The Name of That Game

"You f---ing Americans.  Who are you to tell us, the rest of the world, that we're not going to deal with Iranians."  Group executive director Standard Chartered Plc, London

And in fact that sounds typically British.  Who are the Americans to tell the rest of the world not to deal with Iranians?  Well, the Americans, isn't it so, own Wall Street, right?  And the American administration has amply given notice to international banks that any who deal with or on behalf of Iranian interests can expect to lose the opportunity to trade financially with America and to operate out of the United States.

Because, simply put, there is a United Nations-imposed set of sanctions against Iran, as a result of its intransigent, dangerous and threatening position over an internationally-illicit nuclear program the Republic is dead set on acquiring for the quite specific purpose of assembling for itself a neat little nuclear arsenal. 

With which it will then threaten, and perhaps with little provocation do more than threaten, its neighbours.  In an already volatile part of the world this can be a most complicating situation, the end result of which is anyone's guess.  And given the fact that there are many international interests in the territory involved, they too can be pulled into the chaos through misadventure.

Best, under those circumstances, to deny a shrilly war-mongering theocratic dictatorship the wherewithal to further give heartburn to those surrounding its borders.  But when there's huge amounts of money to be made through careful laundering and lackeying, there will always be those who neatly set aside their morality and code of ethics on a hard-to-reach shelf where they can be forgotten, enabling them to proceed as they wish. 

Which is why the New York State Department of Financial Services has threatened to tear up London-based Standard Chartered banking licence.  Charging it with being a "rogue institution" which "schemed" with the Islamic Republic of Iran to hide some $250-billion U.S. in transactions tied to Iran. That charge and the accompanying threat of defenestration wiped $17-billion off the value of the transactions.

So this is an indication that no one in authority in financial circles in New York is prepared to look the other way.  The New York DFS charged Standard Chartered with shielding from scrutiny 60,000 secret transactions generating hundreds of millions of dollars in fees over a ten-year period.  With this revelation, shares in Standard Chartered closed down 16.4% for a loss of 24% since the news became public.

"Even the so-called 'safe' banks like StanChart and HSBC seem to be crumbling, with their reputation in tatters.  No one, it seems, is immune.  Some of the language used is very disturbing.  Of course, it could be that the Americans are exaggerating, but somehow that doesn't seem to be the case here", said one investor under confidence.

According to the New York regulator, officials at Standard Chartered had debated whether they would continue to deal with Iranian investors.  In 2006, they held, the head administrative official for business in the Americas sent a "panicked message", that continuing to deal with Iran might cause "catastrophic reputational damage", along with "serious criminal liability".  So they well knew what they were about.

In its own defence, Standard Chartered claimed it "does not believe the order issued by the DFS presents a full and accurate picture of the facts."  For if indeed Standard Chartered were excluded from direct access to the U.S. bank market, it would represent a devastating blow for a foreign bank like Standard Chartered.  One that processes $190-billion daily for global clients.

Which represents what is at stake here.  Any institutions wishing to play in the American financial pond, must be prepared to respect American game rules.  And that, in a nutshell, is who they think they are.  Take it or leave it.  Eschew those opportunities to play in those leagues by underhanded business transactions under these quite specific circumstances, and suffer the consequences.

And that is fair game.