In the Matter of Standard Bank Plc

• Case Name
• In the Matter of Standard Bank Plc

• Date Filed
• 11/30/2015

• Enforcement Agency
• SEC

• Countries
• Tanzania

• Foreign Official
• Tanzanian Minister of Finance and other government officials.

• Date of Conduct
• 2011 to 2013

• Nature of Business
• Standard Bank PLC (now known as ICBC Standard Bank Plc) is a London-based international investment bank subsidiary of the Standard Bank Group Limited of South Africa.  Standard Bank is regulated by the U.K. Financial Conduct Authority and the Prudential Regulatory Authority.

• Influence to be Obtained
• According to a cease-and-desist order issued by the SEC, from 2011 to 2013, Standard Bank and a Tanzanian Standard Bank Group member, Stanbic Bank Tanzania Limited, sought to secure a mandate from the Government of Tanzania to obtain financing for various infrastructure projects in the country through a private placement of sovereign debt.  According to an initial proposal to the Ministry of Finance, Standard Bank and Stanbic would receive a fee of 1.4% of the proceeds for arranging the transaction.  Over the course of 2012, Standard Bank and Stanbic worked with the Ministry of Finance to secure its approval of the proposal.  However, in May 2012, the Ministry of Finance was replaced by a new group of administrators.
  
  From May 2012 to the end of 2012, Standard Bank and Stanbic continued to work with the new Ministry of Finance to secure its approval of the proposal.  After a series of meetings in August and September 2012, Standard Bank and Stanbic issued a proposal letter to the Ministry of Finance which provided that the bank would receive a fee of 2.4% of the gross proceeds as lead manager of the transaction.  Notably, the proposal defined “Lead Manager” as Stanbic and Standard Bank, “in collaboration with its Local Partner.”  The “Local Partner” was later revealed to be Enterprise Growth Market Advisers Limited (“EGMA”).  According to the proposal letter, the Local Partner was to receive 1 percent of the gross proceeds.  Later versions of the proposal letter removed references to the Local Partner, but contemporaneous emails indicated that Standard Bank and Stanbic were preparing a side letter to allocate a portion of the fees to EGMA. 
  
  On February 27, 2013, the Government of Tanzania issued floating-rate amortizing, unrated, unlisted, sovereign bonds through a Regulation S private placement.  As alleged by the SEC, $600 million in proceeds were generated by the transactions, with 1% ($6 million) going to EGMA.  After EGMA paid for legal costs associated with the transaction, approximately $5.2 million was allegedly withdrawn in cash from the bank account holding the funds in the period between March 18 and March 27, 2013.  According to the SEC, Standard Bank did not become aware of the cash withdrawals until after they were made and did not know how the funds were ultimately used.  Although not alleged in the SEC action, in a proceeding initiated by the U.K. SFO, Standard Bank and Stabic were accused of using the 1% fee as a bribe to induce the Government of Tanzania to approve the financing proposal.

• Enforcement
• On November 30, 2015, the SEC issued a cease-and-desist order against Standard Bank.  According to the order, Standard Bank violated Section 17(a)(2) of the Securities Act for its failure to take reasonable steps to understand what role EGMA would play in the transaction and its failure to disclose material facts associated with the transaction to investors.  The order instructed Standard Bank to pay a $4.2 million civil penalty as a result of its violation of U.S. securities laws.  In addition, the SEC’s order acknowledged that Standard Bank had agreed to disgorge $8.4 million as a result of charges brought by the U.K. SFO for violations of Section 7 of the U.K. Bribery Act.  In an SEC press release accompanying the order, the SEC indicated that it did not bring FCPA-related charges against Standard Bank because Standard Bank was not an “issuer” for purposes of the FCPA, thus depriving the Commission of jurisdiction.

• Amount of the Value
• Approximately $6 million.

• Amount of Business Related to Payment
• Approximately $600 million.

• Intermediary
• Local Partner.

• Citizenship of Parent Entity
• United Kingdom

• Total Sanction
• $ 12,600,000

• Compliance Monitor
• No

• Reporting Requirements
• Yes

• Case is Pending?
• No

• Total Combined Monetary Sanction
• $ 12,600,000

Standard Bank Plc

• Citation
• In the Matter of Standard Bank Plc, Admin. Proc. File No. 3-16973 (Nov. 30, 2015).

• Date Filed
• 11/30/2015

• Filed Under Seal
• No

• FCPA Statutory Provision

• Other Statutory Provision
• Securities Act Section 17(a)(2) (obtaining property by untrue statement or omission of  material facts).

• Disposition
• Cease-and-Desist Order

• Defendant Jurisdictional Basis
• Unknown

• Defendant's Citizenship
• United Kingdom

• Individual Sanction
• $12.6 million (up to $8.4 million credited by payment to U.K. SFO).