I recommend that Benjamin Lawski, head of New York state's Department of Financial Services takes my good friend Sriram's Geography 101 course . He might want to learn where the borders of the United States lie and where his jurisdiction is. The laws of the United States are enforceable in the United States. They are not enforceable on the world.
I am referring to the spat between the DFS and Standard Chartered Bank. The problem is this. US law does not allow US entities to have any business dealings with Iran - neither the country nor its nationals. The US is perfectly entitled to have such a law - its merits or otherwise is for US citizens to decide. The problem is that the US would like everybody in the world to follow that law. That deserves the response - mind your own business.
Standard Chartered Bank is a UK headquartered bank that largely deals with Asia and Africa. It has very little business in the US. However it does have a branch in New York where transactions are routed through if they are in US dollars - since most Asian and African countries deal in US dollars for their international trade, much of it gets routed through the US.
There is no doubt that Standard Chartered Bank deals with Iran. But the laws of the UK where it is registered and the other countries where it operates, does not prohibit it from doing so. There are certainly laws prohibiting dealings with crooks and terrorists, but it is a reasonable fact (that may however be surprising to Mr Lawski) that all Iranians are not crooks or terrorists. US law permitted in the past the sort of transactions that Standard Chartered did, called U turn, but there are grey areas and , no doubt, this case will be enmeshed in legalese.
But the impact of the DFS report has been devastating on Standard Chartered Bank. The damage has been done, irrespective of whether the bank is found guilty or not. It's share price tanked some 16% yesterday.
Standard Chartered is livid and has said it would vigorously contest the case (code for saying screw you). It is asking the British government to intervene and put the DFS in its place. One Standard Chartered executive described the colourful DFS report – packed with allegations of “deception”, “fraud” and a “staggering cover-up” – as “like a John Grisham novel”. A director is reported to have allegedly remarked to a colleague "You f---ing Americans. Who are you to tell us, the rest of the world, that we’re not going to deal with Iranians? "
My language is somewhat more restrained, but I must admit I have to agree with the worthy !
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Hmmm! what more to expect from the self appointed "police man" of the world. Thank heavens we don't have much oil down here. Else we would have seen Uncle Sam's soldiers doing the Haka and playin rugby
naanga cricket veladarachay yar kitta bat iruko avanga solrathu thaan rule and he gets to have 2 times to play even if out..this one reminds me of that
Ramesh,
I actually now a days feel, we must stop associating too much importance to share prices tanking and going up every day. i dont think these are real representatives of the true market value of any company.
of course, standard chartered price will get back to normal. and over time, people will forget. what if some bull or bear in the market has lost or gained money, i dont think, any share holder who had invested in Standard Chartered because it was a good bank to invest in, is going to be bothered.
i feel, we give too much importance to the short term share prices and just making a thriving industry more important that what it is.
Yes, Stan Chart can tell America F*** Off and it can say with even more conviction, if it shuts off the TV in its treasury department for a couple of days.
@kiwi - Oh no; the very thought of American football types doing the Haka is a bit too funny :)
@gils - The PERFECT comment. Of course what you say is true. But equally the boy without the bat is entitled to yell loudly; which is what I am doing !
Gilsu, whatay comparison. mudiyala!! :( I was wondering how come US can comment on it and really thought US had some jurisdiction over it! #facepalm
New York's head of banking is simply noting that Standard Chartered has a right to transact with Iran -- that right is incompatible with the PRIVILEGE of being granted a NY state banking license.
Standard Chartered agreed to follow US law in exchange for the privilege of a banking license in the USA and the ability to transact in the Federal Reserve System. At the same time, it operated as a rogue institution and ignored US law regarding Iran.
The proper outcome is simple -- revoke SC's ability to operate in the United States. Then it is free to pursue banking with criminal regimes overseas without having to worry about US law.
I think my comment was so foolish that blogger deleted it. so i leave it without repeating the stupid comment again but just leaving it as "Aye Aye Sir"
@Sandhya - Oh no; Blogger cannot delete comments of such a valued commenter and blogger as you. Here it is above.
I agree; short term fluctuations in prices simply do not matter.~
@zeno - Oh yes - master comment from Gils.
@Anon - Thanks for dropping by and leaving a comment. I see where you are coming from, but have to disagree. Firstly Stan Chart has not been proven to have done anything wrong - at the moment DFS has merely alleged and in any case legality or otherwise of U turns is a very grey area legally. Secondly, the point I am making is that for example if China passes a law that any company that has sold anything to the Dalai Lama is banned in China, would that be acceptable as a sensible law. I can understand the US saying you cannot transact with Iran from the US - what the DFS appears to be trying to do here is that a company cannot transact with Iran from anywhwere. That, to my mind, is overreach.
Thanks for your point of view and the debate. That is what enriches the discussions, even if we disagree.
My first thought was, first let's figure out how many of them know the difference between Iraq and Iran!
For a country who chose to literally pour tax money into staging a war on the territory of another country for 10 yrs and carrying out a stealth operation on the soil of another country in full public view, loses the right to call some else criminal. No matter what your intention was you did not make morally correct choices anyways.
Then again like Gilsu said, they are the kid who has the cricket bat! :)
I can visualize smoke through your ears as you wrote this piece. :-)
When you have an arm to twist, twist. Who cares if it was your neighbour's or someone else's? Well China too does that in a territorial sense.
@Deepa - I know - that's the problem with foreign policy. Nobody is either completely clean or completely dirty. Iran certainly does a lot of roguish things and economic sanctions re one of the better ways to pressurise the regime. However there is no way any one country can impose its will on the world, however powerful it may be.
@RamMmm - Wonderful to see you back. Thought you had disappeared off into Spain !!
Yeah; every country does this sort of a thing - using power gracefully is not a virtue anywhere.
Almost every country in the globe ( barring the occasional russian snubs that Putin gives the big brother) is a mute spectator to the american high handedness over the years and they seem to have their way. And yes we do have the option of screaming out loud from wherever we are.
Totally agree with Gils' comment on the boy with the bat behaviour!!
SC can call them f....ing Americans and we could yell , but they will still have their way I guess.
What a way to manipulate, sigh !
Can their arrogance really weigh;
At the risk of attracting brickbats from you I will make my comment. I must qualify this by saying that I am not familiar with the details of the transactions in question. My understanding is that these are dollar denominated transactions that are routed through the US branches. If that is the case then these transactions should comply with the law of the land. We can have a separate debate on the merits of the law but every country has to weigh its political motives against its economic ones and draw their own line. In this case apparently SC admitted to masking the identity of the Iranian parties from the transaction records which is a violation of the law as it stands and so I don't understand how they can act innocent and victimized. On the othrr hand the DFS probably wants to make an example of such cases as a deterrent to other banks for all kinds of transactions including money laundering drug money. If indeed the so called Iranian transactions took place entirely outside the US branches then my position becomes a bit murky.
@Vincy - Very often perceived American highhandedness is really them being asked to take on the ole of the policeman of the world - somebody has to do it and I have some sympathy for it. But in this case I think it is an overreach
@Hema - Wasn't Gils's comment a classic ? That boy is too much :)
@J - Oh yes - there is no doubt at all that every entity must follow the laws of the US for its operations there. But in this case the U turn transactions are a grey area - these transactions are neither originating in the US nor destined for the US. The real purpose behind US action (other than political grandstanding by Lawski) is that the US is trying to stop everybody else from dealing with Iran. These transactions met the requirements of money laundering or terrorist filters - else the bank will be quartered in the UK.
The whole purpose of blogging is to have a healthy exchange of views, isn't it - love to have disagreements especially from very knowledgeable people such as yourself.
A late comment: I did some informal checking. It is possible to send US Dollars to Iran from countries like India, and the message details on the Swift transfer can be changed to reveal as little as possible.
@Ravi - Yes, this is precisely the sort of issue on which SCB seems to have got caught. Altering the details of the SWIFT message, that is.
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