Austria charges bank after Cuban accounts cancelled
Campaign News | Thursday, 26 April 2007
VIENNA, April 27 (Reuters) - Austria is charging BAWAG, being taken over by U.S. investor Cerberus Capital [CBS.UL], with violating European Union rules after the bank cancelled the accounts of around 100 Cubans, foreign minister Ursula Plassnik said late on Thursday.
BAWAG, Austria's fifth-largest bank, told around 100 Cuban clients earlier this month that it had to cancel their accounts because U.S. sanctions against Cuba meant Cerberus could not buy BAWAG if it kept them as clients.
Plassnik told Austria's parliament late last evening that BAWAG had violated EU rules against implementing the U.S. Cuban sanctions on European soil, and that she had therefore launched proceedings against BAWAG.
"U.S. law is not applicable in Austria. We are not the 51st of the United States," Plassnik said. "Neither the EU nor the U.N. have implemented a general economic or contact embargo against Iran or Cuba."
"We have started the necessary steps to launch administrative proceedings (against BAWAG)," Plassnik said.
Plassnik mentioned Iran in referrence to U.S. objections against Austrian oil and gas group OMV's (OMVV.VI: Quote, Profile, Research plans to produce gas in the Islamic state.
A spokesman for Plassnik added on Friday that the ministry had requested BAWAG to explain its decision to cancel the accounts and that it would make a decision about whether to fine the bank after reviewing BAWAG's reply.
BAWAG reiterated on Friday that it regretted the measures but had no choice but to implement them due to its new owner. It said the cancellations did not violate EU rules.
The European Commission in 1996 decreed that U.S. sanctions against Cuba known as the Helms-Burton Act, which ban U.S. companies from dealing with the socialist Carribean state, must not be applied in the EU. .
BAWAG executives can be fined as much as 73,000 euros for violating the EU regulation.
U.S. private equity fund Cerberus, whose Chairman is former U.S. Treasury Secretary John Snow, agreed to buy BAWAG for 3.2 billion euros last year from BAWAG's current owner, Austrian trade union federation OeGB.
The deal is expected to close in mid-May, BAWAG Chief Executive Ewald Nowotny said this week.