Yet another scandal is unveiled in the British banking industry. Standard Chartered, a British bank, was accused by New York regulator Ben Lawsky of dealing with Iran and hiding these transactions worth some $250 billion.
The new York state department said “Standard Chartered, which has 2,000 staff in London, had shown obvious contempt for US financial laws.” Indeed the investigation also unearthed an email from a senior London based bank executive to a U.S. official, which said “You f***ing Americans. Who are you to tell us, the rest of the world, that we’re not going to deal with Iranians?”
The accusations also go on to say the Bank actively removed details that would show any connection between Iran and the transactions. Now as Standard Chartered operates on Wall Street, these transactions violate U.S. law and if proven could result in the Bank having to close its U.S. arm or to be "kicked off the Street."
The Bank so far has strenuously denied these charges but has also stated "the group is conducting a review of its historical U.S. sanctions compliance and is discussing that review with U.S. enforcement agencies and regulators."
Indeed, the UK government's own business website states "There are extensive trade and financial sanctions in place against Iran as a result of the U.K.'s foreign policy commitments" yet the financial police in the U.K., the FSA, have yet to act.
Had this incident been an isolated case you could be forgiven for thinking a rogue bank had been caught breaking the rules but this latest scandal comes just weeks after HSBC, another British bank, was caught laundering money for terrorists and drug barons. The bank has set aside some $700 million for potential fines.
OK, so two banks were caught breaking the law - it does not mean the entire system is corrupt. Well, not quite. Just a few weeks before the HSBC debacle, another British bank, Barclays, was caught rigging the interbank borrowing rate. This rate ripples through to you and me on any borrowings we make. What they were doing was to ensure the competitive nature of borrowing money was rigged - a bit like you or I trying to buy a car and ringing around the various auto dealerships fishing for the best deal only to find the prices were being artificially held high due to the dealers striking a secret agreement.
Then there is the massive "mis-selling" scandal rocking the U.K. Billions of dollars have had to be set aside to pay compensation to customers who had been ripped off being forcibly mis-sold products they did not want or need.
Strangely enough the banks embroiled in this scandal are quite willing to pay these fines, probably because they are in public ownership after having been bailed out. Thus it's public money paying the compensation. One wonders had they still been in private ownership would they have been so keen to pay?
In a strange way the only people who seem to be interested in policing the U.K. banking sector seem to be the U.S. government.
On a final thought, if things do go badly wrong in the Middle East and U.S. forces alongside their British counterparts have to invade Iran, they might just find out what $250 billion buys in weapons technology.