- Author, Andy Verity
- The role, Correspondent in economics
A British bank that escaped prosecution for money laundering made billions of dollars in transactions for terrorist financiers, US court documents claim.
Standard Chartered, one of Britain’s biggest banks, avoided prosecution by the US Department of Justice after Lord Cameron’s government intervened on its behalf in 2012.
New documents filed in a New York court allege the bank made thousands of transactions worth more than $100 billion from 2008 to 2013 in violation of sanctions against Iran.
An independent expert has identified $9.6 billion in foreign exchange transactions with individuals and companies designated by the US government as financing «terrorist groups,» including Hezbollah, Hamas, al-Qaeda and the Taliban.
In a statement, the bank said it disputes the whistleblower’s claims, saying US authorities have «thoroughly discredited» their previous claims.
Sanctions violated
Standard Chartered has been publicly accused of falsifying transaction data on Swift – the international payment system used by thousands of financial institutions – to transfer billions of dollars through its New York subsidiary on behalf of sanctioned entities such as the Central Bank of Iran.
But in September 2012, George Osborne, then chancellor in Lord Cameron’s government, secretly intervened on behalf of the bank.
Three months later, the US Department of Justice decided not to sue the bank.
The exchange transactions identified in the court filings have yet to come to light and it is not suggested that Mr Osborne or Lord Cameron had any knowledge of the transactions at the time.
The bank has twice admitted to violating sanctions against Iran and other countries — first in 2012 and then in 2019 — paying fines totaling more than $1.7 billion. But he did not admit to conducting transactions for «terrorist» organizations.
The transactions lay hidden in confidential bank spreadsheets first handed over to US authorities in 2012 by two whistleblowers, including former Standard Chartered director Julian Knight.
They claim that US government agencies made false statements to the court in order to have their claim for a whistleblower reward dismissed.
U.S. authorities involved in the bank’s investigation successfully filed a motion to have their case dismissed in 2019. An FBI agent told the court that he had not shown anything that «indicated or suggested that the bank engaged in improper transactions in U.S. dollars» after 2007.
US authorities argued that the whistleblower’s allegations «did not lead to the discovery of any new … violations», and the court dismissed the case as «baseless».
However, an independent analysis by David Scantling, an expert with decades of experience investigating illegal banking transactions for the CIA, contradicts this.
In a court filing last Friday, he said the spreadsheets contained records of more than half a million separate transactions between 2008 and 2013 that were «disguised,» meaning they weren’t immediately visible in the spreadsheets but could be extracted with a simple technique – known to analysts in their profession.
His statement states that among the records are numerous transactions by Standard Chartered Bank (SCB), «with or on behalf of Iranian banks, Iranian companies and Middle Eastern exchange offices which, according to [the US government]finance designated foreign terrorist organizations”.
It says SCB processed transactions for a bank posing as the Central Bank of Iran after it claimed to have halted its operations in Iran in 2007.
This happened at the same time it was borrowing an average of $2 billion a day from the Term Auction Facility, an emergency program set up by the US government to support banks during the 2007-2009 global financial crisis.
“The newly extracted data simply cannot be reconciled with the government’s statements to the court in this matter that [whistleblowers’ evidence] it contains no evidence of undisclosed sanctions violations,» Scantling’s statement read.
The transactions include those of a Pakistani fertilizer company, Fatima Fertiliser, known for selling explosive materials used by the Taliban in roadside bombs that have killed or maimed thousands of British and US troops in Afghanistan.
SCB, the kit sponsor for Liverpool FC, also facilitated 73 transactions for a Gambian shell company owned by key Hezbollah financier Mohammad Ibrahim Bazzi, the documents said.
image source, Getty Images
Daniel Alter, former general counsel at New York’s Department of Financial Services, which first prosecuted SCB for sanctions violations, called the new revelations «shocking» and «exponentially worse» than the bank admitted in 2012.
«This shows a terrifying connection not only with commercial entities, but also with terrorist organizations, terrorist front companies for organizations like Hamas, Hezbollah, al-Qaeda, the Taliban – things that are a nightmare for regulators – and we didn’t know it: we never discovered. And that was not visible in the data we had,» Alter told the BBC. «That’s a completely different story.»
SCB, which is headquartered in London, mainly serves clients in Africa, the Middle East and Asia.
When Mr Osborne surreptitiously intervened on behalf of the bank, it was at risk of prosecution for money laundering by the US Department of Justice.
On 10 September 2012, Mr Osborne wrote to Ben Bernanke, then chairman of the US Federal Reserve, and to US President Barack Obama’s then Treasury Secretary, Tim Geithner. He met them the following month.
Two months later, the bank was fined $300 million but avoided prosecution with a deferred prosecution agreement (DPA), a form of probation for corporations. No individual bank director has been prosecuted.
That same month, Mr Knight turned to US authorities with evidence that the bank’s misconduct was far worse than it admitted and continued after 2007.
In 2019, SCB agreed to a further DPA in relation to transactions between 2007 and 2011 and was fined an additional $1.1 billion.
‘without merit’
Both the FBI and the US Department of Justice declined to comment. Neither Lord Cameron nor Mr Osborne would comment on the record.
SCB said it was «confident that the courts will reject these claims». It said US authorities had previously concluded that the whistleblower’s claims were «without merit» and «did not demonstrate any violations of US sanctions».
But the whistleblowers claim that US authorities have committed «a colossal fraud in this court by falsely denying» that the whistleblowers provided «previously unknown, incriminating evidence».