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Standard Chartered’s Iran transactions subject to new whistleblower complaints

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Whistleblowers claim to have discovered previously undetected transactions worth billions of dollars made by Standard Chartered with Iran-linked entities, including sanctioned companies and terrorist organizations, according to filing Friday in New York.

The alleged transactions were discovered after whistleblowers re-examined spreadsheets and documents they had provided to US authorities in 2012 and 2013 and found hidden data. The whistleblowers are seeking to revive a lawsuit they filed in Manhattan federal court in 2012 and overturn the dismissal of their complaint.

The newly discovered data prompted the two whistleblowers – including a former StanChart executive – to claim the US government committed “colossal fraud in court” by claiming it failed to produce evidence substantial to assist the authorities in taking enforcement action against the bank. for violating American and international sanctions.

The new allegations are the latest in a series of claims spanning more than a decade by the two men, who sought to highlight an era when StanChart facilitated access to the global financial system for rogue countries , including Iran.

StanChart called the filing “another attempt to use fabricated claims against the bank, following previous failed attempts” and said the allegations had been discredited by U.S. authorities. “We are confident that the courts will reject these allegations, as they have repeatedly done before,” he said.

With the help of a forensic investigator, the whistleblowers – Julian Knight, a former global head of foreign exchange who left StanChart in 2011, and Robert Marcellus, a foreign exchange trader – uncovered hidden data covering more than half a million financial transactions. They include transactions with sanctioned entities linked to Iran totaling $9.6 billion, and foreign exchange transactions linked to the Islamic Republic with a notional value of $100 billion, according to the filings. .

The transactions are believed to have taken place between 2008 and 2013, after the London-based bank announced it would cease further business with Iranian clients in 2007.

One such example is data showing that StanChart conducted “direct and indirect transactions involving known front companies” of terrorist organizations, the documents claim. These included transactions with a company owned by Mohammad Bazzi, who was later sanctioned by the US Office of Foreign Assets Control in 2018 for his alleged role as a financier of the Lebanon-based militant group Hezbollah. The files also highlight transactions with a Pakistani fertilizer conglomerate that allegedly sold explosive materials used to make improvised explosive devices to the Taliban in Afghanistan.

Since 2012, StanChart has been hit with sanctions related to sanctions violations and due diligence lapses, totaling more than $2 billion. More than half of that sum was paid as part of a 2019 settlement that included a guilty plea from a former bank employee and a criminal indictment against a StanChart customer.

A U.S. federal law allows whistleblowers to sue on behalf of the government in so-called “qui tam” actions and share in the profits if the lawsuits stand up. The whistleblowers argued that the documents they provided to U.S. law enforcement contained crucial information proving sanctions violations.

However, government agencies argued that the case against the bank was reopened based on evidence unrelated to the material provided by the whistleblowers. The government further argued that after a thorough investigation, it concluded that the alleged violations highlighted by the whistleblowers were “liquidation transactions” or other transactions that “otherwise did not appear to violate any sanctions rule”.

In February, the U.S. Supreme Court refused to hear the whistleblowers’ civil complaint, which had been dismissed by a lower court.

The Federal Reserve declined to comment. The Department of Financial Services said it could not comment on pending litigation. Ofac referred questions to the Justice Department, which did not immediately respond to a request for comment.

News Source : www.ft.com
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