UK Bank In The Dock Over 'Iran Deals'
Updated: 11:24pm UK, Monday 06 August 2012
To get a perspective on how serious the allegations are for Standard Chartered, one need only look through the 27-page document released by the New York State Department of Financial Services.
The New York Regulator doesn’t mince its words in the publication.
Standard Chartered "operated as a rogue institution," it concludes. The bank indulged in "wilful and egregious violations of the law".
It leaves no room for misinterpretation.
On page four is a quote from an email purportedly sent by Standard Chartered CEO for the Americas 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".
Of that extract, what would worry me is not the fact that his prediction of reputational damage might now prove accurate, but that he is seemingly advising that the financial benefits of the behaviour be weighed against the potentially damaging outcome.
In short, if it’s financially worth us breaking US law then let’s continue, but if not, then maybe we should stop because there could be a high price to pay.
This email also suggests that senior executives were fully aware of what was going on. It will be hard to argue otherwise.
The knives are already out for the financial services and those who have nothing but disdain for the sector will again point out that banks see themselves as above the law.
Standard Chartered are remaining very tight-lipped at the moment. An internal investigation is on-going so they are understandably limited in what they can say publicly.
The Treasury tells me they are looking at the papers and will react to anything as and when it comes to light.
What differentiates this from the Barclays/Libor scandal is the public image of Standard Chartered: it isn’t a high street bank and it isn’t a company that many of us have first-hand knowledge of.
But the allegations are equally serious. The potential consequences, if found guilty, perhaps more so.
