Standard Chartered’s chief executive Peter Sands has flown to New York to take personal control of the bank’s attempts to reach a settlement with US regulators over allegations it hid transactions involving Iran.
The Department of Financial Services has no plans to bring charges against Deloitte
Mr Sands is also ready to attend a hearing set for today at which the London-based bank has been told by the New York banking regulator that it must demonstrate why its state banking licence should not be revoked over the transactions.
A Standard Chartered spokesman said yesterday the bank was waiting to hear from New York regulator, the Department of Financial Services, what form the hearing will take. The DFS has released no details of how the session will be conducted.
“Peter is happy to go if that’s appropriate,” a Standard Chartered spokesman said.
Mr Sands will work with the bank’s lawyers, who are attempting to negotiate a settlement over the issue with US authorities, the spokesman said.
Last week, state Financial Services Superintendent Benjamin Lawsky said the bank hid Iran-linked transactions with a total value of $250 billion. Mr Lawsky called Standard Chartered a “rogue institution” for breaking US sanctions against Iran.
Mr Sands had to cut his vacation short when details of the New York regulator’s allegations emerged.
He denied the allegations and said the total amount that failed to adhere to the sanctions was less than $14 million. He also said he was taken by “complete surprise” by the ferocity of Mr Lawsky’s attack, which he described as “disproportionate”.
The stakes for Standard Chartered are high, given that the loss of its state banking licence would effectively cut it off from direct access to the US bank market. Most of Standard Chartered’s business is in Asia and the Middle East.
The DFS has declined to comment on the negotiations.
A person familiar with the situation, who spoke on condition of anonymity, said Mr Lawsky was seeking a settlement of about $350 million. Another person with knowledge of the situation said the figure had dropped to $250 million.
Meanwhile, Deloitte LLP chief executive Joe Echevarria fought back against allegations that his firm helped Standard Chartered hide transactions with Iran, saying charges by the top New York state banking regulator were “distortions of the facts”.
Mr Echevarria, CEO since June 2011, defended Deloitte in his first interview since the firm was dragged into the spotlight over its independent reviews of British bank Standard Chartered.
The New York State Department of Financial Services last week said Deloitte consultants omitted critical details in a report to regulators about Standard Chartered.
The regulator cited an e-mail from a Deloitte partner saying he drafted a “watered-down version” of the report after being asked by Standard Chartered to omit information.
“It’s an unfortunate choice of words that was pulled out of context,” Mr Echevarria said.
A source close to the matter, who asked to remain anonymous because of its sensitive nature, said the Department of Financial Services has no plans to bring charges against Deloitte. A spokesman for the department refused to confirm or deny that statement.
Mr Echevarria said he was standing in line with his 16-year-old son at Universal Studios in Orlando, Florida, a week ago when he first heard of the Standard Chartered matter by e-mail.
A Bronx native in his 35th year at Deloitte, Mr Echevarria said one of his first thoughts was: “There’s got to be more to this.”
The head New York banking regulator, Benjamin Lawsky, alleged Standard Chartered hid from regulators some 60,000 “secret transactions” tied to Iran. Mr Lawsky said that at one point, Standard Chartered asked Deloitte to delete from its draft report any reference to payments that could reveal the bank’s practices involving Iranian entities.
Mr Lawsky quoted an e-mail from a Deloitte partner who said “we agreed” to the request.
Mr Echevarria declined to discuss specific allegations, but in a statement last week, Deloitte said “contrary to the allegation,” it “absolutely did not delete any reference to certain types of payments” from a final report.