A British bank that avoided money laundering prosecution allegedly conducted billions of dollars of transactions for financiers of terrorist groups, according to US court documents.
Standard Chartered, one of Britain’s largest banks, avoided prosecution by the US Department of Justice in 2012 after the Cameron government intervened on the company’s behalf.
New documents filed in a New York court allege that the bank carried out thousands of transactions worth more than $100 billion in violation of Iran sanctions between 2008 and 2013.
Independent experts identified $9.6 billion in foreign currency transactions with individuals and companies designated by the U.S. government as funding “terrorist organizations,” including Hezbollah, Hamas, al-Qaida and the Taliban.
The bank in a statement disputed the whistleblower’s claims and said their earlier complaints had been “totally discredited” by U.S. authorities.
Sanctions violations
Standard Chartered was publicly accused of falsifying transaction data on SWIFT, a global payments system used by thousands of financial institutions, and moving billions of dollars through its New York branch on behalf of sanctions targets, including the Central Bank of Iran.
But in September 2012, George Osborne, then Chancellor of the Exchequer in Cameron’s government, secretly intervened on the banks’ behalf.
Three months later, the US Department of Justice decided not to prosecute the bank.
The foreign exchange transactions identified in court documents have not yet been revealed and there is no suggestion that Mr Osborne or Lord Cameron had any knowledge of them at the time.
The bank twice admitted to violating sanctions against Iran and other countries, in 2012 and 2019, and paid fines totaling more than $1.7 billion, but did not admit to doing business on behalf of “terrorist” organizations.
The transactions were hidden in confidential banking spreadsheets first provided to U.S. authorities in 2012 by two whistleblowers, including former Standard Chartered Bank executive Julian Knight.
They allege that U.S. government agencies made false statements to the court in order to have their whistleblower reward claims dismissed.
US authorities involved in the bank’s investigation successfully applied to have the case dismissed in 2019. FBI agents argued to the court that nothing had been shown “to indicate or suggest that the bank was involved in improper US dollar transactions” since 2007.
U.S. authorities argued that the whistleblower’s complaint “did not lead to the discovery of new violations,” and a court dismissed the lawsuit as “without merit.”
But an independent analysis by David Scanling, an expert who spent decades investigating illicit banking transactions for the CIA, disagrees.
In a court filing last Friday, he said the spreadsheet contained “concealed” records of more than 500,000 individual transactions dating from 2008 to 2013 — transactions that were not immediately visible in the spreadsheet but could be extracted using simple techniques well known to analysts in the field.
According to his affidavit, the records include numerous transactions by Standard Chartered Bank (SCB) “conducted with or on behalf of Iranian banks, Iranian companies and Middle Eastern money exchanges.” [the US government]funding a designated foreign terrorist organization.”
He said SCB had been processing transactions as a front for the Central Bank of Iran after claiming to have ceased operations in Iran in 2007.
This came at the same time that the bank was borrowing an average of $2 billion a day from the Term Auction Facility, an emergency program set up by the U.S. government to help banks through the 2007-2009 global financial crisis.
“The newly extracted data is completely inconsistent with the statements the government has submitted to the court in this matter. [whistleblowers’ evidence] “It contains no evidence of undisclosed sanctions violations,” the scanning declaration said.
The deals also include those for Fatima Fertiliser, a Pakistani fertiliser company known for selling explosives used by the Taliban in roadside bombs that have killed or injured thousands of British and US servicemen in Afghanistan.
The documents show that SCB, Liverpool FC’s shirt sponsor, also brokered 73 deals for a Gambian front company owned by Hezbollah’s main financier, Mohamed Ibrahim Bazi.
Image source, Getty Images
Daniel Alter, a former general counsel for the New York State Department of Financial Services, which first pursued SCB for sanctions violations, said the new revelations were “shocking” and “exponentially worse” than what the bank admitted to in 2012.
“This shows frightening connections not just to commercial entities but to terrorist front companies for terrorist organisations, organisations like Hamas, Hezbollah, al-Qaida, the Taliban. These are regulators’ nightmares. We didn’t know about it. It was never disclosed to us. It wasn’t apparent in the data we had,” Alter told the BBC. “It’s a whole other story.”
Headquartered in London, SCB serves clients primarily in Africa, the Middle East and Asia.
When Osborne secretly intervened on the bank’s behalf, it put it at risk of criminal prosecution by the U.S. Department of Justice for money laundering.
On September 10, 2012, Osborne wrote to Ben Bernanke, then chairman of the Federal Reserve, and Tim Geithner, then President Barack Obama’s Treasury Secretary, and met with them the following month.
Two months later, the bank was fined $300 million but avoided prosecution under a deferred prosecution agreement (DPA), a type of corporate stay of prosecution, and no individual bank executives were charged.
That same month, Knight presented evidence to U.S. authorities that the bank’s misconduct was much worse than the bank had admitted, and continued after 2007.
In 2019, SCB agreed to a further DPA in relation to transactions between 2007 and 2011, resulting in a further fine of $1.1 billion.
“No achievement”
The FBI and the US Department of Justice both declined to comment, and neither Lord Cameron nor Mr Osborne would comment publicly.
The SCB said it was “confident that the court will reject these claims,” adding that U.S. authorities had previously concluded that the whistleblower’s claims were “unfounded” and “do not indicate any violation of U.S. sanctions.”
But the whistleblower alleges that U.S. authorities “committed a gross fraud upon this Court by falsely denying” that the whistleblower had provided “previously unknown and conclusive evidence.”
