Former StanChart CEO failed in bid to escape fine and ban in Guernsey

Thursday 25 May 2023

Standard Chartered Guernsey’s former CEO fought to overturn a ban and fine imposed for his role in how the firm dealt with more than $1bn of tainted assets, it has emerged.

Trevor Kelham was banned from holding senior finance roles in the island for four years and fined £45,000 by the Guernsey Financial Commission after events at Standard Chartered Trust (Guernsey) from 2012 to 2016.

The investigation had centered around transactions in and out of Guernsey without proper checks in place and assets worth around $1.2bn that were red flagged after an independent review.

Deputy Bailiff Jessica Roland backed the decision making by the GFSC, which has now published the appeal judgement on its website.

In fighting against the sanction, Mr Kelham questioned why he had faced action when others that were involved had not.

He argued that none of the sanctions were fair, proportionate or reasonable, saying it was not fair for him to be singled out for punishment when the GFSC had already imposed sanctions on the company, which was closed down in mid-2016.

Any failings, he argued, were inadvertent and not deliberate.

“The Appellant also says the SDM [GFSC’s senior decision maker] failed to take account the fact that he obtained no personal financial benefit from the failings, lost his job with SCTG, lost remuneration, has suffered extreme mental ill‐health as the result of these events, and has not found it possible to obtain other employment in the intervening period of time, the financial consequences of both a public statement (which will be available by internet search) and a financial penalty are clear and unfair. The sanctions should also take into account that he lives in the US and has no desire to work in Guernsey or in financial services in Guernsey.”

He had argued there was no evidence that any of the assets of customers who were transferred were in fact the proceeds of any crime - there was a risk, at most, of this being the case.

The judge rejected his arguments about how the decisions were reached.

She said that the argument there was no public interest in there being a public statement about Mr Kelham was misplaced, agreeing that one of its purposes was to highlight poor practices to promote high standards, that it could act as a deterrent and provided transparency that maintained the reputation of the Bailiwick as well regulated.

“For a small jurisdiction heavily dependent upon the provision of financial services to person beyond these shores, the reputation of the Bailiwick is fundamental to the sustainability of the island’s economy for the benefit of the population as a whole.”

There were lessons for other directors to learn from the case, she ruled.

“It is evident that the SDM did take into account that the matters were self-reported to the GFSC, but did not accept the Appellant’s arguments that the information was sufficient or identified the severity of the issues.”

For example, in a meeting with the regulator in December 2015, they did not tell it that the ownership of $1bn of assets was about to pass out of the island or that senior trust officers had raised concerns.

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