Standard Chartered Scandal: Pressure Mounts on Bank's Bosses to Quit

Standard Chartered's top officials, who were holding senior positions in the bank during the period of the alleged money laundering, are under increased pressure to resign, it has been reported.

Peter Sands, the present chief executive and Richard Meddings, the finance director, joined the bank in 2002, shortly after the alleged Iranian transactions began and have been holding their current positions since 2006.

"No names have been mentioned [in the US report] but the chief executive and the finance director were with the bank at the time so the focus will intensify on those two," Michael Symonds of Daiwa Capital told The Independent.

"If they didn't know [about the money laundering], the charge will be levelled that they were asleep on the job," Symonds added.

The New York Department of Financial Services (DFS) accused Standard Chartered of laundering $250bn (£160bn) of Iranian money from 2001 to 2010. The regulator charged the bank with deceptive transactions which left the US financial system vulnerable to terrorists, weapons dealers, drug kingpins and corrupt regimes.

Standard Chartered expressed shock at the public accusations of the New York regulator Benjamin Lawsky and said the regulator did not present "a full and accurate picture".

Standard Chartered maintained that it had been in consultation with the US authorities over the Iran transactions since early 2010 and the value of Iran-related transactions accounted for less than $14mn, contrary to the alleged sum.

The bank was asked to present evidence and to defend its conduct at a hearing on 15 August in the US to avoid cancelling its licence.

IBTimes UK in its previous report pointed out that the bank may be exposed to further investigations in the wake of the disclosures by the New York regulator. Sanctions violations were taken very seriously by the US administration and they are believed to be in touch with the state and federal agencies to figure out the extent of the violations.

"Sanctions violations are something that this administration takes extremely seriously and has a strong record of action to this end," said Jay Carney, White House Press Secretary.

"The Treasury Department remains in close contact with both federal and state authorities on this matter," he added.

Meanwhile, Standard Chartered has hired two prominent law firms - Sullivan & Cromwell in New York and Slaughter and May in London - to represent them in their dealings with US authorities, Reuters reported.

These revelations are expected to make ripples in City circles as both the top executives were known for their spotless reputation for financial and ethical integrity.

It could also create problems for the chances of Lord Turner, chairman of the Financial Services Authority (FSA), in his bid to succeed Sir Mervyn King as the chairman of the Bank of England.

Lord Turner was a non-executive director at Standard Chartered between 2006 and 2008. He was also a member of the board's audit and risk committees and remuneration committee.

"Not long ago Peter Sands was being touted as the next governor of the Bank of England. Obviously the whole game is changed," Christopher Wheeler, an analyst at Mediobanca SpA in London told the Independent.

Meddings was considered as prime contender for the top post in Barclays, in place of Bob Diamond.

Standard Chartered shares plunged 24 percent since the news surfaced on 6 August and closed at £12.28, down 16.4 percent on 7 August.