StanChart: what's to stop a regulatory body going rogue?

Still possible that the New York DFS allegations are untrue.

Whether true or not, the New York Department of Financial Service's accusations have caused a whole lot of trouble for Standard Chartered, but the key point is that they still may not be true.

The accusations are fairly detailed, but are also unbacked by facts, highly unusual for this sort of announcement. The regulatory body will have to prove their allegations are true on August 15, but unfortunately for Stan Chart the markets operate on a "no smoke without fire" basis.

The company's shares suffered their steepest one-day decline in several decades on Tuesday, dropping more than 16 per cent.The shares have bounced back slightly since then, but the damage has been done.

“This has been incredibly damaging,” analysts at Charles Stanley confirmed in a note. “It is ruining all the good work that [has been] done in recent years.”

If the accusations do turn out not to be true, StanChart is still left in pieces. How are regulatory authorities allowed to wreak this sort of havoc? (British MPs have already accused the New York DFS of a motivated attack, in pursuit of an anti-city agenda.)

As a spokesperson for the British Banking Authority said:

"There really isn't anything that stops a regulatory authority from making accusations."

Perhaps reassuringly, every part of this incident points to something quite unusual on the part of the New York DFS. Firstly the announcement itself completely sidesteps normal procedure. Most cases of this kind would first be compiled in full, the evidence fully collected and an opportunity  given to the company in question to defend themselves, before an announcement could then be made. The language used by the NY DFS also stands out. "Rogue institution", as they dubbed StanChart, is just one example of the unusually inflammatory phrasing.

Standard Chartered. Photograph: Getty Images

Martha Gill writes the weekly Irrational Animals column. You can follow her on Twitter here: @Martha_Gill.

Getty
Show Hide image

The Taliban's succession crisis will not diminish its resilience

Haibatullah Akhunzada's appointment as leader of the Taliban may put stress on the movement, but is unlikely to dampen its insurgency. 

After 19 years under the guidance of the Taliban’s supreme leader Mullah Omar, the group has now faced two succession crises in under a year. But although Haibatullah Akhunzada’s appointment as leader of the Taliban will likely put stress on the movement, it shows few signals of diminishing its renewed insurgency.

The news pretty much ends speculation about former leader Mullah Akhtar Mansour’s death in a US airstrike in Pakistan’s south-western Baluchistan province, which was criticised by Islamabad as a violation of its sovereignty.

The Taliban would have prepared extensively for this eventuality. The fast appointment, following days of intense council, appears to be a conspicuous act of decisiveness. It stands in contrast to the two-year delay the movement faced in announcing the death of the Mullah Omar. It will be not be lost on the Taliban that it was subterfuge around the death of Mullah Omar that caused the fracture within the movement which in turn led to the establishment of an ISIS presence in the country.

The appointment is a victory for the Taliban old guard. As former head of the Taliban's judiciary and Mullah Mansour’s deputy, in many ways, Haibatullah is a natural successor. Haibatullah, described by Afghanistan expert Sami Yousafzai as a “stone age Mullah,” demonstrates the Taliban’s inherent tendency to resort to tradition rather than innovation during times of internal crisis.

The decision taken by the Taliban to have an elder statesman of the group at the helm highlights the increasing marginalisation of the Haqqani network, a powerful subset within the Taliban that has been waging an offensive against the government and coalition forces in northwest Pakistan.

Sirajuddin Haqqani, the leader of the Haqqani network who already has a bounty of 5 million dollars on his head, was touted in some Taliban circles as a potential successor, however the decision to overlook him is a conservative move from the Taliban. 

The Taliban’s leadership of the jihad against the Afghan government is hinged on their claims to religious legitimacy, something the group will hope to affirm through the Haibatullah’s jurisprudential credentials. This assertion of authority has particular significance given the rise of ISIS elements in the country. The last two Taliban chiefs have both declared themselves to be amir ul-momineen or ‘leader of the faithful,’ providing a challenge to the parallel claims of ISIS’ Abu Bakr al-Baghdadi.

Any suggestions that Mansour’s death will lead to the unravelling of the Taliban are premature. The military targeting of prominent jihadi leaders within group structures has been seen in operations against the leadership of ISIS, al-Qaeda in the Arabian Peninsula, al-Qaeda in the Islamic Maghreb, and other groups.

In recent research for the Centre on Religion & Geopolitics, we found that it is often less prominent jihadis that play an integral role in keeping the movement alive. Targeted killings do create a void, but this often comes at the expense of addressing the wider support base and ideological draw of militant outfits. This is particularly relevant with a relatively decentralised movement like the Taliban.

Such operations can spur activity. If the example of the Taliban’s previous leadership succession is to be heeded, we might expect renewed attacks across Afghanistan, beyond the group’s strongholds near the eastern border with Pakistan. The brief capture of Kunduz, Afghanistan's fifth-largest city, at the end of September 2015, was a show of strength to answer the numerous internal critics of Mullah Mansour’s new leadership of the movement.

In a news cycle dominated by reports of ISIS, and to a diminishing extent al-Qaeda, atrocities, it is important to comprehend the renewed brutality of the Afghan insurgency.  Data from the Centre on Religion and Geopolitics Global Extremism Monitor found a seventeen per cent rise in fatalities from March to April, marking the start of the Taliban’s spring fighting season. A suicide attack in central Kabul on the headquarters of an elite military unit that killed 64 people was the single most deadly act of terror around the world in the month of April, and the group’s bloodiest attack in the Afghan capital for years. Reports this morning of a suicide attack on a bus killing 10 staff from an appeal court west of Kabul, suggests that the violence shows no sign of diminishing under the new leadership.

All these developments come during a period of renewed impetus behind international peace talks. Last week representatives from Pakistan were joined by delegates from Afghanistan, the United States, and China in an attempt to restart the stalled negotiation process with the Taliban.

Haibatullah Akhunzada’s early leadership moves will be watched closely by these countries, as well as dissonant voices within the movement, to ascertain what the Taliban does next, in a period of unprecedented challenge for the infamously resilient movement. 

Milo Comerford is a South and Central Asia Analyst for the Centre on Religion and Geopolitics