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This is extortion by America, not law enforcement

Threatened with total destruction, companies write a large cheque David Bermingham writes for The Times - Thunderer August 8 2012 Pity poor Standard Chartered Bank, the latest high-profile British casualty of the US enforcement agencies apparent war on big foreign corporations. Accused by the New York State Department of Financial Services of flagrantly deceptive actions in its dealings with Iran, it has been ordered to explain why its New York banking licence should not be revoked. This follows hot on HSBCs admission of wrongdoing in respect of money-laundering involving drug cartels, news that RBS is being investigated over money laundering, and the Libor-fixing scandal. Standards immediate response was a robust denial, but history suggests that the eventual outcome will be a settlement, with a large cheque written by the bank. Not because it has done anything wrong necessarily, but because its commercial interests in the US are too valuable to risk. A cynic would see a pattern here. After prosecuting Arthur Andersen into oblivion over Enron, US agencies realised that the threat of extinction for a big corporation could be used to significant financial advantage. And how much better when the company writing the cheque is foreign? A straightforward transfer of wealth from foreigners to the US economy. We in the NatWest Three always suspected that the Department of Justice threatened RBS with loss of its US banking licence if it helped us to defend ourselves. The previous year KPMG had paid $456 million to settle allegations that it had helped wealthy clients to evade US taxes. And last month GlaxoSmithKline agreed a $3 billion fine to settle fraud allegations. Libor-fixing could prove a real beanfeast, with Barclays having already coughed up $360 million. But the grandaddy of them all is BP, which may have to pay out $20 billion. The modus operandi is similar in every case; civil and criminal agencies work in tandem, threatening total destruction of the company, which writes a large cheque and signs a settlement. Few cases make it to court as the stakes are too high. But the victim is buried in invective: Standard Chartered was accused of leaving the US vulnerable to terrorists, drug kingpins and corrupt regimes. Often a mix of politics and ego lie behind the charges. Many prosecutors have their eye on high political office and bashing foreign corporations is good for their CVs. But ultimately it all boils down to money. When asked why he robbed banks, Willie Sutton is reputed to have said because thats where the money is. Have the US enforcement agencies adopted a similar approach? David Bermingham is the author of A Price to Pay: The Inside Story of the NatWest Three (Gibson Square)