StanChart tells authorities about corruption allegations at Indonesian firm

Wed Sep 28, 2016 6:10am EDT
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By Lawrence White and Joel Schectman

LONDON/WASHINGTON (Reuters) - Standard Chartered (STAN.L: Quote) has told "appropriate authorities" about alleged corruption at an Indonesian power plant company majority-owned by its private equity arm, the bank said.

The lender's comment came in response to a Wall Street Journal report that the U.S. Department of Justice is investigating whether Standard Chartered failed to stop possible bribery and other misconduct at MAXpower Group Pte Ltd, which builds and operates gas-fired power plants in Southeast Asia.

The allegations compound the legal woes of the bank, which is subject to a deferred-prosecution agreement with the Justice Department over alleged Iranian sanctions breaches and faces possible prosecution if found to have committed another federal crime.

"Standard Chartered takes very seriously allegations of impropriety in any of our private equity investments. We proactively referred this matter to the appropriate authorities and have conducted our own review," a spokesman for the bank said in an emailed statement on Tuesday.

Two people familiar with the matter said that the "appropriate authorities" included the U.S. Department of Justice. A Justice Department spokesman declined to comment.

In 2012, Standard Chartered admitted to breaking U.S. sanctions against Libya, Iran and Sudan. The bank signed a deferred-prosecution agreement, allowing the Justice Department to later bring criminal charges for the sanctions busting if the bank was caught committing another federal crime in the following two years.

But the Justice Department extended the bank's scrutiny through 2017, after authorities said they discovered other possible violations the bank had not revealed.

U.S. authorities could tear up the agreement entirely, and bring the earlier sanctions charges, if they determine that Standard Chartered has committed "egregious enough" misconduct, said William Jacobson, a white-collar defense attorney at Orrick, Herrington & Sutcliffe LLP.   Continued...

A MAXpower sign is seen above the power company's booth at an electricity exhibition show at the convention center in Jakarta, Indonesia September 28, 2016. REUTERS/Darren Whiteside