Mr. BARR. Why would these employees be terminated then if people were just involved in a series of tragic human errors? You certainly wouldn't terminate people for that reason, would you?
Mr. RENYI. The people that were terminated were terminated for reasons having nothing to do with the conduct of the account, Congressman.
Mr. BARR. Nothing to do with the conduct of any of these accounts, even the Benex accounts?
Mr. RENYI. That is correct.
If I can restate with regard to Ms. Edwards, Ms. Edwards was terminated by us because of violations of the code of conduct surrounding the fact that she did not advise us that she was a signer for these accounts. She did not have any day-to-day activity or involvement in these particular accounts.
Mr. BARR. So it wouldn't really be accurate to say that she was not fired for any reason connected at all with the Benex accounts; there is a connection there, is there not?
Mr. RENYI. There is a connection there to the extent she was a signer.
Mr. BARR. Through her and through her husband.
Mr. RENYI. And did not reveal that.
Mr. BARR. And through her husband there was a connection obviously.
Mr. RENYI. Yes, but that isn't necessarily grounds for termination.
Mr. BARR. But it certainly is grounds in retrospect for some rather significant suspicions.
Mr. RENYI. Correct. That is not to be debated.
Mr. BARR. I just have a general question. Would you say that any of the following are secondary to earning fees or making profits for the Bank: One, protecting our Nation's security, is that secondary?
Mr. RENYI. Absolutely not.
Mr. BARR. Compliance with our criminal laws?
Mr. RENYI. Absolutely not.
Mr. BARR. And protecting taxpayer funds?
Mr. RENYI. Absolutely not.
Mr. BARR. Thank you.
Thank you, Mr. Chairman.
Chairman LEACH. Thank you.
Mr. Royce.
Mr. ROYCE. Thank you, Mr. Chairman.
Mr. Renyi, in your statement you describe how certain procedures that the Bank of New York follows to ensure due diligence. Basically, I guess, one of those procedures is reviewing financial statements and other regulatory filings.
Mr. RENYI. Yes, sir.
Mr. ROYCE. Reported yesterday is a story about the Bank of New York's efforts to help a Russian bank sell shares to investors and the way this aggressive pursuit was undertaken, but what is unusual in the story is that at the same time that your bank was doing that, Inkombank, the Russian bank, was undergoing its own review, and the financial status was being challenged in Russia, and Russian bank regulators that were investigating the bank had found that it had violated numerous rules, including inflating its income. In fact, the report recommended curtailing the bank's operations, and the bank has since been declared insolvent. And what is unusual here is, I think, the question, why would you pursue under these circumstances this particular customer, and why would you help it win regulatory approval in the United States to sell its stock in the U.S. as American Depositary Receipts in 1996?
Mr. RENYI. Well, Congressman, the response is somewhat of a lengthy one, because I need to go into just a little bit the nature of the depositary receipt service that we offer, very easily confused and misinterpreted, against the investment banking opportunity where an investment bank would, in fact, sell securities or underwrite securities. In our case and in the case of any depositary receipt sponsor, what we provide is what I would call the plumbing associated with the capital market transaction, where we are the individual that provides information, provides the recordkeeping for the legal transfer and registry of ownership of those securities. We in no way underwrite, sell, or issue securities on behalf of any of our clients that we are depositary receipt sponsor for.
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продолжение-2
Date: 2007-05-26 09:15 pm (UTC)Mr. RENYI. The people that were terminated were terminated for reasons having nothing to do with the conduct of the account, Congressman.
Mr. BARR. Nothing to do with the conduct of any of these accounts, even the Benex accounts?
Mr. RENYI. That is correct.
If I can restate with regard to Ms. Edwards, Ms. Edwards was terminated by us because of violations of the code of conduct surrounding the fact that she did not advise us that she was a signer for these accounts. She did not have any day-to-day activity or involvement in these particular accounts.
Mr. BARR. So it wouldn't really be accurate to say that she was not fired for any reason connected at all with the Benex accounts; there is a connection there, is there not?
Mr. RENYI. There is a connection there to the extent she was a signer.
Mr. BARR. Through her and through her husband.
Mr. RENYI. And did not reveal that.
Mr. BARR. And through her husband there was a connection obviously.
Mr. RENYI. Yes, but that isn't necessarily grounds for termination.
Mr. BARR. But it certainly is grounds in retrospect for some rather significant suspicions.
Mr. RENYI. Correct. That is not to be debated.
Mr. BARR. I just have a general question. Would you say that any of the following are secondary to earning fees or making profits for the Bank: One, protecting our Nation's security, is that secondary?
Mr. RENYI. Absolutely not.
Mr. BARR. Compliance with our criminal laws?
Mr. RENYI. Absolutely not.
Mr. BARR. And protecting taxpayer funds?
Mr. RENYI. Absolutely not.
Mr. BARR. Thank you.
Thank you, Mr. Chairman.
Chairman LEACH. Thank you.
Mr. Royce.
Mr. ROYCE. Thank you, Mr. Chairman.
Mr. Renyi, in your statement you describe how certain procedures that the Bank of New York follows to ensure due diligence. Basically, I guess, one of those procedures is reviewing financial statements and other regulatory filings.
Mr. RENYI. Yes, sir.
Mr. ROYCE. Reported yesterday is a story about the Bank of New York's efforts to help a Russian bank sell shares to investors and the way this aggressive pursuit was undertaken, but what is unusual in the story is that at the same time that your bank was doing that, Inkombank, the Russian bank, was undergoing its own review, and the financial status was being challenged in Russia, and Russian bank regulators that were investigating the bank had found that it had violated numerous rules, including inflating its income. In fact, the report recommended curtailing the bank's operations, and the bank has since been declared insolvent. And what is unusual here is, I think, the question, why would you pursue under these circumstances this particular customer, and why would you help it win regulatory approval in the United States to sell its stock in the U.S. as American Depositary Receipts in 1996?
Mr. RENYI. Well, Congressman, the response is somewhat of a lengthy one, because I need to go into just a little bit the nature of the depositary receipt service that we offer, very easily confused and misinterpreted, against the investment banking opportunity where an investment bank would, in fact, sell securities or underwrite securities. In our case and in the case of any depositary receipt sponsor, what we provide is what I would call the plumbing associated with the capital market transaction, where we are the individual that provides information, provides the recordkeeping for the legal transfer and registry of ownership of those securities. We in no way underwrite, sell, or issue securities on behalf of any of our clients that we are depositary receipt sponsor for.