Standard Chartered Said to Tell U.S. of Alleged MAXpower Bribery

  • Bank said to have passed on information from MAXpower auditors
  • Standard Chartered installed new MAXpower directors last year

Standard Chartered Plc informed the U.S. Department of Justice about allegations of bribery involving MAXpower Group Pte, an Indonesian power company in which its private-equity division is a minority shareholder, according to a person familiar with the matter.

The London-based bank passed on the information after MAXpower’s auditors uncovered what may be inappropriate payments totaling $750,000, said the person, who asked not to be identified as the matter is not public. Further details aren’t available, the person said.

MAXpower declined to comment on the alleged bribery, according to Alastair Hetherington of Finsbury, the Indonesian company’s external public relations firm. Peter Carr, a Justice Department spokesman, declined to comment. Piers Townsend, a Standard Chartered spokesman in Singapore, declined to comment.

MLex, a regulation-focused news service, reported earlier on the alleged bribery at MAXpower, saying the Indonesian company may have made payments to Indonesian government officials in violation of the U.S. Foreign Corrupt Practices Act, which prohibits bribery of foreign officials.

Standard Chartered has been operating under deferred prosecution agreements with the Justice Department and the New York District Attorney’s Office since 2012, when it settled cases related to money-laundering failures and breaches of U.S. sanctions against Iran. The bank has been enhancing its controls on money-laundering, bribery and other offenses since then.

Original Investment

The bank first got involved with MAXpower through the Standard Chartered IL&FS Asia Infrastructure Growth Fund, which invested $58 million in the Jakarta-based power developer in 2012.

After the discovery of the alleged bribery last year, Standard Chartered removed the founding board members at MAXpower and installed its own directors with the intention of turning the company around, said the person. Greg Karpinski, a former Standard Chartered Private Equity executive, was appointed chief executive officer and executive chairman in September, according to his LinkedIn profile.

He and three Standard Chartered Private Equity executives currently hold four of the six board seats, MAXpower’s website shows. Karpinski couldn’t be reached for comment, according to people answering calls at his offices in Singapore and Jakarta.

Debt Restructuring

MAXpower, which develops, owns and operates gas-fired power plants in Indonesia recently appointed the lawyers Clifford Chance LLP to advise on restructuring a $222 million five-year loan it received last year from a consortium of banks led by Standard Chartered and Singapore-based Oversea-Chinese Bank Corp.

Standard Chartered Private Equity holds a direct equity stake in MAXpower of about 5 percent, as well as other interests through a fund and structured equity financing, the person said.

MAXpower reported losses of $75.9 million in 2014, with negative operating cash flow of $13.3 million, according to the company’s latest annual report.

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