Why I knew Standard Chartered was guilty

Posted on August 15 2012

Last week I was heavily criticised for saying I thought Standard Chartered guilty as charged by New York. I was accused of trial by media; acting hastily; presuming guilt when innocence is the required assumption and so many more cliches. And I was sure I was right to ignore all such warnings. It transpires I was right to do so. As the FT says:

Standard Chartered has agreed to pay $340m to New York state to settle accusations it hid from regulators key details involving at least $250bn in transactions with Iran and potentially violated US sanctions policy.

The civil penalty avoids what could have been a bruising showdown on Wednesday with New York state's Department of Financial Services, which last week accused StanChart of defrauding regulators, falsifying records and obstructing government inquiries.

Note there's no reference to only $14 million of mistakes here: the error is to admitted  relate to at least $250 billion of transactions. Standard Chartered, for all their bluff and suggested counter claim for loss of reputation, have in effect pleaded guilty in full.
So why was I so confident? For the simple reason that, as the Guardian puts it this morning:
After Barclays' Libor rigging and HSBC's Mexican money laundering scandal, we now have Standard Chartered branded as a facilitator for "terrorists, weapons dealers, drug kingpins and corrupt regimes".
But for those of us who have looked at offshore in detail for a decade or so know there is no news in this. This is what offshore exists to do. The major banks are the key offshore players. They're assisted - as Standard Chartered was - by big accountants lawyers who have lost sight of what being ethical might mean. And however much places like Cayman and Jersey might protest that they're clean, that's an impossibility.
To put it another way, they can't possibly be clean if even the major banks that work there see the abuse of all regulation as one of their primary functions, which they have to date.
What we, as a society, now have to face is that this corruption is not marginal, it is normal. And it is not done by faceless people who can't be held to account. It's done by the supposed top echelons of our society who have knowingly run criminal organisations, or at least have knowingly turned a blind eye to it when they had chance to do something about it.
Over thirty years neoliberal economics has corrupted our society to its very core.
Now, what are we going to do about it? That's the real question.

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7 Responses

  1. David Quayle says:
    August 15 2012 at 9:32 am

    I think you are wrong. I think Standard Chartered value their US banking license more than £217,000,000, and that New York are happy to accept the money rather than getting caught up in years of costly litigation that they may lose. Even the US treasury told them to shut up!

    Most annoying to me is this “fine” is not going to a good cause like third world poverty and famine. I wonder how big the bonuses at the New York banking regulators will be this year?

    • Richard Murphy says:
      August 15 2012 at 9:36 am

      That is just the biggest load of rubbish I’ve read in ages

      No one pays £217 million if they think they can win

      You’re even wrong about New York being told to shut up – other regulators are following suit so that can’t be true

      • David Quayle says:
        August 15 2012 at 10:32 am

        £217M is nothing compared to the cost of losing their banking license. If SC took the case further and won, how do you think the NY regulators would view their banking license? Quite simply, it would be history. If other regulators are following suit it will be in the hopes of a big payout.

        So, it is pay £217M now, keep banking license and the problem goes away, or spend much more over several years and it hardly matters whether they win or lose because the banking license would be gone. Sounds like SC made a very wise decision.

      • Richard Murphy says:
        August 15 2012 at 10:41 am

        You are ignoring something rather important: the evidence of wrong doing

        Is that deliberate?

      • David Quayle says:
        August 15 2012 at 1:30 pm

        http://www.nytimes.com/2012/08/15/business/standard-chartered-settles-with-new-york-for-340-million.html

        No such thing. NY times seems to agree with me. SC did nothing illegal. However, the actions were against tthe “spirit” of the law, whether the iranians were terrorists or not. As it also says in the NY Times, It is a small price to pay to retain it’s banking license and continue it’s billions of dollars worth of business.

        About time uk started to spook some us banks I think if it is that easy to get a shed load of money into the government coffers.

      • Richard Murphy says:
        August 15 2012 at 3:17 pm

        well that’s proof then

        I am sure cynically they settled – don’t doubt it

        They wouldn’t if they weren’t guilty

  2. Premier Sharehoders Group says:
    August 15 2012 at 7:12 pm

    Richard you write that those who have looked at offshore in detail for a decade or more know that there is nothing new in the knowledge that offshore centres (such as Jersey, IoM, Guernsey) can’t possibly be clean if even the major banks that work there see the abuse of all regulation as one of their primary functions.

    The Guernsey based Royal Bank of Scotland International can not even spell the word “regulation” — it is oblivious to everything except its own greed regardless of the cost and misery rendering everyone and everything subservient to its own selfish, despicable being.

    Ably assisted by the joke that passes for law on this anarchic island.