Jim Armitage: Double dealing means these bank monitors need watching

Guests: HSBC and Standard Chartered are among the banks that have had to lay out the welcome mat for monitors

Frank Augstein/AP

1 September 2015

We all know who regulates the regulators — er… no one. But in the banking world, another question is: who monitors the monitors?

When banks such as HSBC and Standard Chartered get caught out by US regulators laundering money for drug dealers or sanctions busting, as well as paying whopping fines, they increasingly agree to allow independent “monitors” in to observe their working practices and hunt for further naughty behaviour.

So many of these deals have been cut that there’s now a booming industry of specialist monitoring firms making a killing from these miscreant institutions.

You might not recognise their names, but be assured, Exiger, Navigant, Treliant are extremely familiar in the companies they’re monitoring.

They can be effective, too, these bounty hunters. Standard Chartered’s additional fine of $300 million (£195 million) last year stemmed from Navigant’s investigations into its poor controls, The Wall Street Journal reported today.

Their effectiveness is little wonder: most are run by former state prosecutors cashing in on their public service knowledge. And when I say cashing in, I mean it: monitors charge $1200 an hour to hunt down further wrongdoing — all paid for by the banks.

So what, you ask. The banks shouldn’t have been so cavalier in the first place. True, but now the monitoring firms are getting greedy.

Not content with the contracts they get from courts and watchdogs, they’re flogging private consultancy work direct to misbehaving banks. One of the main services? Helping banks control their monitors.

So, as the WSJ reports, Navigant sold its services privately as a compliance adviser to Western Union, which had been accused of aiding money laundering tied to human smuggling.

Although Western Union’s state-appointed monitor had concerns about the bank’s clean-up progress, Navigant wrote favourable reports. Details are shrouded in secrecy, but Western Union complained about the state appointee’s work and he was fired.

This smells bad. How can a bank oust its monitors? Why are full details of the affair not made public?

But more fundamentally, monitors should only be allowed to work one side of the game.

Make it game over

A week eating Devon pasties and I return to find still no resolution to the Bwin takeover.

Today sees 888 up its bid beyond 110p by increasing the number of shares it’s offering.

This latest tilt is hardly thrilling: Bwin would prefer to have seen more cash, I’m sure. But an 888-Bwin combination makes far stronger industrial sense than a GVC buy-and-break-up job.

So please, Bwin, take 888’s paper and end this tedious process.

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Jim Armitage: Double dealing means these bank monitors need watching

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Make it game over