Standard Bank to Pay $4.2 Million to Settle SEC Charges
Standard Bank Plc (now ICBC Standard Bank) failed to disclose a $6 million bribe paid through its affiliate to a Tanzanian firm with government ties to secure its role as lead manager of a $600 million sovereign bond offering, resulting in a $4.2 million SEC penalty and a $36.9 million global settlement including disgorgement and U.K. fines.
Standard Bank Plc, acting as lead manager for a $600 million Tanzanian sovereign bond offering in 2013, failed to disclose that its affiliate Stanbic Bank Tanzania paid $6 million to Enterprise Growth Markets Advisors Limited (EGMA), a firm with a government representative on its board, in exchange for being selected as banker. The SEC charged Standard with violating Section 17(a)(2) of the Securities Act for materially misleading investors by omitting this bribe-like payment, and ordered $8.4 million in disgorgement and a $4.2 million civil penalty. As part of a coordinated global settlement with the U.K. Serious Fraud Office, Standard admitted wrongdoing, paid a total of $36.9 million across jurisdictions, and agreed to cease and desist from future violations under both U.S. and U.K. anti-bribery laws.
Standard Bank Plc, now ICBC Standard Bank, acted as lead manager for a $600 million sovereign bond offering by the Government of Tanzania in 2013, during which its affiliate, Stanbic Bank Tanzania, paid $6 million to Enterprise Growth Markets Advisors Limited (EGMA), a Tanzanian firm with no substantive role in the transaction. EGMA’s director was a representative of the Tanzanian government, and the offering was only finalized after Standard and Stanbic committed to pay EGMA one percent of the proceeds—$6 million total—effectively as a bribe to secure their selection as lead managers. Despite red flags, Standard failed to investigate EGMA’s role or disclose the payment in offering documents, rendering them materially misleading to investors under Section 17(a)(2) of the Securities Act of 1933. The SEC charged Standard with securities fraud and ordered $8.4 million in disgorgement and a $4.2 million civil penalty, with the disgorgement offset by an equal payment made to the U.K. Serious Fraud Office (SFO). In a coordinated global settlement, the SFO also fined Standard under the U.K. Bribery Act 2010, bringing the total monetary relief to approximately $36.9 million. Standard admitted to the facts underlying both settlements and agreed to cease and desist from future violations. The SEC emphasized its commitment to pursuing tainted securities offerings globally, even when the underlying bribery occurs outside U.S. jurisdiction, as Standard was not an 'issuer' under the FCPA and thus could not be charged under that law.
Exhibits & Attached Documents (1)
Extracted insights
- $600.00M $600 million $100M–$1B
- $36.90M $36.9 million $10M–$100M
- $8.40M $8.4 million $1M–$10M
- $6.00M $6 million $1M–$10M
- $4.20M $4.2 million $1M–$10M
- agency $4.2 million civil penalty to sec
- company $6 million from stanbic bank tanzania limited
- agency approximately $36.9 million in total monetary relief in sec and u.k. actions
- company enterprise growth markets advisors limited
- agency sec charges by paying $4.2 million penalty
- agency Securities and Exchange Commission
- company stanbic bank tanzania limited
- company standard bank plc
- SEC charged Standard Bank Plc with failing to disclose payments in connection with Tanzania debt offering
- Standard Bank Plc acted as lead manager for $600 million Tanzania debt offering in 2013
- Standard Bank Plc failed to disclose payments made by affiliate to Tanzanian firm EGMA
- Standard Bank Plc agreed to settle SEC charges by paying $4.2 million penalty
- Stanbic Bank Tanzania Limited paid $6 million of offering proceeds to EGMA
- Standard Bank Plc will pay approximately $36.9 million in total monetary relief in SEC and U.K. actions
- SFO brought action against Standard Bank for violations of Section 7 of U.K. Bribery Act of 2010
- Enterprise Growth Markets Advisors Limited received $6 million from Stanbic Bank Tanzania Limited
- Standard Bank Plc must pay $4.2 million civil penalty to SEC
- Standard Bank Plc must pay $8.4 million disgorgement
- Standard and Stanbic received $4.2 million each for participation in Tanzania debt offering
- SEC requires Standard to cease and desist from violations of Section 17(a)(2) of Securities Act of 1933
The Securities and Exchange Commission today charged Standard Bank Plc with failing to disclose certain payments in connection with debt issued by the Government of Tanzania in 2013. The London-based bank acted as a lead manager for the offering and failed to disclose payments made by an affiliate to a Tanzanian firm that received a portion of the proceeds of the $600 million offering but performed no substantive role in the transaction. Standard Bank, now ICBC Standard Bank Plc, agreed to settle the SEC’s charges by paying a $4.2 million penalty and admitting the facts underlying the SEC’s charges that were admitted in a related settlement with the United Kingdom’s Serious Fraud Office (SFO). As part of that coordinated global settlement, the SFO also announced a settlement today in an action it brought against Standard in the U.K. for Standard’s violations of Section 7 of the U.K.’s Bribery Act of 2010. The Bribery Act of 2010 is similar to the Unites States’ Foreign Corrupt Practices Act (FCPA). The SEC would not have jurisdiction to bring charges under the FCPA because Standard was not an “issuer” as defined by that Act. Standard will pay a total of approximately $36.9 million in monetary relief in the SEC and U.K. actions. According to the SEC’s order, the offering documents and statements to potential investors in the sovereign debt offering were materially misleading because they failed to disclose that Standard’s affiliate, Stanbic Bank Tanzania Limited, would pay $6 million of the proceeds to Enterprise Growth Markets Advisors Limited (EGMA), a private Tanzanian firm. The order found Standard did not seek to understand EGMA’s role in the transaction despite red flags that the $6 million payment was intended to induce the Government of Tanzania to select Standard and Stanbic as managers for the offering. One of EGMA’s directors was a representative of the Government of Tanzania and the offering was not finalized until Standard and Stanbic committed to pay EGMA one percent of the proceeds of the offering. Standard and Stanbic split 1.4 percent of the proceeds, with each receiving $4.2 million for their participation in the transaction. “Standard failed to disclose EGMA’s involvement in the bond offering to investors despite red flags suggesting some of the proceeds of the offering were going to EGMA for the purpose of influencing the Tanzanian Government’s selection of bankers for the transaction,” said Gerald W. Hodgkins, Associate Director of the SEC’s Division of Enforcement. “This action against Standard demonstrates that when suspicious payments made anywhere in the world result in tainted securities offerings in the United States, the SEC is fully committed to taking action against the responsible parties.” The SEC’s order requires Standard to cease and desist from committing or causing any violations and any future violations of Section 17(a)(2) of the Securities Act of 1933 that prohibits obtaining money by any materially untrue statement or omission, and to pay a $4.2 million civil penalty. The order also requires Standard to pay disgorgement of $8.4 million, which the Commission has deemed satisfied by a payment of equal amount in the U.K. matter. The SEC’s investigation was conducted by Douglas C. McAllister and Lesley B. Atkins. The SEC appreciates the coordination of the U.K Serious Fraud Office.
The Securities and Exchange Commission today charged Standard Bank Plc with failing to disclose certain payments in connection with debt issued by the Government of Tanzania in 2013. The London-based bank acted as a lead manager for the offering and failed to disclose payments made by an affiliate to a Tanzanian firm that received a portion of the proceeds of the $600 million offering but performed no substantive role in the transaction. Standard Bank, now ICBC Standard Bank Plc, agreed to settle the SEC’s charges by paying a $4.2 million penalty and admitting the facts underlying the SEC’s charges that were admitted in a related settlement with the United Kingdom’s Serious Fraud Office (SFO). As part of that coordinated global settlement, the SFO also announced a settlement today in an action it brought against Standard in the U.K. for Standard’s violations of Section 7 of the U.K.’s Bribery Act of 2010. The Bribery Act of 2010 is similar to the Unites States’ Foreign Corrupt Practices Act (FCPA). The SEC would not have jurisdiction to bring charges under the FCPA because Standard was not an “issuer” as defined by that Act. Standard will pay a total of approximately $36.9 million in monetary relief in the SEC and U.K. actions. According to the SEC’s order, the offering documents and statements to potential investors in the sovereign debt offering were materially misleading because they failed to disclose that Standard’s affiliate, Stanbic Bank Tanzania Limited, would pay $6 million of the proceeds to Enterprise Growth Markets Advisors Limited (EGMA), a private Tanzanian firm. The order found Standard did not seek to understand EGMA’s role in the transaction despite red flags that the $6 million payment was intended to induce the Government of Tanzania to select Standard and Stanbic as managers for the offering. One of EGMA’s directors was a representative of the Government of Tanzania and the offering was not finalized until Standard and Stanbic committed to pay EGMA one percent of the proceeds of the offering. Standard and Stanbic split 1.4 percent of the proceeds, with each receiving $4.2 million for their participation in the transaction. “Standard failed to disclose EGMA’s involvement in the bond offering to investors despite red flags suggesting some of the proceeds of the offering were going to EGMA for the purpose of influencing the Tanzanian Government’s selection of bankers for the transaction,” said Gerald W. Hodgkins, Associate Director of the SEC’s Division of Enforcement. “This action against Standard demonstrates that when suspicious payments made anywhere in the world result in tainted securities offerings in the United States, the SEC is fully committed to taking action against the responsible parties.” The SEC’s order requires Standard to cease and desist from committing or causing any violations and any future violations of Section 17(a)(2) of the Securities Act of 1933 that prohibits obtaining money by any materially untrue statement or omission, and to pay a $4.2 million civil penalty. The order also requires Standard to pay disgorgement of $8.4 million, which the Commission has deemed satisfied by a payment of equal amount in the U.K. matter. The SEC’s investigation was conducted by Douglas C. McAllister and Lesley B. Atkins. The SEC appreciates the coordination of the U.K Serious Fraud Office.