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Jesse Hamilton, Alan Katz, Silla Brush05 Jun 2015 00:00
US prosecutors have alleged that the bank's business included processing millions of dollars in bribes from a Sao Paulo sports marketing business to Fifa-affiliated soccer officials. (Fabrice Coffrini, AFP)
A small private bank controlled by a reclusive Brazilian billionaire shows up more than two dozen times in United States prosecutors’ corruption charges against world football officials. It’s hardly the bank’s first brush with scandal.
Delta National Bank and Trust Company has had at least three previous run-ins with authorities on two continents over the past 15 years, including when Brazilian lawmakers probed its role as the banker for a scandal-tinged head of national football.
In 2003, Delta pleaded guilty in the US to failing to report transactions linked to a Colombian drug cartel.
Even so, Delta, with US assets of $467-million, continued operations from its offices in Manhattan, Miami and Geneva.
Delta’s US regulator, the Office of the Comptroller of the Currency, is now investigating the bank’s role in those transactions, according to a person with knowledge of the matter who asked not to be named because the probe is ongoing. Linda Chapman, Delta’s vice-president in charge of compliance, declined to comment.
The latest scrutiny of Delta comes after more than a decade of red flags about its business, according to a review of lawsuits, regulatory filings and reports documenting government investigations. It isn’t clear how the bank may have changed its reporting or compliance programmes over that time, including after the US justice department conviction 12 years ago. The regulator imposed no further penalties on the bank, said spokesperson Bryan Hubbard, and allowed it to continue doing business in the US. Hubbard declined to comment on the regulator’s latest Delta investigation.
“There’s not much of a track record of closing banks down for bad behaviour, is there?” said Jack Blum, a former US Senate investigator and expert on money laundering. Delta is “just another bank in this big sea of trouble in the banking business”.
The history of Delta shows that even a small bank can keep operating following a criminal conviction, much as the world’s biggest banks have after agreeing to plead guilty in recent years to charges including doing business with rogue nations and rigging global interest rates.
At times, the alleged Fifa bribes were channelled from Delta through larger banks including Citigroup and JPMorgan Chase & Co, according to justice department proceedings announced last week. US prosecutors have said they are investigating banks as part of their probe into corruption at Fifa, but didn’t name any specific lenders.
Whereas banks in the US have an obligation to report suspicious transactions to authorities, the department’s indictment doesn’t say whether any lenders failed to do so.
Citigroup and JPMorgan weren’t the only banks that had relationships with Delta. Over the course of a decade, it wired tens of millions of dollars on behalf of Traffic Group, the Brazilian sports marketer, through those banks and HSBC Holdings, Wells Fargo & Co and Banco Do Brasil SA, according to justice department documents.
Representatives for Citigroup, JPMorgan, Wells Fargo and Traffic Group declined to comment, and Banco Do Brasil didn’t respond to requests for comment. HSBC is reviewing the Fifa indictment “to ensure that our services are not being misused for financial crime”, said Rob Sherman, a New York spokesperson for the bank.
The fallout from the scandal is growing as Sepp Blatter, Fifa’s president, said on Tuesday that he would resign.
Delta was established in the 1980s by Aloysio De Andrade Faria, a 94-year-old billionaire with an affinity for breeding prize milk cows and Arabian horses.
With a reputation among Brazilian media outlets for rarely granting interviews, Faria has built a business empire that includes Sao Paulo-based Banco Alfa de Investimento SA, hotels, a palm oil producer and a home improvement chain. In 1998, he sold a bank founded by his father for $2.1-billion. – © Bloomberg
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