Standard Chartered is the victim of US warfare against British banking

John Mann
STANDARD Chartered, one of the few British banks hitherto left untainted by allegations of misconduct, saw its share price nosedive yesterday, after accusations by a New York regulator that it had violated sanctions against Iran. I’m now left more convinced than ever that US politicians and regulators have a hidden objective in exposing the wrong-doings of UK banks.

There are parallels with the Libor rate fixing scandal. It was clear, when I sat on the Treasury Select Committee and questioned Bob Diamond, Marcus Agius and others, that Barclays had a lot to answer for. But, throughout, it was also obvious that Barclays was merely one of many banks involved. It was left exposed and, at first, solely held to account for Libor rate fixing. Some cynics are already speculating that it was hung out to dry to protect the government’s investments in RBS and Lloyds.

But now, over 20 banks are under investigation and face potential class action in the US courts, with a majority of these being US financial institutions.

So why is there an increasing mantra in Washington and New York that this is a London and a British problem?

Nobody can excuse HSBC for alleged drugs money laundering or Standard Chartered for alleged Iranian sanctions busting. My voice has been as loud as any on these problems. But where is the publicity on the court action in Indonesia over US banks’ involvement in money laundering, or the headlines about Mexican drug cartel money going through US banks?

The negative publicity about a “London problem” is entirely out of context – especially when you look at the full range of current and recent bank irregularities and indiscretions.

The US body that co-ordinates responses to these matters is the President’s working group on financial markets. It is chaired by Tim Geithner, the US treasury secretary. Mary Shapiro, head of the Securities and Exchange Commission, sits among its quartet of members. It is Shapiro who is determining who is investigated, what secret deals are done to close down action, and the publicity that surrounds all of this.

Their work is being supplemented by the Republican-led House Committee on Financial Services. But the real political powerhouse of US political investigations is the Senate Permanent Committee on Investigations, chaired by Democratic senator Carl Levin. This is a sub-committee of the Homeland Security Committee, where Levin has presided for a number of his 34 years in the Senate. In US politics, Levin is a major heavyweight figure.

Levin, under the banner of homeland security, has led the way in tackling any overseas activity deemed detrimental to US security interests. No American politician could resist this portfolio, but its fundamental weakness is that it does what is says on the tin: Iran is a threat, Indonesia is not.

Therefore, there is no serious investigation into money laundering in central America, Asia or Mubarak’s Egypt, and an inbuilt bias into highlighting overseas banks while defending American interests.

Geithner and Shapiro are leading Presidential political appointments, and they fully understand this way of doing business. Geithner is, of course, the US equivalent of George Osborne, based directly inside the President’s cabinet. The fact that there is a Presidential election on the horizon is no coincidence, with cross-party momentum in Washington seeking to blame the British.

Our response in the UK should not be to deny the alleged activities of HSBC, Standard Chartered or Barclays. Indeed, quite the opposite. But market manipulation, insider dealing and money laundering are historically a far greater problem in American banks than their British rivals. Our weakness is our impotence in challenging US banking behaviour, and repeatedly failing to effectively regulate our own.

Time is running out, as Washington makes its play for New York to usurp London’s position in global finance. The previously unthinkable British political logic should now emerge as the key to London’s salvation. Agreement over European Union regulation of financial markets may now prove to be the best way forward, and the only effective antidote to American self-interest.

John Mann is Labour MP for Bassetlaw and a member of the Treasury Select Committee.