The state of New York announced on Tuesday, that Deloitte, a Big 4 accounting
firm, has been banned for a year from accepting Wall Street consultancy work - -
in effect from hundreds of financial institutions in New York City and fined $10m for
"misconduct, violations of law, and lack of autonomy during its consulting work
at Standard Chartered on anti-money laundering issues."
Finfacts report, Dec 2012:
US fines ex-British Empire banks HSBC and Standard Chartered $2.5bn for money
Benjamin M. Lawsky, New York superintendent of Financial Services,
said, “At times, the consulting industry has been infected by an 'I'll
scratch your back if you scratch mine' culture and a stunning lack of
independence. Today, we are taking an important step in helping ensure that
consultants are independent voices – rather than beholden to the large
institutions that pay their fees. Our aggressive work investigating and
reforming the consulting industry is far from over and will continue in the
days, weeks, and months ahead.”
This was the same culture that prevailed in
Ireland during boom and the same firms scooped up business from the Irish
Government, after the bust.
Settlement agreement with Deloitte [pdf]
The Department of Financial Services said: its investigation into Deloitte’s
conduct during its consultant work at Standard Chartered found that the company:
In an email cited in the
settlement agreement [pdf] with Standard Chartered Bank, a Deloitte partner said: “ ‘[W]e agreed’ to [StanChart]’s
request because ‘this is too much and too politically sensitive for both
[StanChart] and Deloitte. That is why I drafted the watered-down version’.”
- Did not demonstrate the necessary autonomy required of
consultants performing regulatory work. Based
primarily on Standard Chartered's objection, Deloitte removed a
recommendation aimed at rooting out money laundering from its written final
report on the matter to the Department. The recommendation discussed how
wire messages or “cover payments” on transactions could be manipulated by
banks to evade money laundering controls on US dollar clearing activities.
- Violated New York Banking Law § 36.10 by disclosing confidential
information of other Deloitte clients to Standard Chartered.
senior Deloitte employee sent emails to Standard Chartered employees
containing two reports on anti-money laundering issues at other Deloitte
client banks. Both reports contained confidential supervisory information,
which Deloitte FAS was legally barred by New York Banking Law § 36.10 from
disclosing to third parties.
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