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Standard Chartered Scandal: Crime Pays

Posted by Larry Doyle on August 8, 2012 9:07 AM |

If in fact — and as reported — the UK-based Standard Chartered Bank is fined a token $700 million for the violation of American sanctions in dealing with Iran, then we are left with only one conclusion: CRIME PAYS. (A second conclusion would be that our regulators and government officials are in the pockets of the banks BUT we already knew that.)

There are allegedly $250 billion worth of transactions in question in this Standard Chartered scandal. A slap on the wrist of $700 million would equate to less than .3 of 1% (.003) for dealing with the crowd that would like to see Israel obliterated. 

Are you kidding me? Is this a joke or what? What do you think the profit margins were in the business transacted by Standard Chartered with their friends in Iran? Certainly a LOT more than than .003.

With new and explosive scandals becoming regular occurrences, the underside of the financial industry on both sides of the pond is being exposed like never before. How do the shareholders of Standard Chartered feel as the value of their holdings plummet?

Once again, we learn that the real risks in the marketplace go far beyond basic market risks. The greatest risk of all is getting overrun by a situation in which our financial regulators fail to perform. Chirantan Barua, an analyst at Sanford Bernstein, is quoted in the WSJ this morning and gets the award for the greatest understatement of our entire economic crisis,

“These scandals [don’t] reflect well on the regulators who are becoming a global laughing stock.”

No doubt about that but the lives impacted and well beings destroyed are no laughing matter.

Navigate accordingly.

Related Sense on Cents Commentary
Standard Chartered: Friends Like This, Who Needs Enemies 

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.

 

  • BC

    The craziest part is how the Feds feel the NY regulator completely went rogue. The Feds were in the middle of a sleepover pillow fight with StanChart, and according to Reuters, are furious that somebody is actually calling StanChart (only somewhat as you point out) to task.

    Great that they released that email about “fucking Americans” – such embarrassing revelations happen too rarely.

  • fred

    LD,

    So you mean central banks have other responsibilities beyond ZIRP and QE, where do they find the time?

    Brings up some interesting issues I never thought about.

    How do we get foreign banks to comply with our domestic policy initiatives, NATO?

    I’m sure there is always someone willing to take any business no matter how dirty.

    Are all foreign central banks given the oversite authority/power of the Fed? How is compliance coordinated, IMF?

  • LD

    Fred,

    I view these situations as classic examples of the Prisoner’s Dilemma in which institutions and nations, via their central banks, will pursue their own self-interest at the expense of working together.

    The largest financial institutions have very senior individuals in both legal and finance who work at exploring and exploiting “regulatory arbitrage” especially across geographic borders.

  • Iran-Conoco

    Following the collapse of the Soviet Union and debate on cutting the bloated budgets of the CIA and Pentagon, the CIA and MI6 entered into an unholy alliance with officers/directors of many publicly held US/UK corporations, including banks (remember BCCI). Without notice to their shareholders, these corporate fiduciaries agreed to act as CIA/MI6 “assets” in gathering intelligence if the CIA/MI6 provide protection from criminal prosecution under the “national security” ruse if they were ever caught.

    The directors of the international oil companies that have used Standard Chartered to launder their Iranian oil/gas profits can and should be held accountable for failing to disclose to shareholders the clandestine deals through derivative actions. Furthermore, the Securities and Exchange Commission and the Department of Justice should focus on the underlying violations of the US Foreign Corrupt Practices Act (FCPA) by the international oil companies, like ConocoPhillips (COP), in conspiring with rogue states like Iraq, Libya, Iranian,… in laundering oil-money. See http://Iran-Conoco-Affair.US and http://UnCoverUp.net for two examples.

  • LD

    With news that standard Chartered has agreed to a fine of $340 million on transactions of $250 BILLION, we once again learn that CRIME PAYS!!

    Standard Chartered Settles Laundering Charges for $340 Million

    New York’s top banking regulator reached a settlement on Tuesday with Standard Chartered over charges that the British bank laundered hundreds of billions of dollars in tainted money with Iran and deliberately lied to regulators.

    The bank agreed to pay $340 million to the Department of Financial Services, which is led by Benjamin M. Lawsky. “The parties have agreed that the conduct at issue involved transactions of at least $250 billion,” Mr. Lawsky said in a statement.

    As part of the settlement, the bank will install a monitor for at least two years to vet the bank’s money laundering controls. In addition, the bank agreed to put in permanent officials who will audit the bank’s internal procedures to prevent offshore money laundering.

    Last week, the New York state regulator charged that Standard Chartered laundered $250 billion in tainted money for Iranian clients through its New York branch. A hearing scheduled for Wednesday was canceled.

    The agreement enables the bank to avoid having its license to operate in New York revoked.

    Only eight days ago, the agency issued an explosive report calling the bank a “rogue institution” and said it had masked more than 60,000 transactions for Iranian banks and corporations, motivated by millions of dollars in fees. The regulator said that senior management at the bank used the New York branch “as a front for prohibited dealings with Iran — dealings that indisputably helped sustain a global threat to peace and stability,” according to a regulatory order sent to the bank.

    In its initial response to the accusations, the bank said that it “strongly rejects the position and portrayal of facts” by the agency.

    The Federal Bureau of Investigation said that it had an open investigation into money laundering at Standard Chartered.

    Beyond the dealings with Iran, the banking regulator said it had discovered evidence that Standard Chartered operated “similar schemes” to do business with other countries under United States sanctions, including Myanmar (formerly Burma), Libya and Sudan.

    The “apparent fraudulent and deceptive conduct” by Standard Chartered happened from 2001 to 2010, the order said, and was particularly “egregious,” because some of the transactions were being processed even as the bank was under formal oversight by New York banking regulators from 2004 to 2007.






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