What’s the fastest way to generate a headline and claim your PR moment in the sun? How about a surprise PR missile in the middle of a sleepy summer? Announce to the media that colossal wrongdoing has been uncovered, and presto; you now have more publicity than TomKat’s divorce.
Top marks, then, to New York State’s Department of Financial Services (DFS), who late on Monday stunned the markets with an accusation that venerable British bank Standard Chartered was hiding some $250 billion worth of transactions with the Iranian government. Benjamin Lawsky, superintendent of the DFS, gave the media a summer gift by calling Standard Chartered a “rogue institution.” He said the firm “carefully planned its deception” of US authorities using “fraudulent” procedures and “forging business records” to stage a “staggering cover-up.” Markets were stunned. Shares in Standard Chartered fell more than 16 percent, and the bank’s executives – as well as other bigwig US regulators, were caught unaware by the revelations.
Eight long hours after the headlines had been screaming of criminal activity, Standard Chartered limped out with a statement. The firm rejected the accusations and said “well over 99.9 per cent” of Iranian transactions complied with US regulations. The sums of money were nothing like $250 billion, more like $14 million, said one source, a result of “small clerical errors,” nothing more.
The PR Verdict: “C” (Distinctly OK) for New York’s DFS. Great splash, but now what? Where is the chorus of other regulators outraged at this alleged wrongdoing?
The PR Takeaway: Be careful what you wish for. Great job in getting the headlines, but now comes the tough part! Despite the nicely packaged and damning sound bites, it could be lonely out there for NY’s accuser as UK politicians begin to comment that this issue seems more about undermining foreign banking firms than substantive wrongdoing. This story may no longer turn on straightforward “did they or didn’t they” facts, and instead become a wider issue regarding PR grandstanding and regulatory overreach. If that’s the case, the splashy headlines might have been better delayed until all the other regulators were in the pool.
UPDATE: OUCH! Since publication, Standard Chartered have now agreed to a puzzling $340 million penalty. Rather embarrassing for the bank that was so outraged over being publicly shamed for what it said was only $14 million dollars of faulty transactions. Now the firm has agreed to pay $340 million in penalties… hmm… does this math add up?
Should the DFS have waited until they had backup, or were they right to go ahead and shout “J’accuse!”? Give us your PR Verdict!