Back in December, Standard Chartered Bank paid $227 million to settle charges by the Federal Government that it had improperly processed financial transactions destined for Iran. Earlier this month, John Peace, the Chairman of the Bank, said at a year-end results press conference that the whole business with the Iran fine was the result of “clerical errors” and not the result of willful acts by bank employees. Then all hell broke loose.

So last week the company issued a formal stock market announcement in which Peace took it all back, ate his words, and did everything short of donning sackcloth and ashes and walking to Wall Street to be flogged by U.S. government officials. The spelling mavens and junior detectives at The Guardian found the orthographic fingerprints of U.S. influence on this apology:

The statement appeared to demonstrate the influence of the US regulators by containing American spellings “willful” and “apologize.”

In fact, and without need to resort to orthographic peculiarities of American spelling, the reason for Peace’s contrition can be clearly found in the deferred prosecution agreement that Standard Chartered signed. Paragraph 12 of that agreement is a “muzzle” clause and provides:

SCB expressly agrees that it shall not cause to be made, through its attorneys, board of directors, agents, officers, employees, consultants or authorized agents (including, contractors, subcontractors, or representatives), including any· person or entity controlled by any of them, any public statement contradicting the acceptance of responsibility by SCB set forth above or the facts described in the Factual Statement. Any such public statement by SCB, its attorneys, board of directors, agents, officers, employees, consultants, contractors, subcontractors, or representatives, including any person or entity controlled by any of them, shall, subject to the cure rights of SCB set forth below, constitute a willful and material breach of this Agreement as governed by Paragraph 9 of this Agreement, and SCB would thereafter be subject to prosecution pursuant to the terms of this Agreement.

In short, it seems clear that the U.S. threatened prosecution and Standard Chartered exercised its cure rights to avoid being in the unenviable position of having paid $227 million dollars and still be prosecuted for its violations of U.S. economic sanctions laws. Still, you have to wonder what legitimate purpose a muzzle clause has other than to soothe the sensibilities of government regulators.