Tuesday, August 07, 2012

More criminal bankers

Today's criminal banker story: Standard Chartered Bank is alleged to have schemed with Iran to launder money and evade financial sanctions for nearly a decade:

The New York State Department of Financial Services said that the bank hid 60,000 secret transactions for "Iranian financial institutions" that were subject to US economic sanctions. It labelled UK-based Standard Chartered a "rogue institution".
This goes well beyond merely looking the other way on dubious transactions, to actively falsifying information to hide them. And its not just a few bad apples: this was written up as official policy by senior management. They're estimated to have laundered around US$250 billion over the last decade, collecting hundreds of millions of dollars in fees for doing so. And why wouldn't they? After all, its not like they'll ever be held to account. While the bank may be fined, or even shut down, that price will be paid by its shareholders, not its management. The people responsible will simply trigger their golden parachutes and depart to continue their criminal career in another financial institution.

When corporations engage in illegal behaviour on this scale, it tells us that the incentives around corporate malfeasance are all wrong. If we want to stop this sort of criminal behaviour, we need to focus penalties where they belong: on criminals, not innocent bystanders.