22 January 2007


    Rhys Blakely

    Senior bankers and leading politicians have attacked demands from the American Department of Justice for British bankers to hand over details of their dealings with online gambling companies outlawed in the US. After calls on the British Government to spell out the limits of the US authorities’ reach, the Treasury said last night that it was monitoring the situation.

    Subpoenas have been issued by the Southern District Court of New York to at least 16 banks, including HSBC, Dresdner Kleinwort, Credit Suisse and Deutsche Bank. The official demands for e-mails, telephone records and other documents form part of a controversial push by the Department of Justice (DoJ) to build cases against individuals and companies who profited from online gaming in the US.

    Alan Duncan, Shadow Trade and Industry Secretary, said: “There is growing suspicion that the US Department of Justice is using its muscle in a highly unpleasant manner, and is targeting financial institutions beyond their own shores in a way that cannot be justified. I hope the Department will stop and review its approach so that its behaviour doesn’t sour relations between us.”

    Vince Cable, the Liberal Democrat Treasury spokesman and a former chief economist for Shell, said: “This appears to be another case of extra-territorial and retrospective action from the US authorities that goes against two basic principles of justice.”

    A senior banking source, who asked not to be named because of the “immense legal complexity and sensitivity” of the issue said: “The US is saying to itself, ‘We must get somebody’, and in the process it seems to think it can foist . . . US legislation, even individual state legislation, on anybody.

    “They are going after parties removed several steps from the business of gambling. To pursue say, an adviser on a float is frankly ridiculous. It is a straightforward case of the Government being responsible for setting and arranging sensible boundaries on what the US can request.”

    London, which became the fundraising centre of choice for the internet gambling industry, is at the heart of the DoJ investigation. It has emerged that the first subpoenas date back to October, only days after George Bush effectively banned online gaming by outlawing related transactions, such as credit card payments. Fresh demands were made as recently as three weeks ago.

    Deutsche was co-broker to PartyGaming, the largest online gaming company. PartyGaming was advised by Dresdner on its IPO in 2005, which raised £5 billion and propelled the company into the FTSE 100. HSBC advised 888.com on its £590 million IPO later in the same year. Credit Suisse had advised the company’s former shareholders.

    Another banker said: “This is a massive, ongoing fishing trip. Everyone — the bankers, the lawyers — who was involved in the IPOs or had ongoing business with these companies is in the same boat.”

    The Home Office would not comment on whether it had received a request from the US for “mutual legal assistance”, a statutory precursor to the US authorities conducting an investigation in the UK. The Department of Justice did not return calls. None of the banks involved would comment.


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