Bank of China faces contempt fines

AUS judge will impose a daily fine of $50,000 (Dh183,500) against Bank of China Ltd starting next week after holding it in contempt for refusing to turn over account information on Chinese customers accused of selling counterfeit luxury goods.

In a decision made public on Tuesday, US. District Judge Richard Sullivan in Manhattan said the “coercive fine” will be imposed starting on December 8 unless the state-run bank complies with subpoena requests for the records.

Bank of China is appealing the civil contempt order and fine.

The records come from Chinese entities that were sued in 2010 by Gucci, Yves Saint Laurent, Bottega Veneta and other units of Paris-based Kering SA for trademark infringement over their sales of knockoff handbags, briefcases and other products.

Bank of China, which is not a defendant, said it could not turn over the records without violating Chinese privacy law and that the judge lacked jurisdiction to force compliance.

Sullivan said, however, the bank’s “manifest determination” to ignore the subpoenas and his orders has made it hard for the Kering plaintiffs to pursue their claims against “rampant counterfeiters,” and could harm consumers who fall victim.

“BOC’s refusal to comply with US law, while it continues to receive the benefits attendant to its banking activity in the United States, has inflicted a significant harm on plaintiffs and the general public,” Sullivan wrote. “Only a large fine will have a coercive effect on BOC at this stage.” Sullivan also ordered the bank to cover the plaintiffs’ costs of litigating the contempt issue.

He noted that the fine represents a tiny fraction of Bank of China’s roughly $27.8 billion of profit in 2014.

The dispute is part of a larger conflict over financial transparency between China and the United States, which employs a disclosure-based regulatory regime.