The New York Times - Global Business
Italy Seizes Millions in Assets From Four Banks
written By CLAUDIO GATTI
Published: April 27, 2009
With municipal bond investigations spreading to Europe from the United States, Italian authorities have seized about $300 million in assets of four global banks — JPMorgan Chase, Deutsche Bank, UBS and Depfa — whose officials have been accused of fraud.
The Guardia di Finanza in Milan, the financial police of Italy, took over real estate properties, bank accounts and stock holdings on Monday to assure it could collect from the banks if their officials were found guilty and the banks were held responsible.
The seizures stem from the banks’ handling of a $2.2 billion municipal bond issue and related financial contracts known as swaps that Milan undertook to retire other debt in June 2005. The lead prosecutor accused the bankers of misleading the city and falsely claiming that the deal would generate savings. If all the costs had been properly included, the prosecutor said, the entire deal would have been illegal under a national law that allows restructuring of debt only if it produces a savings.
Alfredo Robledo, the prosecutor in Milan, suspects the banks made $130 million in illicit profits, according to information obtained in a joint investigation by the Italian business newspaper Il Sole 24 Ore and The International Herald Tribune. He is also investigating transactions by the banks with other local Italian governments and the possibility that public officials received kickbacks.
About 35 billion euros ($46 billion) in bonds were issued by local Italian governments over the last decade, mostly by the London units of large banks based in the United States and Europe. A former executive from one of the banks being investigated in Milan said that all of these could be subject to challenge.
Three of the banks are also being investigated over their municipal bond practices in the United States. Officials or former officials of JPMorgan Chase, Deutsche Bank and UBS, along with the institutions themselves, are the subjects of investigations, company filings and documents filed in civil cases show.
In its annual report released last month, JPMorgan Chase acknowledged parallel investigations in the United States by the Justice Department and the Securities and Exchange Commission into possible antitrust and securities violations involving derivatives sold to local governments. JPMorgan said it was cooperating with the investigations and had provided documents.
These derivatives, when combined with bond offerings, were presented as ways to raise cash and reduce the long-term cost of debt, but officials claim now that many of the contracts, in the form of swaps, were packed with millions of dollars in fees that were not disclosed.
In his filings to a judge in Italy seeking the asset seizure, Mr. Robledo asserted that the bankers falsely claimed that the deal would save 57.3 million euros.
Click HERE to continue reading this article... MUST READ!
Italy Seizes Millions in Assets From Four Banks
written By CLAUDIO GATTI
Published: April 27, 2009
With municipal bond investigations spreading to Europe from the United States, Italian authorities have seized about $300 million in assets of four global banks — JPMorgan Chase, Deutsche Bank, UBS and Depfa — whose officials have been accused of fraud.
The Guardia di Finanza in Milan, the financial police of Italy, took over real estate properties, bank accounts and stock holdings on Monday to assure it could collect from the banks if their officials were found guilty and the banks were held responsible.
The seizures stem from the banks’ handling of a $2.2 billion municipal bond issue and related financial contracts known as swaps that Milan undertook to retire other debt in June 2005. The lead prosecutor accused the bankers of misleading the city and falsely claiming that the deal would generate savings. If all the costs had been properly included, the prosecutor said, the entire deal would have been illegal under a national law that allows restructuring of debt only if it produces a savings.
Alfredo Robledo, the prosecutor in Milan, suspects the banks made $130 million in illicit profits, according to information obtained in a joint investigation by the Italian business newspaper Il Sole 24 Ore and The International Herald Tribune. He is also investigating transactions by the banks with other local Italian governments and the possibility that public officials received kickbacks.
About 35 billion euros ($46 billion) in bonds were issued by local Italian governments over the last decade, mostly by the London units of large banks based in the United States and Europe. A former executive from one of the banks being investigated in Milan said that all of these could be subject to challenge.
Three of the banks are also being investigated over their municipal bond practices in the United States. Officials or former officials of JPMorgan Chase, Deutsche Bank and UBS, along with the institutions themselves, are the subjects of investigations, company filings and documents filed in civil cases show.
In its annual report released last month, JPMorgan Chase acknowledged parallel investigations in the United States by the Justice Department and the Securities and Exchange Commission into possible antitrust and securities violations involving derivatives sold to local governments. JPMorgan said it was cooperating with the investigations and had provided documents.
These derivatives, when combined with bond offerings, were presented as ways to raise cash and reduce the long-term cost of debt, but officials claim now that many of the contracts, in the form of swaps, were packed with millions of dollars in fees that were not disclosed.
In his filings to a judge in Italy seeking the asset seizure, Mr. Robledo asserted that the bankers falsely claimed that the deal would save 57.3 million euros.
Click HERE to continue reading this article... MUST READ!
No comments:
Post a Comment