiarmid/Getty ImagesJapanese authorities are seeking to punish Royal Bank of Scotland over its role in manipulating benchmark rates.

LONDON – A senior executive at the Royal Bank of Scotland’s Japanese investment banking unit is expected to resign in the wake of a rate-rigging scandal, according to a person with direct knowledge of the matter.

Ryusuke Otani, who runs R.B.S.’s investment banking business in Japan, will probably step down by the end of the week, added the person, who spoke on the condition of anonymity because he was not authorized to speak publicly.

The resignation of Mr. Otani, a former Citigroup banker, follows moves by Japanese authorities to punish Royal Bank of Scotland over its role in the manipulation of the London interbank offered rate, or Libor.

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The Securities and Exchange Surveillance Commission of Japan asked local regulators last week to issue a so-called administrative action against R.B.S., which is based in Edinburgh, after some of its traders attempted to alter a key benchmark rate for financial gain.

The Royal Bank of Scotland, in which the government holds a stake of about 81 percent after providing a bailout during the financial crisis, reached a $612 million settlement in February with American and British authorities in connection with the Libor scandal. As part of the agreement, the firm’s Japanese unit was required to plead guilty to criminal wrongdoing.

Global authorities already have fined three banks – Barclays, UBS and Royal Bank of Scotland – a collective $2.6 billion for their roles in the manipulation of Libor.

Other major financial institutions, including Citigroup and Deutsche Bank, are still under investigation in the rate-rigging scandal, which affected complex financial products worth trillions of dollars.

In the latest regulatory action against Royal Bank of Scotland, Japanese authorities said on April 5 that some of the firm’s traders had tried to profit from altering rate submissions to yen Libor from 2006 to 2010. The British bank also was sanctioned for failing to spot the wrongdoing over the five-year period.

Japanese regulators have taken similar steps against UBS and Citigroup after investigations found that some of the banks’ traders had attempted to manipulate key benchmark rates in the country.

Royal Bank of Scotland’s chief executive, Stephen Hester, apologized in February for the bank’s role in the scandal, adding that six people had been fired because of their role in manipulating rates. An additional eight bankers left before the wrongdoing was discovered, while six other individuals have been disciplined but remain with the bank.

A derivatives trader, Simon Green, was fired last month in connection to the Libor scandal, according to a person with direct knowledge of the matter.

A spokesman for Royal Bank of Scotland declined to comment.

Article source: http://dealbook.nytimes.com/2013/04/11/senior-r-b-s-executive-in-japan-expected-to-resign-after-libor-scandal/?partner=rss&emc=rss

French Court Overturns Conviction in Concorde Crash

PARIS — A French appeals court on Thursday overturned the involuntary manslaughter convictions against Continental Airlines for its role in the crash in 2000 of an Air France Concorde jet outside Paris that killed 113 people and hastened the end of commercial supersonic travel.

The court, in Versailles, absolved the airline, which merged with United Airlines two years ago, of criminal wrongdoing. But it upheld a lower court’s order in 2010 that the company pay civil damages of €1 million, or about $1.3 million, to Air France, to compensate the French carrier for “damage to its image.”

Air France Flight 4950, a charter carrying mainly German tourists bound for a Caribbean cruise, crashed in flames shortly after taking off from Charles de Gaulle Airport on July 25, 2000.

A 2002 report by French air accident investigators concluded that a small strip of metal fell off a Continental DC-10 that took off minutes earlier and punctured a tire of the Concorde as it accelerated on the runway. The tire disintegrated in seconds, investigators said, sending shards of rubber into the fuel tanks.

The ruling did not challenge the lower court’s finding that linked the metal strip from the Continental jet to the chain of events that caused the crash. But it said the criminal manslaughter charge was unjustified.

All 109 passengers and crew members were killed, along with 4 people on the ground.

The appellate court also overturned the conviction of a Continental mechanic, John Taylor, who had originally been faulted the for using titanium, rather than a softer metal like aluminum, to construct a replacement piece called a wear strip for the DC-10. It also accused him of improperly attaching the strip to the aircraft, resulting in it falling onto the runway.

Olivier Metzner, the lawyer representing United Continental, said by telephone that he was satisfied that the ruling would put an end to efforts to make the American carrier a scapegoat for an accident that he argued was the result of failures by French air safety regulators.

“This is the end of the Concorde affair,” Mr. Metzner said.

France is one of a handful of countries that routinely seek criminal indictments in transportation accidents, regardless of whether there is clear evidence of criminal intent or negligence.

The decision to proceed with criminal charges in the Concorde case alarmed airlines and aviation safety experts worldwide, who contend that the threat of prosecution dissuades witnesses from cooperating in crash investigations.

“The aviation safety community is going to view this verdict with great deal of relief,” said William R. Voss, president of the Flight Safety Foundation in Alexandria, Virginia. “It reminds us that human error, regardless of the tragic outcome, is different from a crime.”

Mr. Voss said he hoped that the judge’s finding would cause prosecutors to proceed cautiously in similar cases, including the continuing French criminal inquiry into the 2009 crash of an Air France jet en route from Rio de Janiero to Paris, which left 228 people dead. Air France and the jet’s manufacture, Airbus, both face accusations of involuntary manslaughter in that case.

Fernand Garnault, a lawyer for Air France, welcomed the decision on Thursday for setting an “important precedent” for the judges responsible for the Rio-Paris case.

“This is the first decision in France of this importance that finds that someone can have civil responsibility for an accident without also being criminally responsible,” Mr. Garnault said.

In the Concorde case, Air France itself was not accused of wrongdoing and joined the case as a civil party in the hope of recouping damages from Continental. The $1.3 million in damages awarded was far less than the nearly $20 million the French airline had sought in the original trial. Air France reached a $150 million settlement in 2001 with the families of the crash victims.

The crash of Air France Flight 4590 was the only fatal accident involving the Concorde, which first took to the skies in 1969, becoming an emblem of trans-Atlantic luxury travel. Flying at twice the speed of sound, its Paris-New York crossing took less than four hours and its London-New York time was just three and a half.

The crash helped bring an end to the plane’s commercial operations, which had become a financial burden for Air France and British Airways. Both took the Concorde out of service in 2003.

Article source: http://www.nytimes.com/2012/11/30/business/global/french-court-overturns-conviction-in-concorde-crash.html?partner=rss&emc=rss