Boris bites back in Standard Chartered row

14 August 2012 | By Vanessa Drucker

American banking regulations are designed to curb the financing of terrorism, weapon and narcotics trafficking. Yet, British media and certain politicians have responded belligerently to American allegations that Standard Chartered hid from regulators 60,000 secret transactions between 2001 and 2010 for Iranian clients. Specifically, Standard Chartered stripped identifying information from wire transfers, replacing it with false entries.

London mayor Boris Johnson hastened to interpret the order of New York State Superintendent of Financial Services, Benjamin Lawsky as “motivated by jealousy” and the “desire to knock a rival centre”. Writing in The Spectator, Johnson added that he was “fine and sound” with the reported sentiments of Standard Chartered executive director Richard Meddings, who allegedly cursed the Americans in 2006 for telling other countries not to deal with Iranians.

Mr. Johnson: American and British economic sanctions directed against Iran seem to be taking effect. Surely most reasonable people would agree that pressure exerted through economic measures is vastly preferable to military action. Are you sound with that?

Another prominent politician, Labour MP John Mann characterised the Standard Chartered exposure as a “concerted effort that’s been organized at the top of the US government…to win a commercial battle to have trading from London shifted to New York”.

As a member of the Treasury Select Committee, Mann must be aware of the outrage that Benjamin Lawsky’s solo bombshell has provoked from the New York Fed, the US Treasury and the Department of Justice, who claim it has muddied the waters in ongoing private negotiations with Standard Chartered. Why the fury? All those institutions may be embarrassed for having pursued the Standard Chartered case too indolently, or even fallen asleep at the switch. Anyhow, forget about Mann’s conspiracy theory.

Lawsky currently earns $127,000 a year as head of the Department of Financial Services, where he oversees 1,700 people and regulates 3,900 financial services firms. It has been suggested that his surprise move against Standard Chartered reflects his own political ambitions, reminiscent of other zealous public prosecutors, like former New York Governor Eliot Spitzer and former mayor Rudi Giuliani. Then again, could Boris Johnson’s accusations of Wall Street “protectionism” also have been prompted by personal political yearnings?

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^{Vanessa Drucker is the American Editor of Fund Strategy, based in New York City. She has worked as a financial journalist for 20 years. In the 1980s, she practiced banking and securities law on Wall Street, and is the author of two business novels. Vanessa can be contacted at vanessa.drucker@centaur.co.uk.}

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