Standard Chartered faces bribe allegations

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STANDARD Chartered Bank is facing a new embarrassment following securities scandals in Bombay and Hong Kong, this time involving allegations of bribes paid by executives of its Mocatta gold bullion dealing subsidiary to government officials in Malaysia and the Philippines, writes John Willcock.

The bank is not commenting on the latest row, one that will make it more difficult for Standard to throw off its accident-prone image. This is despite sweeping management changes and good results from its Far Eastern operations, which have made Standard's shares a star performer.

Two Mocatta employees, one in London and one in Hong Kong, have resigned as a result of the affair.

It is understood that the Bank of England is not conducting an investigation into the allegations surrounding Mocatta, contrary to press reports over the weekend. Standard discovered irregularities in its staff practices several months ago and has kept the Bank of England and regulators in Malaysia and the Philippines informed.

Sources close to Standard Chartered insist that the payments were no more than ordinary market practice in the countries concerned. They were small payments to junior government officials in order to win business, equivalent to no more than taking someone out for a couple of lunches in the City, according to the source.

Standard has suffered no loss over the affair. However, accusations of bribery could be damaging, especially in the case of Malaysia, which retaliated against British businesses after similar accusations concerning UK construction companies.

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