Organisational Behaviour and the Standard Chartered Bank Scandal Essay

Organisational Behaviour and the Standard Chartered Bank Scandal - Essay Example This was used to fund terrorist groups. The US branch of the bank hid 60,000 transactions with Iran for almost a decade. Speaking in a press conference on August 8th, Standard Chartered Bank CEO, Peter Sands stated that â€Å"there was no systematic attempt to circumvent sanctions in Iran†. He admitted that some deals violated US sanctions of Iran but that was not the whole representative policy of the bank. However, this incident wiped off $17billion from the bank's market value and shares fell by 7% within the 24-hour period (BBC News, 2012a). According to the Telegraph (2012) the US Treasury department showed suspicion that some US banks are collaborating with Iran to fund the nuclear weapons programme of Iran. However, Standard Chartered Bank kept this secret until the lid was opened upon them. A senior business writer for the Guardian in the UK did a thorough critique of the situation at hand (Palmer, 2012). In his critique, he identified important pointers and actions th at are relevant to the case and give a broader view of the concepts involved in the breach. He identifies that widespread illegal activities committed in different parts of the world cannot succeed unless some international banks cooperate with the persons indicted for the activity. In citing a similar case, Palmer identifies that HSBC bank was indicted for helping Mexican drug traffickers to circumvent sanctions by covering up their transactions and presenting them as legal (Palmer, 2012). In the events leading to the Standard Chartered scandal, it is said that the head of Standard Chartered Americas wrote to the director on 5th October, 2005 stating that the UK headquarters' transactions with Iran were â€Å"very serious and even catastrophic enough to cause major reputational damage of the bank† (Palmer, 2012). However, the warning was not heeded and this led to the scandal. However, Standard Chartered went on and altered wire transactions for the Iranian government (see A ppendix 1). Deloitte, the bank's auditors came out and claimed that they had no knowledge of the actions of the bank's employees and this activity was not disclosed to them (Palmer, 2012). However, Palmer insists that the current CEO, Peter Sands served as the finance director between 2002 and 2006 before assuming his current position and he had served long enough to know about this spate of illegal transactions. This is an offence and the management and staff of Standard Chartered Bank are indicted for their role in breaking an international legal convention. This is clearly the case of an unethical behaviour and requires a lot of attention from the major stakeholders. This paper undertakes analysis of the subject and its implications to organisational behaviour. Organisational Structures/Culture and the Scandal â€Å"In banking, there has always been an overlap between corporate governance and banking regulations† (Gup, 2007 p13). This implies that banking has always had a corporate governance culture that requires the people charged with directing the affairs of the bank to follow some important regulations and considerations in decision making and the running of the banks. Gup goes on to state that these rules and imperative requirements were in place since the 1930s where most banks in the developed world had to react to the major economic crises that came up prior to the Second World War (2007).