London, 12.08.2012 – In recent weeks, some news has profoundly shocked me. Perhaps I am still coming to terms with the naivety and ignorance that are part of the cultural baggage one carries after being born and raised in a developing country. When one arrives in these so-called “civilized and advanced” societies, there’s a tendency to think that here, the law is respected and observed by everyone. But in reality, nothing could be further from the truth.
London was the capital of the great British Empire. Among “sophisticated” places, it ranks near the top, if not at the very top. From a cultural, social, artistic, financial, and political standpoint, London is a powerhouse. It makes no sense to deny its historical significance, as nearly everyone who has achieved anything has lived in this marvelous city at some point. However, like anywhere else, the good mixes with the bad and the ugly. A stroll through Knightsbridge, Mayfair, or Chelsea reveals obscene displays of wealth from individuals who likely did not earn it through hard work, but rather looted it from some underdeveloped country in Africa, the Middle East, Russia, Eastern Europe, China, or Latin America. London is filled with bankers who welcome these thugs, eager to lend their expertise in money laundering to claim a share of ill-gotten fortunes.
But I digress. The surprise is that I find no real differences between certain people and institutions in a completely corrupt country like mine, Venezuela, and the United Kingdom. Here enters Standard Chartered Bank. We have a saying at home: “caught with your pants down and no toilet paper,” which could be interpreted as “caught red-handed with pants down in a compromising situation.” Standard Chartered was basically caught in the act. If we are to believe Benjamin Lawsky, the Superintendent of Financial Services in New York, Standard Chartered has been flaunting the restrictions of the Office of Foreign Assets Control (OFAC) for almost a decade without hesitation. The charges against Standard Chartered Bank (SBC) are quite damaging:
falsification of business records;
offering false instruments for filing;
failing to maintain accurate books and records of all transactions performed and actions taken on behalf of SCB;
obstructing governmental administration;
failing to timely report misconduct to the Department;
evading federal sanctions;
and numerous other legal violations that, like the previous ones, impact the safety and soundness of SCB’s New York branch and the Department’s confidence in SCB’s character, credibility, and suitability as a licensed financial institution to operate under the laws of this State.
As a result, SBC has seen more than $9 billion, or around 16 percent, wiped from its undefined market value. Just a short while ago, some people thought SBC was a model financial institution, unlike other banks and bankers in the City of London and across the pond who have been involved in all types of scams in recent years. The LIBOR scandal of Barclays, HSBC’s money laundering for Mexican and Iranian drug traffickers, Lehman Brothers, Goldman Sachs, JP Morgan—bankers seem to be going unhinged and getting away with it. Nowadays, bankers are all in this together. In the quest for profit in a stagnant global economy, this lot will do whatever, wherever, and with whomever to earn a pound. There’s no punishment, no arrests, no charges. Just a few toothless bureaucrats displaying malaise, followed by deals here and there between useless regulators and financial fraudsters caught breaking laws, and imposing fines that, compared to the amounts involved in suspicious operations and transactions, amount to a mere slap on the wrist.
Places with weak or harmless law enforcement tend to be gangsters’ havens, as the incentive for criminal activity simply outweighs the fear of being caught and potential punishment. In some areas, criminals actually run countries. Libya, Zimbabwe, Venezuela, Cuba, Russia, China, Syria, Iran are good examples. But the UK is supposed to be an advanced, modern country governed by law that protects both authorities and citizens, a democratic example, with a separation of powers and all that. The UK is meant to be different. Unfortunately, it is not; for the thugs who have wreaked havoc in the aforementioned countries, subjecting millions to miserable lives, they have friends, collaborators, properties, companies, financial institutions, and officials galore here, eager to do business with them. Just ask Tony Blair, Gordon Brown, Alex Salmond, Prince Andrew, BP, or British Gas… the list goes on and on.
When the bigwigs at SBC were alerted to the possible consequences of violating US regulations, the response was: “Damn Americans. Who are you to tell us, the rest of the world, that we can’t deal with Iranians?” The totally distorted executives at SBC – led by Peter Sands, who at one point was even mentioned as a potential successor to Mervyn King for the presidency of the Bank of England – clearly believe that the “damn Americans” have no authority to dictate who they can or cannot do business with. Even though the “damn American” currency was used all the time; the “damn American” trade stream was used everywhere; the “damn American” financial center of New York was utilized constantly; the “damn American” financial clearing system was tapped into at all times.
So here’s the deal: SBC was caught violating US law while conducting operations in the United States. Even if we afford SBC the benefit of the doubt—which hardly anyone rational seems willing to do these days in light of the overwhelming precedence of recent financial crimes—only $14 million in illegal transactions took place between the bank and Iran, instead of the $250 billion Lawsky alluded to. SBC’s claim of innocence is not that it didn’t violate OFAC bans in dealings with Iran, but rather that it only did so in transactions worth $14 million. That’s quite a moral defense, isn’t it, government?
But just as thieves in Venezuela have nothing to fear from the head thug Chávez, SBC has nothing to fear here. And that, at least for me, is a remarkably depressing realization. Because SBC is, in simple terms, enabling and inciting criminals who are causing untold suffering worldwide. The Brits have developed quite a notoriously illustrious track record in that regard in recent history: whether in Libya, Kazakhstan, or Iran, locals will be condemned if millions can be made.