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Zambia's High Court ruled that Standard Chartered does not have to pay USD 500,000 in compensation to a former client over a defaulted Chinese property bond. While the bank was found not to have violated local laws in 2022, it was ordered to cover the client's legal costs due to falling short of its own conduct standards. The SEC had previously sanctioned the bank for failing to disclose key information and using restrictive contract clauses. Both parties can appeal. Standard Chartered has a nearly 120-year history in Zambia and is considering selling its local operations.
Zambia's High Court has determined that Standard Chartered is not required to pay USD 500,000 in compensation to a former client who purchased a Chinese property bond that later defaulted during China's real estate downturn. The court found that the bank did not violate local laws when it sold the bond in 2022. However, it was instructed to cover the client's legal expenses due to shortcomings in adhering to its own internal code of conduct. Advertisement
The issue first drew regulatory attention earlier this year when Zambia's Securities and Exchange Commission sanctioned the London-listed bank for breaching two SEC rules. These involved failing to disclose key information about the Chinese property company Sino Ocean, which defaulted in 2023, and including contract clauses that made the client responsible for all associated risks.
The client had sought USD 320,000 for losses incurred from the bond default, along with an additional USD 180,000 in damages. While the High Court judge ruled there was no statutory or contractual violation by the bank, he noted that the sales approach did not fully meet Standard Chartered's own ethics and conduct standards. This was deemed sufficient to require the bank to pay the client's legal costs.
Both the bank and the client retain the right to appeal the decision. A Standard Chartered spokesperson said the bank respected the ruling, while the client's legal representatives did not respond to requests for comment.
Last year, Standard Chartered had announced plans to sell its Zambian wealth and retail banking operations, alongside its businesses in Botswana and Uganda. The bank has a nearly 120-year presence in Zambia, making it the country's oldest operating bank.
Source- Reuters
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