Standard Chartered and Iran: what kind of bank thinks Tehran is more important than Wall Street?
By David Blair World Last updated: August 7th, 2012
Standard Chartered may not be a household name in Britain, but in plenty of countries this bank is one of our best known national brands. Which makes its alleged behaviour over Iran even more troubling and inexplicable.
First things first: Standard Chartered denies the allegation made by the New York state regulator that it carried out sanctions-busting transactions on behalf of Iranian clients totalling $250 billion over a decade.
The bank’s response, however, makes interesting reading. Of the nine paragraphs, note how four of them merely say that Standard Chartered was kind enough to cooperate fully with the investigation, turn itself in to the authorities and hand over everything that was asked of it etc etc. You have to wade through 280 words of this gloss before you get to the substance.
When you do, you find that the bank does not dispute the central facts. Instead, its defence hinges on how to interpret the US rules restricting financial transactions with Iran. Here, Standard Chartered thinks the regulator got it wrong by enforcing a view of the rules that was “incorrect as a matter of law”. In effect, Standard Chartered is saying ‘yes, we carried out these transactions, but we think they were within the regulations’. In paragraph five, however, the bank admits that even on its own interpretation of the rules, deals with Iran worth $14 million were in breach of US sanctions.
Let’s be kind and assume, for a moment, that Standard Chartered’s view of the regulations is correct and “only” $14 million of its transactions with Iran amounted to violations of US sanctions. That is still pretty extraordinary. There are moral and political objections to doing business in a country with a deeply repressive regime like Iran’s. But more than anything else, there are commercial objections as well. What kind of a bank thinks that doing business with Iran is such a good idea that it’s worth risking the condemnation of the US authorities? Put bluntly, what kind of a bank thinks that Tehran is more important to them than Wall Street?
Even on Standard Chartered’s own terms, doing $14 million of deals on behalf of Iran turns out to have been a bad idea. The bank’s statement emphasises: “Standard Chartered ceased all new business with Iranian customers in any currency over five years ago.” So its clever, highly paid executives were prepared to jeopardise their bank’s relationship with the US for the sake of a country where no new business was on offer anyway. What were they thinking?
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