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Just over a month ago, Standard Chartered’s CEO urged bankers to regain their “social legitimacy” and asserted that “good banking is never needed more than now”. That message was in line with the bank’s image as “boring but good“, as one FT headline put it.
Standard Chartered now stands accused of helping Iranian banks – including the central bank – circumvent US sanctions by concealing roughly 60,000 transactions involving at least $250 billion from US regulators, and having reaped “hundreds of millions of dollars in fees” for itself over a decade. The whole damning complaint is here, and Business Insider pulled the choicest bits here.
In short, SCB [Standard Chartered Bank] operated as a rogue institution. By 2006, even the New York branch was acutely concerned about the bank’s Iran dollar-clearing program. In October 2006, SCB’s CEO for the Americas sent a panicked message to the Group Executive Director in London. “Firstly,” he wrote, “we believe [the Iranian business] needs urgent reviewing at the Group level to evaluate if its returns and strategic benefits are … still commensurate with the potential to cause very serious or even catastrophic reputational damage to the Group.” His plea to the home office continued: “[s]econdly, there is equally importantly potential of risk of subjecting management in US and London (e.g. you and I) and elsewhere to personal reputational damages and/or serious criminal liability.”
Lest there be any doubt, SCB’s obvious contempt for U.S. banking regulations was succinctly and unambiguously communicated by SCB’s Group Executive Director in response. As quoted by an SCB New York branch officer, the Group Director caustically replied: “You f—ing Americans. Who are you to tell us, the rest of the world, that we’re not going to deal with Iranians.”
The complaint also alleges that Deloitte & Touche aided StanChart, saying the consultancy “intentionally omitted critical information in its ‘independent report’ to regulators”. And a footnote reveals further investigations into whether StanChart was involved in similar schemes with other countries under US sanctions, such as Libya, Myanmar and Sudan.
If nothing else, perhaps this episode will make bank executives think twice before signing off on sanctimonious ad campaigns while they’re simultaneously leaving the “US financial system vulnerable to terrorists, weapons dealers, drug kingpins and corrupt regimes”. The voice-over from this 2010 Standard Chartered commercial has now been pushed painfully beyond absurdity:
Can a bank really stand for something? Can it balance its ambition with its conscience? To do what it must. Not what it can. As not everything in life that counts can be counted. Can it look not only at the profit it makes but how it makes that profit? And stand beside people, not above them. Where every solution depends on each person. Simply by doing good, can a bank in fact be great? In the many places we call home, our purpose remains the same. To be here for people. Here for progress. Here for the long run. Here for good.
– Peter Rudegeair
On to today’s links:
EU Mess Spain’s prime minister would ask for an economy-wide bailout, but first the ECB has to let him know what he’d be asking for – WSJ Consumer austerity hits Europe: Even the French aren’t going to Disneyland Paris – WSJ
Stuff We’re Not Linking To Trend: increased Botox use on Wall St – Bloomberg TV