Obama Says He Won’t Meddle in BNP, Scolds French Mistral Sale

Jun 05, 2014 12:42 pm ET

June 5 (Bloomberg) -- President Barack Obama criticized France’s decision to sell warships to Russia and warned President Francois Hollande that he won’t intervene to protect French bank BNP Paribas SA from a potential $10 billion fine.

The remarks, made after a Group of Seven summit dominated by tension with Russia over Ukraine, set the tone for a meal the two leaders will share later today in a Paris restaurant before Hollande holds a separate meeting with Russian President Vladimir Putin.

“My answer on the banking case is short and simple: the tradition of the United States is that the president does not meddle in prosecutions,” Obama told reporters. “I do not pick up the phone and tell the attorney general how to prosecute cases that have been brought. I do not push for settlements of cases that have been brought. Those are decisions that are made by an independent Department of Justice.”

BNP shares fell after Obama spoke, closing almost unchanged in Paris at 51.48 euros after climbing as high as 52.92 euros earlier in the day.

U.S. authorities are seeking penalties to settle allegations that BNP transferred funds for clients in violation of American sanctions against Sudan, Iran and Cuba. Hollande wants any penalty to be in line with that faced by other lenders.

French Finance Minister Michel Sapin risked stoking the spat further, saying today in a newspaper interview that a disproportionate punishment on BNP could have an impact on free trade talks between the U.S. and the European Union.

Reciprocity, Respect

“France and the U.S. have a relationship, a partnership, and nothing should be allowed to compromise that, because we’re also engaged in other discussions, and we expect reciprocity and respect,” Hollande said late yesterday. He was referring to the continuing talks between the U.S. and the EU to establish a free trade pact, known as TTIP, or the Transatlantic Trade and Investment Partnership, which would create the world’s largest free-trade area.

Obama also scolded Hollande for his decision to go ahead with a sale of two Mistral helicopter carriers to the Russian Navy even as the U.S. and its European allies seek to pressure Putin to recognize Ukraine’s newly elected president, Petro Poroshenko, and pull remaining Russian troops back from Ukraine’s border.

Russia’s seizure of Crimea and menace to eastern Ukraine led the U.S. and the EU to impose asset freezes and travel bans on 98 people and 20 companies. G-7 leaders met in Brussels after canceling a planned G-8 summit in Sochi, Russia, to protest its action in Ukraine.

The warships are being built by DCNS SA, a state-controlled shipbuilder 35 percent owned by Thales SA.

“I have expressed some concerns, and I don’t think I’m alone in this, about continuing significant defense deals with Russia at a time when they have violated basic international law and the territorial integrity and sovereignty of their neighbors,” Obama said. “It would have been preferable to press the pause button.”

--With assistance from Helene Fouquet and Gregory Viscusi in Paris.