StanChart may face an­other fine for sanc­tion breaches

The Star Malaysia - StarBiz - - Foreign News -

NEW YORK: Stan­dard Char­tered Plc has al­ready paid a painful penalty for se­cretly mov­ing bil­lions of dol­lars through the US on be­half of Ira­nian clients, in vi­o­la­tion of sanc­tions. But a sweep­ing in­ves­ti­ga­tion has found ev­i­dence sug­gest­ing that the bank’s Ira­nian busi­ness was more ex­ten­sive than it ad­mit­ted, ac­cord­ing to five peo­ple fa­mil­iar with the mat­ter.

Now US au­thor­i­ties are weigh­ing a crim­i­nal penalty against Stan­dard Char­tered and in­di­vid­ual em­ploy­ees, the peo­ple said, who re­quested anonymity to speak about the probe.

A coali­tion of en­force­ment and reg­u­la­tory agen­cies, in­clud­ing the Jus­tice Depart­ment, New York’s Depart­ment of Fi­nan­cial Ser­vices and the Man­hat­tan Dis­trict At­tor­ney, have fin­ished their in­ves­ti­ga­tion and may an­nounce the res­o­lu­tion by the end of the year, the peo­ple said.

Au­thor­i­ties may im­pose an even big­ger fine than the US$667mil the bank paid in 2012 to pe­nalise it for what they view as con­ceal­ment, though spe­cific num­bers had not yet been dis­cussed in ne­go­ti­a­tions as of early Au­gust, ac­cord­ing to the peo­ple, who de­clined to com­ment on pri­vate talks.

In se­cu­ri­ties fil­ings, the bank has said it could face a range of civil and crim­i­nal penal­ties stem­ming from the case, “in­clud­ing sub­stan­tial mon­e­tary penal­ties.” Stan­dard Char­tered hasn’t set aside spe­cific re­serves for this mat­ter.

“We con­tinue to fully co­op­er­ate with the in­ves­ti­ga­tion re­gard­ing our his­tor­i­cal sanc­tions com­pli­ance and are en­gaged in on­go­ing dis­cus­sions with the US au­thor­i­ties,” Julie Gib­son, a spokes­woman for Stan­dard Char­tered, said in a prepared state­ment.

“While we do not com­ment on the sub­stance of those dis­cus­sions, we look for­ward to the res­o­lu­tion of this mat­ter.”

In its an­nual re­port, the bank said the US probe is “ex­am­in­ing the ex­tent to which con­duct and con­trol fail­ures per­mit­ted clients with Ira­nian in­ter­ests to con­duct trans­ac­tions through Stan­dard Char­tered Bank.”

How the case is re­solved may re­veal much about the US’s ap­proach to en­force­ment on is­sues of key con­cern un­der Pres­i­dent Don­ald Trump.

He has re­asserted a hard line on Iran, which the ad­min­is­tra­tion views as a state spon­sor of ter­ror­ism and a source of re­gional in­sta­bil­ity, scut­tling the nu­clear agree­ment struck by the Obama ad­min­is­tra­tion and re-im­pos­ing the sanc­tions regime that had been in place be­fore.

But at the same time, the Jus­tice Depart­ment has pro­moted smaller penal­ties for cor­po­rate mis­con­duct, while pri­ori­tis­ing the pros­ecu- tion of in­di­vid­u­als.

The Obama ad­min­is­tra­tion’s sanc­tions en­force­ment pol­icy was char­ac­terised by big fines but rarely crim­i­nal charges for com­pa­nies or their ex­ec­u­tives, lead­ing to crit­i­cism that it wasn’t hold­ing fi­nan­cial ex­ec­u­tives to ac­count for wrong­do­ing.

Since 2009, the US has brought about three dozen cases against fi­nan­cial firms for do­ing busi­ness with or han­dling funds linked to sanc­tioned coun­tries and in­di­vid­u­als – pri­mar­ily Iran, Su­dan and Cuba.

Al­most all of those cases were re­solved without crim­i­nal charges or through de­ferred-pros­e­cu­tion agree­ments, like the one reached with Stan­dard Char­tered in 2012.

Over the past few months, deputy at­tor­ney gen­eral Rod Rosen­stein sug­gested some com­pa­nies over­paid for their mis­con­duct dur­ing the Obama ad­min­is­tra­tion, and put in place new poli­cies to stop what he called a “pil­ing on” of fines by mul­ti­ple fed­eral and state en­forcers for the same be­hav­iour – a po­ten­tial is­sue in the Stan­dard Char­tered case given the num­ber of agen­cies in­volved.

Un­der the new pol­icy, Rosen­stein said the Jus­tice Depart­ment may credit com­pa­nies for fines im­posed by other au­thor­i­ties.

In set­tling the orig­i­nal case, Stan­dard

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