French banking giant BNP Paribas is facing a civil trial in a New York courtroom over allegations that it was complicit in human rights abuses committed by the former government of Sudan. The lawsuit, brought by refugees from the Darfur region, claims the bank provided essential financial services that enabled the Sudanese government to fund a campaign of violence.
This case follows a landmark $8.9 billion penalty the bank paid in 2014 for violating U.S. sanctions, but the current trial directly addresses the bank's potential liability to the victims of the conflict.
Key Takeaways
- BNP Paribas is the defendant in a civil lawsuit in Manhattan brought by over 20,000 refugees from Sudan's Darfur region.
- The plaintiffs allege the bank's financial services helped the Sudanese government fund atrocities between 2003 and 2010.
- The current trial is a "bellwether" case, focusing on the claims of three individuals, which could influence the larger class-action suit.
- In 2014, BNP paid an $8.9 billion fine for sanctions violations, but none of that money compensated Darfur victims.
- The bank argues that its services were not a direct cause of the violence, stating the government could have found other funding sources.
Background of the Legal Battle
The legal proceedings currently unfolding in a lower Manhattan courtroom have roots that stretch back over a decade. In 2014, BNP Paribas, the largest bank in the European Union by assets, reached a settlement with United States authorities, agreeing to pay a staggering $8.9 billion penalty. The bank admitted to deliberately violating U.S. sanctions by processing billions of dollars in transactions for entities in Sudan, Iran, and Cuba.
During the period in question, particularly from 2002 to 2007, the Sudanese government under then-President Omar al-Bashir was heavily reliant on BNP's services. This coincided with a brutal conflict in the Darfur region, which the United Nations estimates resulted in approximately 300,000 deaths and the displacement of millions.
The 2014 Sanctions Case
As part of its 2014 settlement, BNP Paribas acknowledged a systematic effort to evade U.S. sanctions. According to the agreed-upon statement of facts, the bank processed over $6 billion for sanctioned Sudanese entities. Its Geneva branch was particularly central, holding around 50% of Sudan’s foreign currency reserves and providing guarantees for about a quarter of the country's exports.
While the 2014 fine was a significant punishment for the bank, the funds were primarily directed to a compensation fund for American victims of terrorism. The victims of the violence in Darfur received no compensation from that settlement, a situation the current civil lawsuit seeks to address.
Allegations of Complicity in Atrocities
The civil case against BNP Paribas is a class-action lawsuit representing more than 20,000 individuals who escaped the violence in Sudan and were granted refuge in the United States. The initial trial, known as a "bellwether" case, focuses on the specific claims of three plaintiffs. Its outcome is expected to heavily influence how the remaining claims are handled.
The core argument presented by the plaintiffs is that BNP Paribas acted as a crucial financial lifeline for the Sudanese government, effectively enabling its military operations in Darfur. By providing access to the U.S. dollar-denominated global oil market, the bank allegedly gave the government the necessary funds to purchase weapons and sustain its campaign.
"More dollars meant more weapons. And more weapons meant more killing and destruction," Bobby DiCello, a lawyer for the plaintiffs, stated in court. He accused the bank of being "complicit, a co-conspirator in . . . violations of human rights."
The plaintiffs contend that without the sophisticated financial infrastructure provided by BNP, the Khartoum government would have struggled to finance its activities on such a large scale. They argue the bank's role was not passive but an active and essential component of the government's financial operations.
The Bank's Defense Strategy
In its defense, BNP Paribas does not dispute the facts established in the 2014 sanctions case. The bank acknowledges providing services that violated U.S. policy. However, its legal team argues that these actions do not make the bank legally responsible for the atrocities committed by the Sudanese government.
Sudan's History of Conflict
BNP's lawyers have pointed to Sudan's long history of internal conflict, which predates the bank's involvement and continues today. They argue that violence has been a persistent issue since the country gained independence in 1956, suggesting that the conflict in Darfur was not solely dependent on the bank's financial services.
Dani James, a lawyer representing BNP Paribas, asserted that Sudan had other means to fund its operations. "Sudan did not need dollars to trade oil, and it did not need BNP to trade oil either. Sudan could and did trade oil in other currencies," she told the court. The defense's position is that the Sudanese government would have found alternative ways to finance the violence, meaning the bank's actions were not the definitive cause of the harm suffered by the plaintiffs.
The Swiss Legal Standard
A unique aspect of this New York trial is that civil liability will be assessed under Swiss law. This is because BNP's Geneva branch was the hub for the transactions with Sudan. The jury, over the scheduled 10-week trial, must determine if the bank's actions meet the Swiss legal standard of being a "natural and adequate cause" of the damages suffered by the victims in Darfur. This legal test requires a more direct link between the action and the outcome than some other legal standards.
Potential Ramifications for Global Finance
The outcome of this trial could have significant implications that extend far beyond BNP Paribas. If the plaintiffs are successful, it could establish a powerful new precedent for holding financial institutions liable for the actions of governments they do business with. The lawsuit against BNP has been in litigation since 2016, with the bank fighting to have it dismissed. The court's decision to allow the case to proceed to trial is already seen as a significant development.
The potential financial risk for BNP is substantial. With a market capitalization of around €89 billion, the bank is large, but the damages could be significant. For example, if the court were to award an average of just $50,000 to each of the more than 20,000 members of the class action, the total payout would exceed $1 billion.
A verdict in favor of the plaintiffs would send a strong signal to the global banking industry about the heightened risks of providing services to regimes involved in conflict or accused of human rights abuses. In an era marked by numerous global conflicts, a ruling that broadens corporate liability could force banks and multinational corporations to re-evaluate their clients and the geopolitical risks associated with their operations.
