By a Newsnet reporter

Another London based bank is at the centre of a financial scandal after a report by the New York State Department of Financial Services alleged that Standard Chartered Bank had illegally laundered over 250 billion US dollars (£161 billion) for Iranian financial organisations that were subject to US economic sanctions.  

The report warned that Standard Chartered may lose its licence to operate in the New York financial markets.

In a statement issued on Monday, Benjamin Lawksy, superintendent of New York state's department of financial services, said that the bank's actions had "left the U.S. financial system vulnerable to terrorists, weapons dealers, drug kingpins and corrupt regimes, and deprived law enforcement investigators of crucial information used to track all manner of criminal activity".

He added, "In short, Standard Chartered Bank operated as a rogue institution."

The US regulator's report accuses Standard Chartered of "willful and egregious violations of law" and claims that the bank kept over 60,000 transactions with Iranian organisations secret from American regulators.  The report adds that the bank engaged in a highly organised sanctions busting operation which went on for almost a decade.  The bank made hundreds of millions in profit as a direct result.

The report also accuses the bank of falsifying SWIFT wire payment directions by removing data which showed that the clients were Iranian and replacing this with false information.

The practice was said to be so organised that senior management at the bank had codified their illegal procedures into formal operating manuals.  The manuals "provided step-by-step wire stripping instructions for any payment messages containing information that would identify Iranian clients".

According to the New York regulators' report, the London directors of the bank showed "obvious contempt for US banking regulations" and engaged in a "staggering cover-up".

The report quotes a reply from a London based Standard Chartered senior executive to an email from a junior American colleague, who had expressed concerns about the bank's sanctions busting activities.  The Standard Chartered senior executive angrily emailed back: "You f*****g Americans.  Who are you to tell us, the rest of the world, that we're not going to deal with Iranians."

Mr Lawsky said he is also investigating "apparently similar" schemes to conduct business with other countries subject to American sanctions, including the Gaddafi regime in Libya, Myanmar and Sudan.

Executives of the bank have been called to appear before New York regulators on August 15 to explain the apparent violations, and defend Standard Chartered's licence to trade on the New York Stock Exchange.

Financial transactions with Iran have been subject to strict terms since the Iranian Revolution of 1979, and the taking of hostages at the US embassy in Teheran by members of the Iranian Revolutionary Guard.  Until 2008, only highly restricted so-called "U-turn" transactions were permitted with Iran.  However the US Treasury banned even these citing fears that Iran was using Western banks to fund its nuclear weapons programme and to support terrorist groups.

The New York regulators' scathing report into Standard Chartered bank comes just a few weeks after another UK bank, HSBC, was accused of allowing drug cartels and rogue states to launder billions of dollars through its US subsidiary.   HSBC has been warned by the US regulators that fines and penalties may significantly exceed the $700 million which the bank has set aside.

The allegations facing Standard Chartered are said to be far more serious, fines and penalties may run into the billions.  A criminal investigation has not been ruled out.  Until Monday, Standard Chartered had been regarded as the most solid of London's banks, but its reputation is now in shreds, having been labelled a "rogue institution" accused of "egregious violations of law".

Standard Chartered's top management – chief executive Peter Sands and finance director Richard Meddings – were closely associated with the former Labour government.  Sands joined Standard Chartered in 2002 after a spell at the Foreign Office.

The bank is said to enjoy a special status in Whitehall and Sands has admitted to having a "voice" and being involved in the "conversations" between the industry and regulators.  The banking rescue plan implemented by then Prime Minister Gordon Brown in October 2008 was reportedly designed by Mr Sands and Mr Meddings.

The episode will cause serious damage to the international reputation of the City of London, still reeling from the financial crisis of 2008 and the subsequent bail outs of several major banks, and more recently the money laundering at HSBC, and the LIBOR rigging scandal which implicated Barclays and other London based banks.


# Robabody 2012-08-06 22:13
Oh dear, was that be the sound of extradition papers being rustled? Or was it other types of paper in the City of London loo's? Or perhaps even both?
# Wee-Scamp 2012-08-06 22:14
Scary isn't it. At least though it's now much easier to understand why the banks are so unsupportive of industry in that they all seem to be making huge amounts of money from gambling, laundering money and now dealing with nations which are the subject of sanctions.

However, this all makes so much easier to argue in favour of independence.
# clootie 2012-08-06 23:17
Only two shares were issued at the foundation of the Bank of England when it was taken from the Rothchilds. The owners protected by the official secrets act - an article that takes us right back to the Royal family!

The wealth of the nation is given to the banks at less than 1% which they allocate at their whim at interest rates a dozen times higher. How does this sytem benefit a nation?

I only hope we build a better nation and banking service than the cesspit that has evolved in London.
# Adrian B 2012-08-07 00:13

From the Scotsman - of all places! This is a must read article. They have two similar articles listed under politics - this is the one you want to read.

"IT IS not exactly a shock that the House of Commons Scottish affairs select committee today warns the “overwhelming” weight of evidence shows Holyrood has no legal powers to hold an independence referendum. What is surprising is how relevant they believe that to be."

The unattributed article goes on...
'From even the most cursory reading of the report, it is clear the committee has fundamentally misunderstood the way modern democracy works. Instead of trusting Lord Wallace, they would have done well to reflect on the words of Irish home rule campaigner Charles Stewart
Parnell, who said: “No man has the right to fix the boundary of the march of a nation; no man has the right to say to his country, ‘Thus far shall thou go and no further’.”
# clootie 2012-08-07 05:41
Adrian B

Thank you for the link. At last the Scotsman has found a journalistic backbone.

Lord Wallace of Tankerness - My how far the LieDems have travelled from their "liberal" values.

That ermine fair soaks up your principles.
# Macart 2012-08-07 05:52
Well my ghast hast been flabbered! I thought some form of alternate reality thing was going on when I checked that link. You know a reality where the Scotsman banner wasn't a misnomer.

The Libdems haven't had a good time this week at all have they? Coalition falling apart, Lords reform pretty much binned (who knew the tories would renege and stab them in the back?) and now this wee gem in the Scotsman effectively accusing the select committee and most especially Lord Wallace of suppressing the march Scottish democracy.

Is it Christmas or Tuesday?

Cracker Adrian B
# uilleam_beag 2012-08-07 06:32
Thanks for that, Adrian B.

The reason the article is as you point out unattributed it that -- and this is what makes it even more significant -- it's a 'leader'. That means it was written by one of the in-house opinion writers as the paper's official take on the issue.

The line of argument for a leader is generally dictated by the ed-in-chief (or in some cases the owner of the paper) following lunchtime or afternoon news conference. In my experience (I used to sit at a desk right next to the leader-writers at a big Hong Kong paper), that takes the form of: "say this, then that and don't forget to mention the other." Normally the editor would commission three or four then pick the best two at the end of the day, depending on how the news agenda evolves during the day.

Sorry for waffling on, but I just want to set out the process involved so anyone not from a media background can understand the implications here. This wasn't something knocked together by some rogue columnist that slipped through the net, nor was it a case of "the opinions expressed are my own and do not reflect the organisation" -- quite the opposite. Leader writers quite often totally disagree with what they are arguing in print but are professional devil's advocates; their job is to produce a logical discourse on demand.

Obviously, this leader does not in any way advocate any particular constitutional position, but it firmly sets out The Scotsman's stall on the side of popular democracy. It even heavily infers a preference for a multi-option referendum (not going to happen and the middle option is unworkable anyway, IMO, but an admirable choice in terms of democratic principles).

Having said all that, we probably shouldn't read too much into this one leader. Newspaper editors can be fairly schitzophrenic at times, arguing one thing one day and the exact opposite the next.
# Adrian B 2012-08-07 09:24
Firstly, I should thank my mother for excitingly passing me this link late last night 'In the bl**dy Scotsman!!! The Scotsman!!!!' to paraphrase her.

@clootie - 'At last the Scotsman has found a journalistic backbone.'
I would certainly like to think so. I have been noticing over passing weeks a few more more balanced efforts from the Daily Record, through links others have linked on these very pages. With the policical editor now taking up a roll in the Scotsman I wonder if the Scottish press is starting to see the light? Only time will tell, but so far things look mildly encouraging. I will say again only time will tell.

@Macart - 'I thought some form of alternate reality thing was going on when I checked that link.' - Understatement of the year surely? However there was a surprise earlier in the evening when I watched Newsnight Scotland. See link below. I had to pick my chin up off the floor as former FM Henry McLeish was being positive about the SNP. Not only did he praise their record on sport in schools, but also positively talked up 'Team Scotland' at the Olympics. Shona Robinson (Sports Minister was very good as well). All in all a far better Newsnight than I have seen for a long me. incidentally I understand that McLeish is in favour of voting 'Yes' if the Devo option is not on the ballot paper.

It's available on iPlayer now, you do not need to wait three days to view it.

@Uilleam_beag - Thanks for outlining how the newspaper press works. I did a short stint many moons ago as a freelancer for the magasine based press. I know only too well that what is submitted from writers gets changed by the Sub Editor, often massively changed to reach different conclusions - my experience was from computer product reviews.


Following on from henry McLeish's praise on the SNP with regards to sport in schools, I have just seen this link to an article published in yesterdays Daily Mail.
# Macart 2012-08-07 13:06
Cheers for the link Adrian B.

That was a very telling wee newsnight. Mr McLeish was almost gushing in praise of government efforts and Shona handled herself well under some persistent questioning.
# taimoshan 2012-08-07 10:14
uilleam beag - was the "big Hong Kong paper" the South China Morning Post?
# uilleam_beag 2012-08-07 10:44
Aye, that'll be the one.

I've wondered about your username a couple of times but assumed it was more likely to do with Tam O'Shanter than the hill -- guess I was wrong.
# taimoshan 2012-08-07 11:11
Yes uilleam - lived in HK on 3 occasions.
50s, 60s and 70s and climbed up TMS when a boy scout in the late 50s. Later, had a different association with the place. In 50s lived Ho Man Tin off Waterloo Rd.
60s and 70s lived in Stanley on the south side of the island. You will probably know that Taimoshan means "big cocked hat mountain". In the 70s I knew 2 journos - can't remember which paper. One was Vova Rodney (a White Russian) who I think wrote on Happy Valley horse racing. The other was a Scot from Selkirk called Jack - forgot his surname.
Wonderful place ink those days and the SCMP a great paper. The Standard never competed. Best. TMS
# NkosiEcosse 2012-08-07 09:05 And this one from the telegraph, but not from Cocky surprisingly they seem to have a new Scottish correspondent:

By Auslan Cramb, Scottish Correspondent9: 12AM BST 07 Aug 2012

As a sovereign nation I personally believe we can just tell them to stuff off. We signed the treaty as an equal (if not slightly pressurised partner) we can certainly unsign it the same way.
# maxstafford 2012-08-07 00:30
"...The coalition was a marriage of convenience. The truth is that the world has moved on and is a very different place. The question is whether there remains enough common policy ambition between the two parties to make coalition even possible, if no longer convenient."

The above quote from the Scotsman article makes just as much sense if you substitute 'Union' and 'Nations' for 'Coalition' and 'Parties'.
# Roll_On_2011 2012-08-07 04:00
OT - Good news

SNP invest £7.5m in new boiler scrappage scheme

The boiler scrappage scheme will see up to 18,000 householders get more efficient boilers installed.

The additional funding – part of a £65million budget to tackle fuel poverty – could see the SNP Government meet their commitment to provide support for 30,000 new boilers three years ahead of schedule.

# Macart 2012-08-07 04:50
And so the thoroughly corrupt financial services at the rotten core of the UK is exposed yet again. The same sector which works hand in glove with Westminster government to keep us all in the style to which they have become accustomed. You don't need infrastructure, a manufacturing base and people in jobs paying for goods and services with cash, when you can gamble the future of nations on the roulette wheel of the city and float an economy on credit/debt and austerity.

Same old, same old.
# cardrossian 2012-08-07 06:22
When working abroad I had an account with Standard Chartered becasue I always understood that it was a Scottish bank. Was I wrong?
# clootie 2012-08-07 06:55

I don't know how this is defined anymore.

Is BP British as it is 60% owned by Americans? is Royal Dutch Shell still Dutch even though the biggest share holder is the Dutch Royal family? Which country holds the loyalty of Glaxo-Smithkline Beecham?

Big business does what is best for their shareholders interests and many have become more powerful than recognised states (Coca-cola / McDonalds etc)

Our media is no longer ours far less a bank.
# Old Smokey 2012-08-07 07:16
A bit O/T but you should be aware that Vince Cable will be making an announcement at the 'British Business Embassy in London' about the creation of 4000 jobs (in England)asa result of GDF SUEZ, Centrica and Bayerngas signing a £1.4 billion Field Development Plan for Southern North Sea.
The Cugnus project will produce from an area just offshore from Lincolnshire, which has a potentional two trillion cubic feet of natural gas

Perhaps this will get Westminster off our backs
# cardrossian 2012-08-07 09:23
My gas still comes from a bottle. Bet I don't get a share of this windfall either
# admiral 2012-08-07 07:39
O/T but Danny Alexander says maintaining the UK's triple A credit rating isn't a priority:

No sense of irony at all, these Brit Nats!!!
# Adrian B 2012-08-07 09:41

'maintaining the UK's triple A credit rating isn't a priority'

Now that they have failed to do so, they move the goalposts in order to show that policy is on track and working.
# Diabloandco 2012-08-07 07:41
Why is it I find myself cheering on the Standard chartered exec. and his or her e-mail?
As soon as I read the bit about Iranian banking I thought ,they are at it again!
I am a tad fedup with washington and its cohorts.
Love the American folk - can't stand their " elite!"
# Marian 2012-08-07 08:29
There may be more to this than meets the eye for there have been signs for some time that the gloves are coming off in the USA in their relations with the City of London and its financial services sector.

The Americans have long wanted to take the title of being the worlds largest financial centre back to the USA where they think it rightly belongs and what we are seeing may be part of a concerted campaign to do just that.
# J Wil 2012-08-07 10:47
The bank should also be removed from operating in the UK, but the sad thing is that many innocent workers would lose their jobs. There is a compelling requirement for the perpetrators to be jailed, so when are the British establishmenrt going to stop protecting their own? Why do they hesitate?

I was most amused too at some of the HSBC advertising that is still being displayed about their moral compass being in good working order.
# Adrian B 2012-08-07 10:51
@J Will

'There is a compelling requirement for the perpetrators to be jailed, so when are the British aestablishmenrt going to srtop protecting their own? Why do they hesitate?'

Income stream from Taxes and Political donations in a nut shell.
# daveniz 2012-08-07 11:30
o/t did you hear the latest one on the independance referendum apparently the house of commons select committee for separation of Scotland (which the BBC say twice on there article) chaired by labour Mp ian davidson (and all members are from the 3 unionist parties) say they have researched the referendum and say its illegal and that Alex salmond should meet with them to discuss the transfer of section 30 of the Scotland act and have a referendum on a timescale set by Westminster! had to laugh at this pathetic attempt to control our independance referendum three things are obvious about this 1) it was so predictable by the unionists to make up an excuse to try and dictate the referendum! 2) the select committee have no legal right to dictate a manifesto pledge from the SNP who won an overall majority especially when there were no SNP mps on the committee! 3) and this is the killer for the committee they clearly haven't read or deliberatly ignored (my bets on this one) the UN charter on self determination which clearly states no other country can interfere in another countries right to self determination and the funny thing is Westminster is a Signatour which means they would be in breach of the UN charter which means two things 1) the second they do they have broken international law and westminster would be punished with sanctions 2) Scotland will legally be allowed to declare UDI! the unionists are probably hoping that Alex salmond does talk so as to try to take control of our referendum and claim that Alex salmond wanted westminster involved by meeting them all westminster are doing with all this so called legal guff is to try and get an inch so they can take a mile like a thief disguised as a cold calling salesperson at your door the minute you let the salesperson in they will try every trick in the book to get you to sign up and part with anything they can get there hands on!
# X_Sticks 2012-08-07 12:35
Ian "give you a doing" Davidson is fishing for a knighthood with his slavish love of all things not-Scottish. He is full of his own importance, and has an ego that could fuel a small planet.

His only problem is that he is a complete idiot.
# NkosiEcosse 2012-08-07 14:44
Yes I have twice today I have posted a small comment with the link to the telegraph posting the same, and twice it has not appeared. Is it the newsnetscotland don't like the telegraph (unlikely there are other links to the telegraph). Better to know your enemy than stick your head in the sand.
# Adrian B 2012-08-07 18:57

If a posting does not appear, don't worry too much. Continue making small comments to other articles and posters. But please don't post the same post across a number of different articles.

I have had some strange experiences such as when sending a post. I have been told that I have recently posted, when in fact I have not. I have on occasion had log in problems too.

Only this morning I posted and it did not appear. I opened another tab and low and behold, there was my post?

I will just add - it is not just NNS that these things happen to. NNS receives a huge amount of people who read, but do not comment as well as many who do comment. Problems like these will show up far more often with a site like this. Please also remember that these sites are all run on the small donations given by readers. There is no conspiracy here, all software has an element of bugs. Have patience.
# J Wil 2012-08-07 16:20
This committee and Mr Davidson in particular, has already proved that they are so devious in their aims for Scotland that they cannot be trusted with such important matters.

Their redundancy is absolute.
# X_Sticks 2012-08-07 11:59
"Politics and sport mix in my inbox"

John Beattie's blog from the Olympics - with comments allowed!

You must be logged-in in order to post a comment.


Donate to Newsnet Scotland


Latest Comments