The Latest Bank Corruption Scandal Aids Iran

In the latest of a growing list of bank corruption scandals, foreign banks, until 2008 were allowed to transfer money for Iranian clients through their

Standard Chartered Bank Tower (f.k.a. Lujiazui...

Standard Chartered Bank Tower (f.k.a. Lujiazui Development Tower) (Photo credit: Wikipedia)

American subsidiaries to a separate offshore institution. In the so-called U-turn transactions, Standard Chartered Bank (an international banking groups with offices in 70 countries) claims to have only had to provide minimal information about clients to their American units as long as they vouched for having thoroughly vetted transactions for suspicious activity. American regulators and the U.S. government, however, suspecting that Iranian banks were financing nuclear weapons and missile programs, finally closed an existing loophole in late 2008.

But how much evidence is necessary in order for  “western leaders” to take definitive, criminal action against the growing list of major, global banks accused of laundering foreign transactions? Banking scandals are becoming so pervasive that the average American doesn’t bother to read about them and the main stream media, especially in the United States, doesn’t bother to cover them. At least Great Britain’s conservatives still believe that the good of the people suprecedes the desires of a few wealthy banksters.

These massive banking conglomerates, for lack of a more accurate comparison, have become money cartels that operate in the same manner as drug cartels. They do not posses any business ethics, nor do they fear any consequences even in the event they get caught performing illegal activities.  To make matters worse, it’s becoming harder to get Americans’ attention because Republicans twist the reasons that this corruption is happening in order o keep their campaign coffers full. Federal regulators are constantly being portrayed in the Republican-led House and their far reaching propagandists as the enemy of business, the enemy of job-creators. And regulators are already underfunded, understaffed, and underpaid as the Republicans will go to any lengths to keep the advantages in the hands of their generous beneficiaries. Left to the Republicans, all regulations would cease exist. Not so that businesses can thrive, not so that red tape hinders business growth; but because they want to keep getting paid to push their benefactors’ agendas.

Throw in the fraud and cover-up, enabled by inadequate regulatory oversight,  that led to the U.S. Investment Bank collapse in 2008, and the bank corruption scandals are getting so numerous and so well funded that it’s beginning to happen too fast for regulators, much less investors, to keep up. In case you’ve  missed some of the latest overseas cases of money laundering, tied to the U.S., a partial list includes, Credit Suisse, Lloyds, Barclays, ING, HSBC , JP Morgan Chase, and now Standard Chartered.

The settlements with the five banks generally included deferred prosecution agreements along with a substantial forfeiture of assets comparable in size to the basket of illegal transactions the banks engaged in. The five cases that preceded Standard Chartered, which resulted from bank actions from 1995 through 2007, produced forfeitures of $2.3 billion over the last three and a half years. About half of that money went to Treasury and half to other entities, including the Manhattan district attorney’s office, which joined the Justice Department in most of the settlements. But still no criminal charges for money-laundering. This time the money-laundering was for Iran!

Osama Bin Laden need not have attacked America to bring down our corrupt banks; we’re doing it for him with Republicans blatantly in favor of ridding our laws for regulations that deter corrupt banking practices under the auspices that it “hurts job-creators.”

Granted, the particulars in each case are not the same, but the international banks are suspected of using their American subsidiaries to process tainted money for clients that included such rogue states as Iran, Cuba, and North Korea, sponsors of terrorist groups and drug cartels.

The  main commonality is that the accused banks took advantage of a law that was not changed until 2008.  It essentially allowed banks to disguise client identities and move their money offshore (can you say R-o-m-n-e-y?). The cases, including one filed this week by New York’s banking regulator against Standard Chartered , also cast aspersions on just how much activity with Iran was permitted in the years leading up to 2008 and whether the practices had violated the spirit, if not the letter, of the law.

These Are Not Your Hometown Banks

Standard Chartered is a major international bank that has been in business for 150 years. They rely on operations in rapidly-growing emerging markets for the majority of its profits, and has sidestepped many of the problems facing European financial institutions, including a fall in trading activity related to Europe’s debt crisis.

On Aug. 6, 2012, the bank became the focus of a scandal when the New York State Department of Financial Services  accused Standard Chartered of scheming with the Iranian government for nearly a decade to launder $250 billion, leaving the United States financial system vulnerable to terrorists and corrupt regimes.

The agency, which called the bank a “rogue institution,” said Standard Chartered masked more than 60,000 transactions for Iranian banks and corporations, motivated by the millions of dollars it reaped in fees.

The new money-laundering claims made by the New York Department of Financial Services against Standard Chartered are particularly embarrassing for the Treasury Department, because they show how, until the end of George W. Bush’s tenure as President,  foreign banks could collaborate with their Iranian clients to circumvent United States sanctions.

Standard Chartered, as part of a  well thought out strategy to ignore regulations imposed by a division of the Treasury Department, schemed with its Iranian clients to omit crucial details from money-transfer paperwork, according to a regulatory order filed Monday. An e-mail from a lawyer to bank executives in 2001 said that payment instructions for Iranian clients “should not identify the client or the purpose of the payment,” according to the order.

The strategy of masking client details was driven, in part, by a desire for speed, according to law enforcement officials involved in the money-laundering cases. Transactions with certain risky clients, like the Iranians, were subject to much more rigorous vetting. To avoid the holdup, the officials said, some foreign banks willfully removed the names in return for large and clandestine fees.

According to a regulatory order sent to the bank, the regulator went on to say that senior management at the bank used the New York branch “as a front for prohibited dealings with Iran — dealings that indisputably helped sustain a global threat to peace and stability.” The order requires the bank to explain the apparent violations of law in a hearing later this month and must justify why its license to operate in New York should not be revoked.

In a footnote the regulator also says that there is evidence of similar “schemes” with other countries subject to American sanctions, including Libya, Myanmar and Sudan.

In the 27-page document, linked to an order to appear at a hearing on August 15th, the department quotes a panicked e-mail by Standard Chartered’s CEO for the Americans from 2006. The activities have the “potential to cause very serious or even catastrophic reputational damage to the group” as well as “serious criminal liability”, he wrote. In response, according to a branch officer, an unnamed “Group Executive Director” replied: “You f—ing Americans. Who are you to tell us, the rest of the world, that we’re not going to deal with Iranians?”

Included in the order are allegations that Standard Chartered’s “deception was apparently aided by its consultant, the massive Accounting Firm,Deloitte & Touche…which intentionally omitted critical information in its ‘independent report’ to regulators.”

Standard Charted is Different-Finally Criminal Charges?

The Standard Chartered case is unfolding radically differently from any other.  Action against the bank on Monday was brought by a single regulator, Benjamin M. Lawsky, a former prosecutor who now leads the New York Department of Financial Services. That is virtually unprecedented, since the vast majority of money-laundering charges come from regulators acting in concert.

Also different, is that the Federal Bureau of Investigation said that it had an open investigation into money laundering at Standard Chartered. In the order, regulators paint a detailed picture of a cover-up that included its own code name “Project Gazelle.” Among the charges against Standard Chartered are:

  1. Money was flowing unimpeded into Iran’s central bank,
  2. United States executives warning of “criminal liability,”
  3. A manual was uncovered that actually taught employees how to automate the masking of a rising number of illegal transactions

The accusations against Standard Chartered came as United States officials were working to crack down on the flow of money to foreign countries, companies and individuals connected to terrorism, weapons of mass destruction and drug trafficking.

Beyond the dealings with Iran, the banking regulator said he had discovered evidence that Standard Chartered operated “similar schemes” to do business with other countries under United States sanctions, including Myanmar (formerly Burma), Libya and Sudan.

Standard Chartered must appear next week before Mr. Lawsky to explain the apparent violations and why it should not have its New York license revoked.

One thing is perfectly clear to me and should be understood by voters. The Republican candidate for President, with the full-throated backing of the Republican Party, continues to call for even fewer regulations than what we have now. If that were to happen, the already out-spent, out-manned, and out-gunned bank regulators, who are clearly not adequate now, might as well throw in the towel and just hand over our 401(k)s, IRAs, pension and retirement plans and be done with it.

There are easy cures to all of the problems that I bring to these pages upon pages of problems. Let the government do it’s work. Government is not our enemy. I have proven time and again that this same and many other instances of corruption, cover-up,  is  facilitated by a corrupt and dishonest Republican Party who has to cater to big business, big banks, and big crooks in order keep receiving massive contributions for their campaigns.

But Americans have got to wake up before it’s too late. They have to become informed. Only through knowledge of the facts can we make good choices.

Stop getting all of your news from one source; especially if it’s on television. Television news is comparable to professional wrestling. They need conflict. They are all owned by entertainment conglomerates. Use the excellent resources that are available elsewhere to get ALL the facts. Don’t let them take away your fundamental right to vote. Don’t let them take away your American Dream. Get out and vote! Make these scoundrels accountable. Don’t just go to the channel that’s going to report what you WANT  to hear.

Don’t let the number of political advertisements determine your vote. Better yet, turn them off and get the facts you NEED to make an informed choice.

If the Republicans get their way and completely dismantle any more of the few remaining Depression-era protections from a corrupt, avaricious, and apparently untouchable banking sector, we might as well just hand over the keys to the country to people that have already stolen the average American into near bankruptcy. They have given no indication that they intend to stop. Quite the opposite. They flaunt it. They’re brazen in their antipathy to the average Americans plight. They lie about it with neither conscience nor consequence.

And the Republican candidate for the Presidency of these United States doesn’t think that the American voters, for whom he is supposed serve , not vice-versa, refuses to even turn over his tax returns. On whose side do you think Mr. Romney will  come down regarding transparency in financial matters that effect Americans? I foresee a total dismantling of the bank regulatory structure, or what’s left of it, should Mr. Romney be elected, or should the Senate fall into Republican hands.

It would be just another mile marker on the way to Great Depression 2.0 and the quest for a new suppression of average Americans in favor of the corporate liars, cheaters and thieves. Don’t let them pull the wool over your eyes or we’ll all be standing in bread lines while the 1% throws the crumbs.

Harvey Gold

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