Whistleblowers claim to have uncovered billions of dollars worth of previously undetected transactions carried out by Standard Chartered with Iran-linked entities, including sanctioned companies and terrorist organisations, according to a court filing submitted in New York on Friday.
The alleged transactions were discovered after the whistleblowers forensically re-examined spreadsheets and documents they had provided to US authorities in 2012 and 2013 and found hidden data embedded in them. The whistleblowers are seeking to revive a lawsuit they filed in Manhattan federal court in 2012 and reverse the dismissal of their claim.
The newly uncovered data has prompted the two whistleblowers — one of them a former StanChart executive — to claim the US government committed a “colossal fraud on the court” when it asserted they failed to produce substantive evidence to help authorities’ enforcement actions against the bank for violating US and international sanctions.
The new allegations are the latest in a series of claims spanning more than a decade made by the pair, who have sought to shine a light on an era when StanChart facilitated access to the global financial system for rogue nations including Iran.
StanChart called the filing “another attempt to use fabricated claims against the bank, following previous unsuccessful attempts” and said the allegations had been discredited by US authorities. “We are confident the courts will reject these claims, as they have already done repeatedly,” it said.
With the help of a forensic investigator, the whistleblowers — Julian Knight, a former global head of foreign exchange transaction banking who left StanChart in 2011, and Robert Marcellus, a currency trader — found hidden data covering more than half a million financial transactions. They include transactions with sanctioned entities related to Iran totalling $9.6bn, and forex transactions tied to the Islamic Republic with a notional value of $100bn, according to the filings.
The transactions were allegedly carried out between 2008 and 2013, after the London-headquartered bank had announced it would cease all new business with Iranian customers in 2007.
One such example is data showing StanChart carried out “direct and indirect transactions involving known front companies” of terror organisations, the filings claim. These included transactions with a company owned by Mohammad Bazzi, who was later sanctioned by the US Office of Foreign Assets Control in 2018 for his alleged role as a financier of the Lebanon-based Hizbollah militant group. The filings also highlight transactions with a Pakistani fertiliser conglomerate that allegedly sold the Taliban in Afghanistan explosive materials used to build improvised explosive devices.
Since 2012 StanChart has been hit with penalties relating to sanctions violations and due diligence failures totalling more than $2bn. More than half of that was paid as part of a 2019 settlement that included a guilty plea by a former bank employee and a criminal indictment against a StanChart customer.
A US federal statute allows whistleblowers to sue on behalf of the government in so-called “qui tam” actions and share in the proceeds if the claims hold up. The whistleblowers argued the material they had provided to US law enforcement agencies contained crucial information proving sanctions breaches.
However, government agencies argued the case against the bank was reopened based on evidence unrelated to the material the whistleblowers provided. The government further argued that after a thorough investigation it had concluded that the alleged breaches highlighted by the whistleblowers were so-called “wind-down transactions” or other transactions that “otherwise did not appear to violate any sanctions rules”.
In February the US Supreme Court declined to hear the whistleblowers’ civil suit, which had been dismissed by a lower court.
The Federal Reserve Board declined to comment. The Department of Financial Services said it could not comment on ongoing litigation. Ofac referred questions to the Department of Justice, which did not immediately respond to a request for comment.
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