Financial Times

SCB CEO aggressively pushed for hedging deals-former employee


Explosive allegations have been levelled against Standard Chartered Bank (SCB) CEO Clive Haswell in an affidavit submitted to the Supreme Court by SCB’s former Head of Corporate Relations, Kimarli Fernando.

According to her affidavit submitted in response to the fundamental rights petition on the controversial oil hedging agreements filed by public interest activist Nihal Sri Ameresekere, Mr. Haswell put her under severe pressure to go along with the transactions and pushed former Ceylon Petroleum Corporation (CPC) Chairman Asantha De Mel into entering into the one-sided contracts to secure huge profits for SCB, a commission of approximately Rs.1 billion and bonuses for himself and other top management.

In the affidavit, Ms. Fernando stated she did not feel the CPC had the capacity to understand such complex financial instruments and that the deals could expose Sri Lanka to severe foreign exchange losses. However, Mr. Haswell insisted on concluding the deals with or without her. She added that Mr. Haswell and SCB’s Head of Global Markets, Rukshan Dias had a strategy to convince Mr. De Mel into entering the transactions which included entertainment and overseas trips.

Ms. Fernando stated it was in the latter part of 2006 that SCB’s product teams in Singapore, India and Dubai suggested marketing oil hedging instruments to the CPC and visited Sri Lanka to solicit the support of the local management team and the CPC to enter into oil hedging transactions.

Ms. Fernando stated that she was aware Mr. Haswell did not have prior experience working in risk management and explained that the hedging transaction could expose the CPC to unbearable losses if oil prices fell because there was no down side protection for the CPC. Ms. Fernando said Mr. Haswell was of the very strong view that oil prices would not fall during a 12 month period and that he strongly believed that if state banks were involved, SCB’s interest would be safeguarded.

From internal meetings and discussions at SCB, Ms. Fernando said she gathered that Mr. De Mel initially was not keen to proceed with the oil hedging although Mr. Haswell and Mr. Dias were very keen to get a deal closed fast. At a training session arranged for the staff by an Indian gentlemen from SCB India, Ms. Fernando said she highlighted that CPC’s financials are not sound and in fact, SCB was having issues even getting approvals for opening Lines of Credit. She also stated that the client, being a corporation, was not sophisticated enough to understand the complicated products. She added that Mr. Haswell was ‘very angry and annoyed’ with her views and insisted that these transactions will be done with or without her.

Ms. Fernando stated that Mr. Haswell then successfully recruited Mr. De Mel’s daughter and placed her under Mr. Dias himself. Expecting the CB to be a hindrance, SCB hired the son of a senior CB official and also placed him under Mr. Dias. From internal discussions, she added that she became aware that Mr. De Mel was entertained by SCB senior officials.

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