Standard Chartered chief executive Peter Sands staged a robust defence of his bank yesterday in his first public comments on the controversy over its dealings with Iran since rushing back early from his summer holiday.
Responding to accusations that the bank defied US sanctions on Iran by laundering as much as $250bn (£161bn) of Iranian money between 2001 and 2007, Mr Sands cast doubt on the integrity of New York's State Department of Financial Services by refuting many of the facts surrounding the allegations and criticising the manner of their disclosure.
"Frankly, there is a lot of material here that we do not recognise or understand, or that is factually inaccurate," he said in a hastily convened press conference late yesterday afternoon.
Mr Sands went on to dismiss an already-infamous allegation in the New York regulator's 27-page report of its case against the bank – that a senior Standard Chartered executive gave short and colourful shrift to a warning from a US colleague of potential problems in dealing with Iran.
On hearing the warning, the executive – whom Mr Sands confirmed yesterday to be his number two, finance director Richard Meddings – allegedly retorted: "You fucking Americans. Who are you to tell us, the rest of the world, that we're not going to deal with Iranians?"
However, Mr Sands used the same phrase to deny the allegation twice yesterday: "We do not believe the quote is accurate," he said. Mr Sands declined to say whether he or his team recognised the warning that the New York regulator claimed sparked Mr Meddings' alleged retort.
Friends and colleagues of Mr Meddings said such language would be highly out of character for the relatively mild-mannered executive. Mr Sands also criticised the regulator for claiming Standard Chartered made "several hundreds of millions of dollars" in fees between 2001 and 2007 from so-called U-turn transactions when the actual amount was "in the tens of millions".
Before they were outlawed in 2008, U-turns allowed US-based banks to process some highly-scrutinised dollar-denominated transactions for Iranian banks or individuals provided that a bank that was neither American or Iranian acted as intermediary on both sides of the deal.
The US government eventually scrapped U-turns on fears that Iran was using its banks to finance nuclear weapons and missiles programmes.
Mr Sands reiterated yesterday that more than 99.9 per cent of the $250bn worth of U-turn transactions the regulator highlighted complied wit regulations governing them, leaving less than $14m that didn't.
He also criticised the regulator for giving the bank no prior notice of its order, the publication of which, he said, "came as a complete surprise to us".
Mr Sands conceded that the episode, which knocked more than £8bn off its value as shares fell by more than a quarter in just two days on Monday and Tuesday, had knocked Standard Chartered badly.
"Clearly this has been very damaging and it would be unrealistic to pretend otherwise…. It's obviously a very serious and difficult set of issues that we've been facing."
"I don't think there is anything wrong with the culture at Standard Chartered…We take our responsibilities very seriously, always seeking to comply with rules and regulations."
Bank shares climb: Bargain-hunters to the rescue after a mauling
Shares in Standard Chartered yesterday clawed back some of the steep losses they had made since the money-laundering allegations surfaced from US regulator Benjamin Lawsky on Monday.
They closed up 87p, or 7 per cent, at 1315.5p as bargain-hunters decided the 22 per cent rout was overdone. Buyers were encouraged by a flurry of analysts' claims that the shares now represented good value.
The bank run by Peter Sands had until now dodged the worst damage of the global financial crisis. Analysts pointed out that even in the event of a massive fine and a loss of its banking licence in the US, the bank would still be a valuable takeover target for rival JPMorgan.