Societe Generale office in Frankfurt, Germany.

When French banking giant Société Générale agreed earlier this week to pay $1.3 billion to settle multiple investigations, it wasn't just the amount of the payout that caught my eye.

On closer inspection, it's apparent that the deal took some highly skilled maneuvering by the bank's lawyers from Skadden, Arps, Slate, Meagher & Flom; Debevoise & Plimpton and Mayer Brown.

The settlement jointly resolves two entirely separate matters—manipulating the London Interbank Offered Rate, or Libor, and bribing officials in Libya. And it required negotiating with the Justice Department, the Commodity Futures Trading Commission and France's Parquet National Financier in the first coordinated resolution with French authorities in a foreign bribery case.

To wrap it all up in one neat package on June 4 was an impressive feat.

Credit goes to lead counsel Keith D. Krakaur, who heads Skadden's European government enforcement and white collar crime group; co-counsel Charles F. Walker, who co-chairs Skadden's litigation group in Washington, D.C.; Debevoise partner Sean Hecker, who focused on the corruption investigation, and Mayer Brown's Steven Wolowitz and Henninger “Hank” Bullock, who took the lead on the Libor side.

“The bank is very pleased to have put these investigations behind it and to have reached agreements with the DOJ, the CFTC and the PNF,” Krakaur said.

For Société Générale, taking the hit as a single blow was surely better from a PR and investor relations standpoint than enduring a series of negative revelations.

Also, the settlement does not include a government-imposed corporate monitor—another big plus for the bank. Although DOJ cites the company's failure to voluntarily self-disclose and its “substantial, though not full, cooperation,” prosecutors nonetheless concluded that “the company's significant remediation which, together with the company's risk profile and ongoing monitoring by L'Agence Française Anticorruption, resulted in the department determining that a monitor was not necessary in this case.”

According to DOJ, between 2004 and 2009, Société Générale paid $90 million in bribes through a Libyan “broker” in connection with 14 investments made by Libyan state-owned financial institutions. As a result, the bank obtained 13 investments and one restructuring worth about $3.66 billion, and earned profits of approximately $523 million.

The government's press release includes some tough anti-corruption talk: “The United States will vigorously protect the integrity of financial markets by holding responsible to the full extent of the law those banks, corporations and individuals who seek to corrupt government officials to enrich themselves,” said U.S. Attorney Richard P. Donoghue of the Eastern District of New York.

But is the penalty as tough as it sounds? Of the $1.3 billion settlement, $585 million is punishment for the Libyan bribes. However, if you do the math, it's only a $62 million loss, considering the bank made a profit of $523 million from the transactions.

What's also notable is that the Paris-based PNF, which was established by the French government in 2013 to prosecute complex financial crimes, is taking half of the $585 million, or $292,776,444, rather than imposing additional penalties of its own. It's a move that signals the French prosecutors are willing to work closely with their U.S. counterparts. It's also consistent with DOJ's new policy against “piling on,” or avoiding multiple penalties for the same conduct.

Funny thing though. … While DOJ and French prosecutors avoided piling on, there was no such accord with the U.S. Commodity Futures Trading Commission.

According to the CFTC, Société Générale during the Greek sovereign debt crisis from 2010 to 2012, “made false reports of U.S. Dollar and Euro Libor and Euribor to protect its reputation from speculation that it was having more difficulty borrowing unsecured funds than other banks.” The bank also made false reports in order to “benefit trading positions that were priced based on Libor or Euribor, or in other words, for profit.”

The CFTC imposed a $475 million penalty for rigging the Libor, while DOJ hit Société Générale with a $275 million fine for the same misconduct.

Two former bank executives were also indicted for their roles in the scheme.  Both remain at large.

The combined penalty of $750 million is steep, but not as bad as the one against UBS, which in 2012 paid $1.2 billion to U.S. regulators for Libor manipulation, or Deutsche Bank, which paid the feds $2.12 billion in 2015.

 

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