Bloomberg published an interesting story reporting that Sullivan & Cromwell LLP and Slaughter and May’s are of interest to U.S. prosecutors, “asking whether [the] two law firms gave Standard Chartered Plc improper advice as they steered the bank through a sanctions-violations investigation.” The prosecutors (who may be the source for the story) have not, though, “accused the law firms of wrongdoing.”
I have written previously about this role of SCB’s in-house lawyers in relation to what was known as wire-stripping, but this story appears to relate to the subsequent investigation into SCB which led to substantial fines for breaching US sanctions law. The bank claimed to have acknowledged past criminal conduct but has been/is being re-investigated to, “determine whether the bank had withheld evidence of Iran sanctions violations.” BNP Parbibas and some of its outside lawyers have also found themselves in hot water in similar circumstances.
What we are told prosecutors want to know now is whether the law firms improperly advised the London-based lender on the submission of certain information during the investigation that led to the 2012 settlement.
Another of SCB’s professional/independent advisers (not its lawyers) have previously been criticised for “softening” its reports to regulators, “by request of the bank or its counsel.” (emphasis added, but it is not clear from the story whether this request emanated from either in-house or outside counsel). This kind of management of independent advisers is coming under increasing scrutiny and beginning to draw professional advisers closer towards scandal. The story ends with this statement:
Rarely are lawyers and law firms taken to task for their opinion letters or advice. Even when a corporate decision is found to be at fault, the company may be able to minimize the penalty with the advice of counsel as a shield.
Rarely, but sometimes. It remains to be seen whether this US investigation goes anywhere.