Standard Chartered comes under spotlight
LONDON – Standard Chartered, a British bank that was run by Lord Davies, the trade minister, has been accused by the the British Foreign Office of 'propping up' President Robert Mugabe's government in Zimbabwe.
Internal Whitehall emails seen by The Telegraph show the concern at the Foreign Office about the involvement of Standard Chartered Bank in Zimbabwe.\r\n\r\nLord Davies of Abersoch was chief executive and then chairman of the bank until last month when he became a trade and investment minister. Standard Chartered is among a handful of foreign banks operating in Zimbabwe. It employs 860 people and has 24 branches there.\r\n\r\nHowever, an internal Foreign Office briefing document accuses Standard Chartered of diverting money to the Mugabe government.\r\n\r\nThe documents, released under the Freedom of Information Act, say that Standard Chartered had been “diverting” cash to the regime through a loans scheme.\r\n\r\nThe email, dated Aug 25, 2008, says: “Standard Chartered risk real reputational damage if seen as passing funds to the Government of Zimbabwe.\r\n”Understand that Standard Chartered has been diverting money to the GoZ due to a legal obligation to do so. But must realise the repercussions of giving money to those responsible for this crisis.”\r\n\r\nA further email from July last year accuses banks operating in the country of “propping up” the state Reserve Bank of Zimbabwe (RBZ).\r\n\r\nIt even suggests that Standard Chartered should close its operations there. “It could be argued that the banking sector is propping up the RBZ and that companies such as [name withheld] and Standard Chartered should close,” the email says. It goes on to suggest that Standard Chartered and the other bank “are aware of the reputation at risk” and should review their operations in Zimbabwe.\r\n”We should ask the companies to take a long hard look at what they are doing and with whom,” it says. “Any opportunity to minimise contact with, and even incidental support for, the regime should be explored within the limits of practical business (and politics).”\r\n\r\nThe revelations are especially embarrassing for the Government because Lord Davies was chief executive of Standard Chartered between 2001 and November 2006, and the bank’s chairman from November 2006. He stood down as chairman on Jan 14, when he became trade and investment minister, replacing Lord Jones of Birmingham.\r\n\r\nAccording to the documents, Standard Chartered Bank Zimbabwe is 100 per cent owned by Standard Chartered, which means that its operations are not governed by European Union sanctions.\r\n\r\nThe documents state that Standard Chartered was “at great pains to explain that they were compelled to hand over these funds. They also iterated that they had a number of employees in Zimbabwe who depended on their salaries and would suffer if they were any pull out by Standard Chartered”.\r\n\r\nNorman Lamb, a Liberal Democrat MP who obtained the emails, said: “These emails demonstrate that UK banks operating in Zimbabwe are indirectly financing the government – through the purchase of government bonds. It beggars belief that Gordon Brown should, in these circumstances, appoint the chairman of Standard Chartered to be a trade minister and place him in the House of Lords.”\r\n\r\nBritish banks were able “to circumvent sanctions by operating through locally based companies”, he said, adding that the revelations “demonstrate just how weak and inadequate the sanctions rules have been – and the hypocrisy of the Government”.\r\n\r\nA spokesman for Standard Chartered confirmed that Lord Davies was aware of the company’s operations in Zimbabwe when he ran the bank.\r\n\r\nThe spokesman declined to comment on the claim that the bank was “propping up” the regime. He added: “We made a conscious decision to stay in the country where we have 860 staff. We concluded it was the right thing to do to look after our customers. In every country where we are operating we are required to deposit certain amounts of capital with the central banks.”\r\n\r\nLord Davies declined to answer a series of questions about Standard Chartered’s involvement in Zimbabwe.\r\n\r\nHowever, a source close to the minister said: “The bank has made it very clear in its report and accounts why it has remained in Zimbabwe.\r\n”The company has made clear what its views on Zimbabwe are. It was a decision taken at board level to remain there. It was a commercial matter for the company.”\r\n\r\nLast year another British bank, Barclays, was accused of providing “personal banking services” for up to four members of Mr Mugabe’s regime who had benefited from the controversial land-grabs from white farmers in Zimbabwe.\r\n\r\nA Barclays spokesman said at the time: “Barclays is compliant with EU sanctions regarding Zimbabwe. Barclays always seeks to conduct its business in an ethical and responsible manner.\r\n”Barclays has been in Zimbabwe since 1912 and is deeply committed to supporting its 150,000 customers in the country in what is clearly a difficult operating environment. Our 1,000 Zimbabwean employees are providing an excellent service and, as a major employer, we are fully committed to their welfare.”\r\n\r\nUnder European Union sanctions imposed in 2002, bank accounts and funds of 131 members of Mr Mugabe’s government were frozen. SOURCE: The Telegraph (UK)