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Standard Chartered: Friends Like This, Who Needs Enemies

Posted by Larry Doyle on August 7, 2012 9:07 AM |

Dealing with terrorists, weapons dealers, drug lords, and corrupt regimes would all seem to take a back seat to the pursuit of profit and revenue at the UK-based Standard Chartered Bank.

In what has to be a new low in terms of financial intermediation, the crowd at Standard Chartered stands accused this morning by the New York State Department of Financial Services of being a rogue institution.

In what might seem to be a potential script for a Harrison Ford thriller but is regrettably all too real, the Financial Times hits Standard Chartered hard in reporting, StanChart Shares Hit Over Iran Probe,

Shares in Standard Chartered plunged nearly 25 per cent on Tuesday after the New York State financial regulator accused the UK bank of hiding $250bn of transactions with the Iranian government. 

The New York state Department of Financial Service claimed on Monday that the bank had concealed about 60,000 transactions with Iranian clients from US regulators, violating sanctions against the Iranian government. It labelled the UK bank a “rogue institution”.

The bank’s shares lost almost a quarter of their value on fears that the scandal would cost the bank its licence and US clearing rights, even though many analysts considered such an outcome unlikely.

While representatives of Standard Chartered mount a public defense of their operation, this financial intrigue might dwarf the scandalous behaviors of its UK brethren at Barclays Bank and HSBC. Those scandals are not exactly small. Whatever happened to the world of genteel and refined British banking?

In addition to taking Standard Chartered over the coals, let’s also put Deloitte and Touche in our target scope as this consultant is alleged to have provided unlawful access to reviews which aided and abetted the bank in withholding information from regulators.

What did one unnamed representative at Standard Chartered allegedly have to say about doing business with Iran in violation of longstanding American sanctions?

“You f—ing Americans. Who are you to tell us, the rest of the world, that we’re not going to deal with Iranians?”

Is that right? Friends like these, who needs enemies.

If the US cares to have any credibility in the world of international trade and finance, these charges against Standard Chartered will receive the most aggressive and serious review possible. Will that happen? Do not count on it. I am not so sure the laundering charges primarily against Wachovia received the proper attention and regulation, so perhaps other institutions including Standard Chartered, took that as a cue that the pursuit of revenue in international banking takes priority over dealing with the unsavory characters involved with drug trafficking and terrorist regimes.

Oh what a tangled web they weave. Will we ever learn the truth?

Larry Doyle

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I have no affiliation or business interest with any entity referenced in this commentary. The opinions expressed are my own. I am a proponent of real transparency within our markets so that investor confidence and investor protection can be achieved.

  • Ron Larson

    Wrist… meet slap.

  • JR

    What would it take for regulators to suspend operations? Is it not clear that fines don’t accomplish anything? Thank you, State of New York, for addressing the issue. Did it not move the needle in Washington? Do we, as a country, enforce sanctions or don’t we?

  • Larry

    10 million dollar fine, and a few angry letters from lawmakers should cover the damages……..

  • Nick

    You’re being suckered.

    This is what’s really going on with Barclays, HSBC and StanChart:

    Money Talks and London Listens to the Yuan

  • LD

    Attracting flows of trade from foreign markets, specifically Asia, is not exactly a novel concept in an increasingly competitive market.

    That effort somehow is the driving force behind Barclays (an many others) manipulation of Libor, HSBC’s laundromat IN MEXICO, and Standard Chartered’s violation of sanctions against Iran.

    I am not denying your premise about attracting capital and liquidity to the Chinese yuan but that is supposed to be the reason for scandalous behaviors?

    let me counter your argument by stating that the reason why regulators and central banks looked the other way at these activities is because the entire global financial system is starved for capital and liquidity. Doing business with criminals and rogue states became little more than a means to an end.

    Suckered? really?

  • Brewster

    Hi Larry,

    We pay for government to regulate, leveling the playing field to give all a fair chance. We also do it ostensibly to protect the population from people who can take advantage of others through various schemes. When it fails on a large scale, it opens up the possible overthrow of the incumbent government, allowing a strong man to rule and crush democracy in favor of dictatorship or similar non-sovereign entity.

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