Bank of New York Co. has found itself in the middle of two international legal disputes.
The banking company recently paid a $225,000 civil penalty to the Treasury Department to settle 174 violations of the U.S. economic embargo of Libya, which has been in force since 1986.
And in a separate case, the company has sued the central bank of Iraq and the state-owned Rafidain Bank for $22.5 million in loan payments owed since Iraq's 1990 invasion of Kuwait.
Funds Transfers to Libya
Bank of New York, the New York office of Paris-based Credit Lyonnais, and Anheuser-Busch Cos. were charged with violating the sanctions against Libya through funds transfers and other transactions.
Credit Lyonnais paid $92,400 and Anheuser-Busch, the brewer, $25,000.
"These penalties should serve notice on the U.S. business community that anyone who transacts business with the government of Libya will pay a penalty for violating sanctions," said R. Richard Newcomb, director of the Treasury's Office of Foreign Asset Control.
The office said Bank of New York paid a reduced penalty "because of the high level of cooperation it demonstrated in voluntarily disclosing the extent of the violations and in taking steps to ensure compliance in the future."
Iraqi Defaults Alleged
Bank of New York sued Rafidain Bank and Central Bank of Iraq in U.S. District Court in Manhattan. The suit said Rafidain had defaulted on two loan agreements that were guaranteed by the central bank.
Rafidain allegedly stopped making payments after the United States imposed sanctions against Iraq in 1990; Iraq then repudiated its international financial obligations.
Bank of New York was part of a syndicate of 36 banks that lent Rafidain $500 million in March 1983. Rafidain stopped making payments in December 1990 and allegedly owes Bank of New York $12.9 million in principal plus interest.
In a second deal, Bank of New York was part of a syndicate of 25 institutions that lent Rafidain $500 million in October 1985. Rafidain stopped making payments in October 1990 and allegedly owes Bank of New York $9.64 million in principal plus interest.