THE US ARM of Deloitte has become embroiled in accusations that a banking unit of Standard Chartered schemed with the government of Iran to hide billions of dollars of transactions for nearly a decade.
A scathing report by New York regulators said Deloitte helped Standard Chartered Bank disguise secret Iranian client transactions from US regulators and “watered down” an independent report into the bank’s practices.
Deloitte denied the allegations, and said in an emailed statement: “Deloitte Financial Advisory Services performed its role as independent consultant properly and had no knowledge of any alleged misconduct by bank employees. Allegations otherwise are unsupported by the facts.”
According to the order, the bank’s actions – in which roughly 60,000 transactions, involving at least $250bn (£160bn), were hidden from US regulators from 2001 to 2010 – left the US financial system “vulnerable to terrorists, weapons dealers, drugs kingpins and corrupt regimes”.
In a statement issued on Tuesday, Standard Chartered said: “The group strongly rejects the position or the portrayal of facts as set out in the order issued by the DFS.” It added that it does not believe the order “presents a full and accurate picture of the facts”.
The New York State Department of Financial Services (DFS) said in its order: “For nearly a decade, Standard Chartered Bank programmatically engaged in deceptive and fraudulent misconduct in order to move at least $250bn through its New York branch on behalf of client Iranian financial institutions that were subject to US economic sanctions, and then covered up its transgression.”
In the order made public on Monday, Benjamin Lawsky, superintendent of the New York State Department, said the bank was “apparently aided by its consultant Deloitte & Touche, which intentionally omitted critical information in its ‘independent report’ to regulators”.
The independent report, carried out by Deloitte’s financial services advisory group, was part of a written agreement between Standard Chartered’s New York branch and banking regulators, following separate compliance failures at the bank.
Lawsky asserts that Standard Chartered asked Deloitte to delete any references to payments that could reveal its practices involving Iranian clients from its draft report. In an email cited by Lawsky, a partner at the firm said that Deloitte “agreed” to the request because “this is too much and too politically sensitive for both SCB and Deloitte. That is why I drafted the watered-down version.”
In August and September 2005, Deloitte is also alleged to have “unlawfully” provided Standard Chartered with confidential historical transaction review reports that it had prepared for two other major foreign banking clients that were under investigation for money laundering.
“These reports contained detailed and highly confidential information concerning foreign banks involved in illegal US dollar clearing activities,” Lawsky said.
The publication of the order sent shares in Standard Chartered tumbling 23.5% in morning trading on the London Stock Exchange.
Do you have an investigation looming large over you? Kingsley Napley's Julie Matheson goes through the best strategies to manage the process
Making Tax Digital will impose significant additional tax compliance costs on small businesses for little or no medium term benefit, tax and small business experts told MPs
Just one half of UK practices have implemented a pricing structure around auto enrolment implementation and advice - with many suffering increased costs
Three former Tesco executives, including the former finance director of Tesco UK, have denied charges of fraud and false accounting in relation to a £326m accounting scandal at the supermarket