StanChart in the hot-seat over alleged FCPA violations

October 11, 2016

One of the things that people tend to forget about a deferred prosecution agreement (DPA) is that the corporation signing the DPA agrees not only to put a compliance programme in place, but also to not engage in any illegal activity going forward. The United States Justice Department (DOJ) tends to take this latter requirement seriously, and our old friends at Standard Chartered were recently reminded of this somewhat depressing fact.

StanChart has revealed that it self-reported to the DOJ allegations of bribery and corruption involving Maxpower, an Indonesian entity that the bank invested in via its principal finance unit before taking majority control in 2015.

According to the Financial Times: ‘Maxpower conducted an internal audit last year, which found that more than US$750,000 in cash advances in 2014 and early 2015 needed examining as potential bribes.’ This led to an internal investigation conducted by outside counsel Sidley Austin, and ‘they apparently found strong indications of bribes having been paid from 2012 to late 2015’. These findings led to the bank ‘removing Maxpower’s founders from its board and installed members of its own private equity team as directors’.

All of the above comes into play because, in 2012, the bank was revealed to have conducted illegal dealings with Iran from a New York-based bank. The allegations accused the fifth-largest United Kingdom bank by assets of illegally scheming for more than a decade to move some US$200 million through the United States system – money that the regulators say the Iranian embargoes made illegal. The bank, which acknowledged wrongdoing in the matter, agreed to pay US$327 million in fines to United States regulators. Additionally, it agreed to pay a fine of US$340 million to the New York Superintendent of Financial Services.

In a statement, the bank said: ‘When we receive allegations of improper behaviour in an investee company, we pursue those allegations vigorously and act appropriately, including sharing information and co-operating fully with government authorities and addressing any issues of internal conduct and accountability.’ It remains to be seen if this is enough to placate the DOJ.

Previous Article
How technology can help manage conflicts of interest
How technology can help manage conflicts of interest

There is perhaps no job description more closely associated with the phrase ‘conflicts of interest’ (COI) t...

Next Article
Car washing corruption out of a country
Car washing corruption out of a country

The Brazilian Lava Jato, or car wash, scandal seems to be rising in profile even more than when it original...

Do your suppliers meet the expectations of your integrity & compliance programme?

Tell me more