Standard Chartered helped build damning case against itself

Fri Aug 10, 2012 7:09pm EDT
 
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By Aruna Viswanatha and Andrew Longstreth

WASHINGTON/NEW YORK (Reuters) - Standard Chartered, the British bank facing explosive money laundering allegations from New York State's top bank regulator, appears to have been burned by a decision to waive attorney-client privilege, a move that usually helps appease U.S. authorities.

While firms on occasion hand over troves of privileged documents to investigators, that practice generally comes with an understanding that the information will not be made public.

But the 27-page complaint filed earlier this week by the New York State Department of Financial Services, a newly created regulator led by former prosecutor Benjamin Lawsky, is jam-packed with emails detailing damning legal advice used to illustrate a "rogue institution."

Lawyers who work on similar investigations say that Lawsky's actions may make corporations think twice before turning over sensitive documents.

"The action of this regulator will have a deterring effect on the nature and extent of cooperation in similar kinds of cases without some specific assurances," said Robert Bennett, a prominent white-collar defense attorney at Hogan Lovells who represented Enron and HealthSouth in criminal investigation.

In a surprise move, the New York regulator broke away from federal authorities also probing the bank and threatened to strip Standard Chartered of its state banking license.

It alleged that Standard Chartered "schemed" with the Iranian government and hid $250 billion of transactions in violation of U.S. sanctions on Iran.

Standard Chartered has denied the accusations and noted that it approached all the U.S. agencies, including the Treasury Department and New York Federal Reserve Bank, in January 2010 to come forth with its own review of its transactions.   Continued...

 
The logo of Standard Chartered is seen at its new Singapore office tower at the Marina Bay Financial Centre, January 24, 2011. REUTERS/Kevin Lam