No financial institution is immune to regulatory charges inside the US.
The recent Standard Chartered Bank adventure provides the best lesson for both the financial industry and the regulators. It also sets an important example.
Standard Chartered Bank is one of the companies to have come under threat under the rigorous regulatory scrutiny. As a result, Standard Chartered was required to pay fines equivalent to the GDP of some less developed countries. The bank has not disclosed to the investing public exactly what happened, only to indicate to the investors that things will be better in the future. Standard Chartered is preparing a quick boardroom reshuffle, having come under pressure from investors over the nature of its handling of allegations that it concealed details of transactions with Iran totalling $250 billion.
The situation arose as a result of an action by a regulatory body whose mandate authority resides within US borders. All of a sudden, no financial institution is immune to regulatory charges inside the US.
The global economy has become swept up in a trend of increasing international conflicts after a deep recession. Politicians of the day want to divert attention far from home, as a result of their own failures in ethics and good governance. In an election year, conflicts are given particular prominence. This is what we saw in recent months in both the US and Japan. Foreign and especially Chinese enterprises doing business overseas are an inevitable target for regulatory investigation.
From this side of the globe, one scenario is that China, as an expanding economy, has attracted careful attention. This highly biased opinion toward China has its followers. Reports about corruption and market misconduct among Chinese enterprises listed in the US are obvious issues for the international media. US regulators may be seen as tools to chase US political and national interest internationally.
The future of regulation and the veracity of regulators do not offer much hope for improvement. What is the nature of the negligence of Chinese enterprises? Is it that corruption is inevitable in the capitalist market, a lack of integrity by different companies, or a cultural and social gap in business culture between Chinese and US companies, or their regulators? The answer may be a bit of everything.
However, the grievance against the regulators is that the importance of corporate governance is clearly not a priority for the regulators in the past years. The numerous international meetings of the regulators in sumptuous tourist spots in the past two decades were restricted to ward off four years of global recession originating in the US and overflowing to other countries.
Regulation seems to have given way to the urgent need to "put out the fire." The numerous international meetings of the financial regulators one after another seem to put rescue foremost, over maintaining institutional structure and rules over the long term. No long-term vision has been revealed. It is time for the US, the international governments, and their respective regulators to rethink what they should develop in the long run.
Source:
http://www.chinadaily.com.cn/hkedition/2012-08/21/content_15691075.htm
