Documentary Credit World

The English High Court, Justice Picken, entered summary judgment in favour of BNP Paribas, the main defendant of claims brought by Verdi Law Group P.C. (Verdi), a small California, US based law firm.

BNP Paribas was one of eight named defendants in the action; several defendants had yet to receive service of process. Verdi claimed being introduced to a transaction central to which was a EUR 500 million standby LC allegedly issued by BNP Paribas. The standby was supposedly backed by cash held by named defendant, Sparx Asset Management Co. (Sparx). Sparx allegedly held a Paris account with BNP Paribas. Verdi claimed that the “stand-by letter of credit would be used to obtain credit from another bank, which credit would, in turn, be used by a third party to conduct leverage trading in medium-term notes.” Verdi claimed, as party to the “non-recourse monetisation agreement”, to be entitled to remitted sums valued EUR 1.4175 billion despite having not invested any sums in the venture.

In its defence, BNP Paribas simply alleged the venture was “a fiction.” The standby was a forgery and BNP Paribas and the other international banks allegedly involved in the transaction had no involvement or knowledge of the scheme. Moreover, printouts of photographs, emails and supposedly key SWIFT messages were also considered fictitious; this was detailed in an expert report prepared on behalf of BNP Paribas.

In reviewing the available evidence, the Judge ruled the case appropriate for summary judgment. Firstly, BNP Paribas argued, and the Judge accepted, that “the alleged profits that the transaction would have generated are so vast as to at least give pause for thought as to whether the transaction can ever truly have been entered into.” The alleged profits were also ostensibly “unconditional” once the standby was issued with vast returns in a “very short timeframe”. These factors combined with unnecessary complexity and commercial implausibility significantly undermined any alleged authenticity. Critically, BNP Paribas successfully demonstrated without contradiction that the alleged Sparx account was fake; printouts detailing the account were doctored. Testimony by a SWIFT general counsel conclusively showed the alleged messages were also fake. Supposedly important emails showed evidence of doctoring or other inauthenticity. In short, the Judge expressed that “the evidence adduced by Banque Paribas is, in my view, compelling. The evidence adduced by Verdi, in contrast, is far from compelling.”

Source: Verdi Law Group P.C. v. BNP Paribas, S.A., [2023] EWHC 1860 (KB) [England]

 

 

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