Standard Chartered Refuses to Claw Back Bonuses After American Fines

Pot Of Gold

Oh no they won't.

No one at Standard Chartered had their bonus clawed back last year – when the bank was fined £415m for busting US sanctions with Iran and other countries and paid its top 16 bankers almost $100m (£65m).

Standard Chartered was rocked last summer when New York state's department of financial services accused it of hiding $250bn of sanctions-busting transactions that left the financial system vulnerable to "terrorists" and "drug kingpins" in the six years up to 2007.

But in the bank's annual report, published on Thursday, Ruth Markland, the non-executive director who chairs the remuneration committee, explained why it was not necessary to reclaim bonuses. "The committee carefully considered whether the circumstances were appropriate to exercise the clawback of past awards in respect of 2001 to 2007. We concluded that it was not," she said.

"In reaching this conclusion, the committee also noted that income and profits from the matters that were the subject of the settlements were immaterial, and therefore did not inflate any prior bonus payout in any material manner."

Standard Chartered insisted it did not breach sanctions to the extent alleged and settled with the regulators for a smaller breach of the rules, which also included a deferred prosecution agreement to avoid potential criminal sanctions.

But last week, Sir John Peace, the chairman, was forced to retract comments describing the breaches as "clerical errors" and apologised for describing them as not "wilful acts" after US regulators were infuriated by his comments at the bank's full-year press conference.

At that event, questions were asked concerning individual employee conduct and compensation following the deferred prosecution agreements. Peace had replied, when asked about bonuses for executives: "We had no wilful act to avoid sanctions; you know, mistakes are made – clerical errors – and we talked about last year a number of transactions which clearly were clerical errors or mistakes that were made."

Sands had admitted at the press conference that he had been awarded a bonus of nearly £2m, down 10%, and that the bank's bonus pool had been cut by 7%. The annual report showed total pay for Sands amounted to $7.6m if an award of shares of $2.4m is added to his $1.7m salary and bonus. A footnote shows that the company paid an extra $213,244 to HM Revenue & Customs after an "internal error" related to the chief executive's company car.

In addition, during 2012 Sands had awards of shares worth more than £5m from previous years – dating back to 2009 – released to him.

Under the totals provided by Standard Chartered, which include the value of share awards made to directors during the year, the six members of the board received $41m, the largest total of which went to Mike Rees, who runs the wholesale bank and who received $12m. He has earned $52m in the last four years, according to Reuters. Last year the total for all board members was $37.8m.

The bank, which employs 97% of its staff outside the UK, also provided anonymised details of its 10 highest-paid bankers who are not executives. They received a total of more than $50m; the highest-paid of them received $9.4m.

Tax equalisation payments – usually made to compensate for working abroad – were also made to two of the bank's directors, Steve Bertamini and Jaspal Bindra, whose "benefits" for the year increased by $110,689 and $319,933 to reflect the payments.

Richard Medding – thought to be the banker who exclaimed "you fucking Americans" when warned about the potential violations of sanctions – received $5m. The bank insists the quote is inaccurate.

Pay up – and down – at Northern Rock

Executives at the nationalised parts of Northern Rock and Bradford & Bingley enjoyed rises in total pay last year – even after their bonuses were cut by 20% because of a £270m bill left for the taxpayer from a mistake in loan statements sent to 152,000 customers.

Total pay for chief executive Richard Banks rose 6% to £642,820 while the pay of finance director Phillip McLelland rose 15% to £445,788 although he was promoted halfway through the previous year. While the management took 20% cuts to their bonuses, Banks took a further 15% reduction.

Chairman Richard Pym offered to take a 5% cut to his £237,000-a-year fee while the rest of the non-execs also volunteered to take less by 5% from 1 October. "These reductions recognise the increasingly stable position of the two businesses and consequently their time required is reduced," said the annual report of UK Asset Resolution, which unites the nationalised arms of Northern Rock and Bradford & Bingley.

Powered by article was written by Jill Treanor, for The Guardian on Thursday 28th March 2013 21.01 Europe/London © Guardian News and Media Limited 2010


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