UK’s Standard Charter Bank Embroiled in Lobbying Scandal
luvsmiling, Dec. 1, 2014, 11:16 a.m.
Financial regulators are investigating Standard Chartered Bank's underperforming Korean unit for allegedly seeking to send W1.2 trillion in dividends to headquarters in the U.K. and plotting to lobby local government officials (US$1=W1,109).
The evidence is contained in an internal report entitled "Korea Capital-Discussion" prepared by the bank. It details plans to send W1.2 trillion or US$1.1 billion in dividends to headquarters by March next year and contains a list of which high-ranking government officials and financial authorities to approach.
The document contains a schedule of contacts to be made with senior figures in the financial authorities here by former CEO Richard Hill and current CEO Ajay Kanwal since April this year. It mentions plans for Standard Chartered Group head Peter Sands, who visited Korea in the first week of July, to meet President Park Geun-hye, the chief presidential economic secretary and the FSS chief.
Sands paid a visit to Cheong Wa Dae on July 2 and denied rumors that the bank would pull out of Korea, instead claiming it wants to upgrade the Korean unit to the Northeast Asian headquarters.
The plan proposes "deal sweeteners" to ensure that the dividends can be sent to headquarters, including advice to the Park administration to bolster the nation's financial industry, which is among the top priorities of her administration.
But the SC’s Northeast Asia business is not significant enough to boost Korea as a financial hub, with the Mongolian branch employing only 10 staff and the Japanese branch less than 200, according to financial sources.
When the plan to send back huge dividends surfaced, SC staff moved to scale down the size of the remittance. A senior FSS official said, "It is unreasonable that a bank performing so poorly should pay excessive dividends to shareholders."
"The regular inspection is now underway and we'll take a close look at the allegation and take action if there's evidence of wrongdoing."