Standard Chartered deal: Anyone notice the admission of guilt?

Johnson, King & Osborne wrong again

Shifting Sands…

“300 transactions totalling some $15million made with Iranian clients between 2001 and 2007 breached US sanctions.This is clearly wrong and we are sorry these mistakes occurred but we did not make any attempt to overturn sanctions.”


If you’re even remotely interested in banking and finance, you will have heard by now that Standard Chartered has ‘negotiated’ a whopping $340m ‘civil’ malfeasance fine with the office of New York regulator Benjamin Lawsky.

But it’s quite hard to find much coverage pointing out one simple change in SCB’s position going into the session: that the sanctions-busting naughty deals involved only $14m. Nevertheless, right at the end of the post-deal joint press release from New York State Department of Financial Services (DFS) and Standard Chartered Bank sits this single sentence:

“The parties have agreed that the conduct at issue involved transactions of at least $250bn.”

Most people are bored by maths, so I’ll keep it simple: that makes the degree of fraud 17,000 times bigger than SCB claimed. Lawsky’s charge has prevailed, and Standard Chartered are guilty as charged. They have coughed up a fine of one third of a billion dollars for fraud that amounted to a quarter of a trillion dollars. Either Peter Sands lied, or he was misled. Whichever is true, I’d expect him now to resign, but not expecting it really…if you see what I mean.

Shortly after the charges were made public, this is what The Man Who Would be Prime Minister told the media:

“You can’t help wondering whether all this beating up of British banks and bankers is starting to shade into protectionism; and you can’t help thinking it might actually be at least partly motivated by jealousy of London’s financial sector – a simple desire to knock a rival centre.”

After first Johnson and then Bank of England Governor Mervyn King leapt to SCB’c defence, a backlash against the allegations spread to the City where investors rallied behind the bank, adding £3bn to its value.  Kerr-ching, fine paid for, Ithangyoo.

Campaigning Labour MP John Mann, who follows a similar line on the prosecution of the guilty, has also been made to look silly. But surely we should expect the man in charge of Britain’s finances to be discreet? Well, we should – but we can’t. George Osborne jumped on the Yank-bashing bandwagon, making three calls to the US Fed Secretary Tim Geithner, during which he demanded “fair treatment of British businesses” by US regulators, and vigorously pointing out that he was “very concerned about the way in which New York’s Benjamin Lawsky had sprung his explosive order on Monday.”

Quite so, George: you’re very concerned that Ben Lawsky gave Peter Sands no time to dissemble, and thus caught him at it….because that now makes it even more difficult to keep drivelling on about how “we must stop bashing the banks”.

Boris, of course, deplores bank bashing. He also wrote off Hackgate as “obvious Left Wing piffle” two years ago, and last week invited Rupert Murdoch to be his personal guest at the Olympic Games.

Let’s face it, these people are gobby lightweights. The precise same charge can be levelled at Ed Miliband, Nick Clegg, Harriet Harman, David Cameron, Theresa May, Ed Balls and the unlamented Louise Mensch. Together, they manage to make Vince Cable look good. That’s worrying.

But Boris Johnson is being pushed – and pushed very hard indeed, more than most folks realise – by unelected media barons and slightly odd backbench groups as our Prime Minister in waiting. He doesn’t have a single qualification for the job; but he does have some unpleasant traits that could make him very dangerous indeed once elected.

Of course, Ed Miliband was propelled into a leadership he doesn’t deserve by the UNITE Union, and the unelectable Harriet Harman. Of course, Nick Clegg and Lod Mandelson used EU allies to add weight to their influence upon the UK’s business and foreign policy.

My point is this simple, regardless of political affiliation: nowhere in this list of influences upon our politicians is a group called ‘the Citizens’. And therein lies a sizeable chunk of Britain’s problem. Yes, I’ve written that before. But it deserves repetition.

See also How the Olympic boost morphed into a cost

48 thoughts on “Standard Chartered deal: Anyone notice the admission of guilt?

  1. Fines on commercial companies are useless. The customers end up paying the fines. If you want to affect company conduct you need the criminal law and executives being jailed.

    There is some grounds for the ‘picking on British banks’ thesis. The US banks that make huge contributions (political bribes) to the Democratic and Republican party funds have been virtually ignored by the regulators.


  2. I am not convinced that Standard Bank was all that guilty. I think regulating a fine was cheaper than years of letigation. That said if they were that guilty let us have some facts please. S B does not operate in Europe but is specialised in the M E and F E.


  3. JW, I fear you are being credulous here. Against the threat of losing their banking licence it made sense to pony up the cash and make this (quite likely completely untrue) admission. This is the way US regulators tend to work, somewhat akin to blackmail. They don’t care about setting clear transparent rules and keeping a level playing field – they want to promote and protect their own industry at the expense of outsiders.

    Things like this should help convince naive British people that the USA doesn’t really have allies in the true sense of theword. It has enemies and peoples who pay tribute in return for favoured status, a bit like ancient Rome. The fact that British soldiers bleed on their battlefields matters not one jot when money is at issue.


  4. This illustrates my reservations on debt default or forgiveness.
    Forgiving people like bankers or politicians only encourages them to carry on.
    If the debt cannot be recouped there should be some punishment involved.
    Personally, I’d prefer the Dimons and Diamonds along with corrupt politicians to be dragged into the street and publicly flogged.


  5. “Johnson, King & Osborne wrong again ”
    They’re not there to be right – or even to get things right. They’re there to keep the system going on regardless.


  6. Sorry, John, but there is another explanation. If I just whip out Occam’s razor, we find that the “US$250bn” was essential to Lawsky’s credibility, so Sands gave it him as part of the deal.

    If there had really been any question of malfeasance on the scale alleged, Lawsky would have gone for much more – withdrawal of banking licence, etc. and a much bigger fine.

    This was a good old style shakedown. I speak with feeling because my own company was at the receiving end of similar tactics by HMRC – a tax demand for £105M with all sorts of allegations morphed into twopennce halfpenny – but no apology!


  7. So, is the fine more or less than the profit made on the illegal transactions? Do financial regulators create a “moral hazard” by failing to punish severely enough?


  8. ‘ Nowhere in this list of influences upon our politicians is a group called ‘the Citizens’.’
    No, and there probably never will be again. I think we have passed the point of no return as far as democracy is concerned.
    As for BoJo being dangerous, probably no more than any other prospective candidate, these are desperate times we live in, they are desperate people.


  9. So the City of London is starting to turn on the US and vice versa…

    The cancer is spreading hence why from a Greek perspective and even German/French/Italian or should i say EU the realisation that eventually so called allies will start to clash once the money runs out and no more deck shuffling is possible.

    The attacks on the Euro from U.S./City of London for their survival is starting to unravel…

    Lawyers get ready… divorce court looms…


  10. Totally agree. I think Wardy is being naive to say the least. Looks more like Benjamin Lawsky is busy making a name for himself and ‘banker bashing’ is, at the moment, an easy way to do this – everyone is at it, even old Wardy. I think they (SC) have been blackmailed into settling and I simply do not believe that the whole $250 billion of transactions have been illegal. Lawsky should produce much more detailed evidence to support his inflated claims.


  11. Pingback: John Ward – Standard Chatered Deal : Anyone Notice The Admission Of Guilt? Johnson, King & Osborne Wrong Again – 15 August 2012 | Lucas 2012 Infos

  12. The fine of $340m is just a pittance,compared to the profit made on over 60,000 transactions of $250 billion. Standard Chartered will consider this a a trifling charge.
    Some jail time is the only punishment that really gets noticed. Shareholders will be on the hook for this fine anyway.


  13. I see the FBI are now on the case. This is beginning to look like the NatWest 3 all over again…they were given the same option as SCB – plead guilty to whatever charges we come up with or we will bankrupt you. To put the fine in perspective it amounts to 5% of SCBs 2011 profits. Lets see what the FBI investigation throws up. If anyone gets canned it should include the guy at the top but as John suggests he almost certainly wont resign as the bankers code will say that “he has done nothing wrong”. In other words “immoral” hazard…


  14. O/T but, thought it shouldn’t go unnoticed.
    ‘The case against Europe: MEP Daniel Hannan reveals the disturbing contempt for democracy at the heart of the EU ‘
    ‘Over 13 years as an MEP, Daniel Hannan has witnessed first hand how Brussels works. Now he has written a forensic analysis of why it’s rotten to the core. His devastating critique should be required reading for every politician.’


  15. Just as fines on public companies, health trusts, local councils are useless. In fact they are worse than useless because they effectively condone malpractice and incompetence. The only way such fines will ever be effective is if they are personally levelled against the board, senior administrators and so on.


  16. Who We Are

    Citizens United is an organization dedicated to restoring our government to citizens’ control. Through a combination of education, advocacy, and grass roots organization, Citizens United seeks to reassert the traditional American values of limited government, freedom of enterprise, strong families, and national sovereignty and security. Citizens United’s goal is to restore the founding fathers’ vision of a free nation, guided by the honesty, common sense, and good will of its citizens.

    Officers and Board of Directors

    David N. Bossie, President and Chairman of the Board
    Burtonsville, Maryland

    Michael Boos, Vice President and General Counsel
    Manassas, Virginia

    Brian Berry, Director
    Media Consultant
    Austin, Texas

    Douglas L. Ramsey, Secretary-Treasurer
    Seattle, Washington

    Ron Robinson, Director
    President, Young America’s Foundation
    Reston, Virginia

    John Bliss, Director
    Denver, Colorado

    Kirby Wilbur, Director
    Duvall, Washington


  17. It looks like everyone is reluctant to say that the Democratic party – represented here by Lawsky – has a large Jewish lobby to play to this year.
    So I will.
    ‘Protecting’ them from those nasty Iranians is the default position.


  18. “My point is this simple, regardless of political affiliation: nowhere in this list of influences upon our politicians is a group called ‘the Citizens’. And therein lies a sizeable chunk of Britain’s problem. Yes, I’ve written that before. But it deserves repetition.”

    Are you talking about soveriegnty here? As Citizen is a Corporate entity and a loss of ones rights….


  19. Quite so, SB. John is allowing his prejudice to trump reason here, not that we aren’t all guilty of that at one time or another, but it is very bad for the reputation when a ‘bollocks deconstructer’ falls prey.

    The accusation was not ‘fraud’ either, it was sanction breaking, which is often more to do with perception than reality particularly when dual purpose or financial products/services are involved.


  20. Surely it means that out of the 340B considered Lawsky was only able to prove any wrongdoing on 15M ….ie the amount that SC admitted to…..
    Also no intention to break the sanctions
    Correct it is a face saving whitewash but SC seem to have done quite well out the settlement and you have to reach your own conclusions….


  21. Astounded at the speed and transparency with which this matter was resolved. What font works best with sarcasm?

    Taking into consideration, timing, maths, data trails, prior knowledge and the players, I’m left with no other option than to go to my kitchen cupboard, retrieve tin foil, scrunch and fashion tin hat. To me it has become “un”clear that events are unfolding in a way so as to suit agendas or uncomfortable reality and that a degree of urgency has been introduced.

    I wait in anticipation of the next examples of “hidden” financial misdemeanor, being de-leveraged in front of our eyes and repackaged. The BS won’t make matters any clearer, which is why it works.

    No conclusions to be seen here


  22. The question is, which bank will Willie and the FO be using to buy 5 million quids worth of ‘non-lethal’ equipment for the Syrian opposition ?

    Money is Power and the banks have access to all the money they want.


  23. I rather suspect the reason that Lawsky went after SCB was because if he went after an equally corrupt US institution, he would have quickly found himself ‘Spitzered’.


  24. @Peter C says: ‘John is allowing his prejudice to trump reason here’.

    Sad to say, this is increasingly the case. This is pure opinion – not a shred of evidence to substantiate JW’s claims. Why believe this press release as opposed to all the others that are put out each day? Surely ‘bollocks deconstruction’ means looking beyond the release and trying to establish the underlying truth (which I suspect lies more in the direction of Sebastian W’s post).


  25. ‘The parties have agreed that the conduct at issue involved transactions of at least $250 billion’.The key words are ‘at issue’.Mr.Lawsky was NOT prepared to take away SCB’s banking license because he knew the illegal transactions were less than $1 billion,hence the level of the agreed fine.The exasperation of the US authorities with this jumped up regulator is due,according to my pal in SCB,to the fact that SCB had been providing the CIA,for years, with all the details.Left hand,right hand.


  26. Personally I hate the stranglehold the Financial sector has currently, especially in the UK, but as a matter of tactics the threat of withdrawing the SCB’s NY banking licence is in my opinion an ‘own goal’ by an over eager NY regulator.

    Surely many International Financial organisations will start thinking of ways to be less dependent on the Dollar and the US based clearing/ banking systems to ensure arbitrary US sanctions and restrictions will in future not be life threatening to them (unfortunately I think they will just go for deeper and more effective layering to disguise their transgressions).

    Make no mistake I personally abhor what the UK Financial sector has become, especially the totally destabilising and ultimately self destructing ‘infinite re-hypothication’ and crazy ‘fractional reserve banking leverage’.

    In conclusion I just think the sound of can kicking will become the ever present white noise for us.


  27. Exactly.
    Why on earth would either party settle within a week of it all going public, unless one side had to save face.
    In a normal world, this would take years to settle after discovery of the facts.


  28. Aside from Mick C, the last three above and some of the following –
    Before you try to deconstruct my bollocks without evidence to support your bollocks, I suggest you ask yourselves what evidence you bring to the table other than anti-American bigotry-bollocks.
    Sorry if this sounds pompous, but I’m much better informed about Ben Lawsky (or Dan Lawsky as the Express called him today) than you. And as for naivety, do you really think Peter Sands got to be CEO of SCB by the power of his buffer-boobiness? Do you really think Ben would’ve lodged these charges if he thought he didn’t have Sands over a barrel?
    All will become clear in time. But meanwhile, smart-arse away: I won’t expect to be hearing from you when the truth comes out.


  29. And if they really were guilty of $250bn of illegal sanctions-busting transactions with a regime building A-bombs, do you think Mr Lawsky (not to mention the Feds) would have settled for this piss-poor fine? I’ve had dealings with US regulators on restricted materials and associated transactions. If you’re really guilty they don’t f*** about, you end up in Sing-Sing. This was a shakedown.


  30. That is very much to the point. Using the US$ clearing mechanism as a tool of diplomacy or indeed of warfare is a foolish and short sighted policy, which will simply result in nations dropping the Dollar, to the immense detriment of the USA.

    George Washington’s cheques were honoured by Barings throughout the War of Independence…there is a moral there.


  31. In reply to JW – I cited an example yesterday (one of your tirades against the Olympics) and there are others that if it really mattered and would make a difference I could dig out. But something tells me that it’s unlikely to make a difference to your approach so it’s almost certainly not worth the effort.


  32. Firstly, the rap on SC is after they hv volunteered info themselves waiving client privileges. So some of past sins washed? If the amount indeed is 250billion – that is shitloads of money to miss – explains the effectiveness of our regulators. Lastly, this was typical tabloid style public bashing of a company which was pushed to a corner with reports published by “responsible” regulators without the company’s defense reported appropriately resulting in hapless shareholders losing billions overnight and then happily pocketing a fine. So in summary – management virtually goes scotfree, Lawsky became a hero, US govt richer by 340m – poor shareholders take all the punishment : so much for effectiveness of regulation !!!


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