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SCMP Reporter

STANDARD Chartered Bank confirmed that employees at its gold bullion trading subsidiary, Mocatta, appeared to have either bribed Asian government officials, or diverted the funds in question.

    John McFarlane, group executive director, said the bank had ''identified a small number of unusual transactions'' at Mocatta in Hong Kong.

  In London yesterday, it was revealed that two directors of Mocatta had resigned.

  The bank in London declined to comment on press reports that the directors had allegedly taken responsibility for corruption in the Philippines and Malaysia.

  The bank merely said the two directors had left their posts while the bank was investigating ''some irregularities'' at Mocatta.

   Mr McFarlane is the first Standard Chartered board member to be based in Hong Kong, splitting his time between the territory and London.

   Although he has a flat in Hong Kong, he is still officially based in London.

    ''It was the bank itself that discovered this,'' said Mr McFarlane. ''They (the irregularities) were not brought to our attention by a regulator, though we have kept our chief regulator, the Bank of England, informed throughout.''   Mr McFarlane said the bank's investigation had revealed discrepancies in expense claims.

   ''The reasons given for the expenses included gifts to individuals in certain countries to facilitate business, a practice contrary to bank rules,'' he said.

  Mr McFarlane would not give details. He refused to answer questions on the identity of the alleged bribers or the individuals who were alleged to have taken them, or even name the countries allegedly involved.

   The Philippines and Malaysia are reportedly the countries at the centre of the allegations.

  Mr McFarlane refused to comment on whether the Foreign Office, The Department of Trade and Industry, or any other arm of the British Government had been briefed on the revelations or had briefed Standard Chartered.

    A Foreign Office spokesman said the ministry had been informed of the story the night before publication.

   ''It is a matter for the bank,'' he said.

    Allegations published in The Sunday Times in London concerning the willingness of a large British construction company to bribe Malaysian politicians caused a storm earlier this year, which culminated in trade sanctions by the Malaysian Government against Britain.

   Malaysia told companies to ''Buy British Last'' and said government contracts would not be given to British firms.

   Prime Minister Mahathir Mohamad said Britain had virtually connived at accusations of Malaysian Government corruption by allowing the story to be printed in the newspaper.

    ''Anything between us and the government is a matter between the government and us,'' said Mr McFarlane.

  Mr McFarlane said the bank was continuing to investigate, but would not say whether a full report would ever be made.

  He refused to say how much money was involved in the case beyond claiming the ''sums involved are insignificant in the context of the group's results''.

  Significant in accounting terms is difficult to define, but is often taken to mean three per cent of profits.

    He said last year had been a record year for Mocatta.

    Mr McFarlane said: ''We are not talking millions [of Hong Kong dollars] as far as I know, at this point in time.''   The scope of Standard Chartered's investigation is hard to judge. Mr McFarlane said the inquiry was ''not going back into the depths of time''.

  ''We have not yet investigated significant lengths of time into the past,'' he said.

   He said he did not know if this was needed.

    Mr McFarlane said regulators in Hong Kong, including the Hong Kong Monetary Authority, had been informed.

   He added that regulators and other bodies in other countries had also been kept informed.

  He said the bank was ''not under investigation by any regulator or other body in connection with these matters''.

  Mr McFarlane said Standard Chartered was determined to keep the bank clean.

    ''We have not been digging hard to find trouble, but we have been investigating our business policies and practices to ensure things are being run correctly,'' he said.

    ''It is inevitable that this discloses things you don't like,'' he said.

  ''We want to put them behind us and practice business on an orderly basis.''   He said it was ''very difficult to give guarantees'' that there were no further scandals to come, but added that problems arise in any business.

   ''We have nothing specific to report to you on at the present time,'' he said.

  The bank is printing new editions of its code of ethics, which staffers must sign once a year.

  ''A bilingual English and Chinese booklet will be given to Hong Kong staff. A Chinese version in simplified characters for use in China is being prepared and an English version will be given to other staff,'' a bank spokesman said.

    The most recent edition, dated May 20, 1994, was an update of last year's version, the spokesman said.

      The bank's general manager of Hong Kong and China, Ian Wilson, said the code of ethics and conduct booklet had been in existence at least since he joined the bank in 1961.

   ''I sign off every year,'' he said.

    Mr McFarlane said there could be further disclosure on the Mocatta bribery/expenses case and on Standard Chartered Securities and Standard Chartered Asia's initial public offering and ''rat-trading'' cases in Standard Chartered's annual report.

  ''We will include in the annual report anything that happens to the company and that is material to the shareholders,'' he said.

  Mr McFarlane said it was possible the latest scandal and the malpractices discovered at Standard Chartered Securities and Standard Chartered Asia would have an impact on future earnings.

  ''Any events which involve criticism of the organisation tend to damage your reputation,'' he said.

   ''We hope they do not make too serious an impact on our reputation in Asia. We would hope the impact will not be significant. We believe our quality of service derives our success,'' he said.

   ''Standard Chartered has been in existence an awfully long time.'' 



Chartered admits to breaches