Standard Chartered Plc (STAN) Chairman John Peace was forced by U.S. regulators to apologize for claiming breaches of sanctions on Iran that led to a $667 million fine were unintentional.
Peace, who told reporters at a March 5 press conference that the firm had no “willful” intention to dodge U.S. rules, said in a statement today that earlier claim was “wrong.”
Under the settlement it reached with U.S. regulators last year, the bank entered into a deferred prosecution agreement with the Department of Justice. As part of that deal, the U.S. charged the bank with conspiring to violate the International Emergency Economic Powers Act, a charge that will be dismissed after two years as long as the bank abides by the agreement.
“As part of these agreements, we rigorously monitor the banks for continued compliance, and subsequently addressed this violation by Standard Chartered for not accepting responsibility for its misconduct,” Joan Vollero, a spokeswoman for the Manhattan District Attorney, said by e-mail. “We demanded a public repudiation and they complied.”
Peace, 64, said his original comment “directly contradicts Standard Chartered’s acceptance of responsibility in the deferred prosecution agreement.” The firm “unequivocally acknowledges and accepts responsibility, on behalf of the bank and its employees, for past knowing and willful criminal conduct in violating U.S. economic sanctions.”
The shares slipped 0.4 percent to 1,724.5 pence in London trading, valuing the lender at 42 billion pounds ($63 billion). The bank has risen 9.6 percent this year. A spokesman for the London-based company declined to comment beyond the statement.
“They tried to play hardball with the U.S. regulators and lost,” said Simon Maughan, an analyst at Olivetree Securities Ltd. in London. “The apology is to placate the regulators, the wider public via the media and some shareholders. However, most of the latter supported management through the difficult times and will pay no attention to this statement.”
The bank was fined $340 million by New York’s Department of Financial Services, $100 million by the U.S. Federal Reserve and $227 million by the U.S. Department of Justice and the District Attorney for New York County. The lender was accused by Benjamin Lawsky, head of the Department of Financial Services, of helping Iran launder about $250 billion, keeping false records and handling wire transfers for Iranian clients. The firm sent them through its New York unit in so-called U-turn transactions with client names omitted to hide their provenance, Lawsky said.
“U.S. regulators take the settlements very seriously and do track how management refer to them once they have been agreed,” said Christopher Wheeler, a London-based financials analyst at Mediobanca SpA. “I don’t think it will have repercussions for the rest of the management team.”
While the bank has clawed back bonuses from employees for wrongdoing before, it didn’t recall any payments from staff over the U.S. sanctions breach, Peace said at the March 5 press conference.
To contact the editor responsible for this story: Edward Evans at email@example.com