By Marc Jones and Chris Mfula
LONDON/LUSAKA (Reuters) -Zambia’s high court has ruled that Standard Chartered does not have to pay $500,000 compensation to a former client it sold a now-defaulted Chinese property bond to at the height of the Asian country’s real-estate crisis.
The court judgement, dated September 8, ruled the bank had not broken any local laws by selling the bond in 2022, although it was ordered to pay the client’s legal costs for falling short of its own internal code of conduct.
Zambia’s Securities and Exchange Commission (SEC) sanctioned London-listed Standard Chartered over the issue back in January for breaching two SEC rules.
Firstly, that it had failed to disclose “material information” about the Chinese property firm Sino Ocean which went on to default in 2023, and that it had used “exclusionary” contract clauses that left the client responsible for all risks.
The client took the case to the Zambian High Court to try to get compensation – $320,000 for the money lost when the bond defaulted, plus a further $180,000 in damages.
The High Court judge said there had been “no infraction” by London-listed Standard Chartered “under statute, in contract or tort”.
He did say, however, that the sales tactics employed “fell short” of Standard Chartered’s own internal conduct and ethics codes, which was viewed as sufficient for it to have to pay the client’s legal costs.
Both sides have the option to appeal the verdict. Neither the lawyer for the client who brought the case, or Standard Chartered provided an immediate comment on the case when contacted by Reuters.
Standard Chartered announced last November that it was looking to sell its Zambian wealth and retail banking businesses alongside those in nearby Botswana and Uganda.
It has operated in Zambia for nearly 120 years, making it the country’s oldest bank.
(Reporting by Marc Jones in London and Chris Mfula in Lusaka; editing by Elaine Hardcastle)
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