LONDON (BLOOMBERG) - Bill Winters found more than just bad loans when he took over Standard Chartered. He says he uncovered a culture where a few senior managers flouted ethics rules for personal gain and considered themselves "above the law."

The lender is cracking down after "recent transgressions" concerning some employees' outside business interests, close financial dealings with co-workers and excessive expenses, according to a series of memos issued over the past two months that were seen by Bloomberg News.

In an effort spearheaded by general counsel David Fein, the British bank, which does almost all of its business in Asia and emerging markets, is also beefing up its internal investigation team with former detectives from the FBI, Scotland Yard, Hong Kong police and the New Zealand intelligence agency.

"I am concerned that a small number of employees, including some senior managers, have willfully disregarded our policies - sometimes for personal gain - and set a poor example for their peers and teams," Winters, the bank's chief executive officer, said in the first memo, sent in April, titled #knowtherules. "I am deeply disappointed and angry at some of the examples we are finding."

Winters inherited a bank in crisis. Emerging-market and commodity loans were souring while the bank was hit with fines of almost US$1 billion since 2012 for alleged money-laundering compliance failures and sanctions violations involving Iran. Since arriving a year ago, Winters replaced much of the senior executive team. In April, he said he'd encountered "a looseness" to the way the bank was managed during years of rapid growth.

The bank is still under the scrutiny of an independent monitor as part of a 2012 deferred prosecution agreement, when it was fined US$667 million for violating US sanctions by engaging in US$250 billion in transactions with Iran. If the lender slips up significantly again, it could lose its US banking license.

In the memo, Winters describes a culture where some managers felt they were "above the law" and had sometimes ignored requirements to complete compliance training.

"I want this to be clearly understood - we have zero tolerance for any employee that deliberately flouts and circumvents our rules and policies, without regard for their seniority, or role."

A probe into misconduct has so far led to the departure of several bankers in Dubai in the past six months, including at least three managing directors, people with knowledge of the matter said April 30. They were found to have improperly lent money to colleagues, while also padding their expense reports, the people said.

Standard Chartered is providing real examples of rule- breaking and conflicts of interest in the memos, particularly those of managers expected to set an example, according to Pam Walkden, its new human-resources chief. One memo cites three senior employees who didn't disclose their investment in an unlicensed money lender that charged high rates of interest. They were all dismissed.

Shareholders are impatient for the bad headlines to end. Standard Chartered reported its first annual loss since 1989 last year and scrapped the dividend. Winters has had to tap investors for US$5.1 billion, while planning 15,000 job cuts. The stock is trading at almost half its book value after plummeting 64 per cent since the start of 2013, when former CEO Peter Sands' expansion across emerging markets began to face slowing economies. Sands, through a spokesman, declined to comment.

Fein, like Winters, is an American import at the London-based bank. He jailed terrorists, drug dealers and pedophiles as Connecticut's Attorney General and advised President Bill Clinton at the White House before joining the bank in 2013.

"You can infer the problems we've encountered from the topics we've sent out, such as close financial relationships," Fein said in an interview this week in the bank's London headquarters. "You can imagine situations when employees have larger-value transactions with each other and that can create both the appearance, and the reality, of conflicts of interest and change the nature of a relationship between colleagues on a desk."

The bank is investigating whether former senior mangers deserve to have their pay clawed back if they were guilty of misconduct or failures of supervision, Fein said. He declined to comment on any individual cases or the status of the probes.

Walkden said the risk and control committee will dock a banker's bonus if compliance or risk officers report that policies aren't being taken seriously enough, and boost the pay of those with good "values ratings."

The bank also has an anonymous hotline staffed by an external company for those afraid of retribution, though his team aims not to be perceived as the enemy by the rest of the bank. "As we operate in 70 jurisdictions, the key is to be sensitive to cultural differences," Fein said.

Now that the rules have been hammered home to 84,000 staff, Fein says there are no excuses for those who transgress. Fein cited some of the arguments staff would have made two years ago: "I didn't know what the policy was; I read it, but it was so unclear; your enforcement was completely inconsistent; no one ever talked about it."

"They are not going to have the same mitigating factors," Fein said. "That stuff's gone."

Winters has overhauled and boosted Standard Chartered's Shared investigative services team, which Fein describes as "our internal fact finders" that combine "old-fashioned police skills" with knowledge of financial services. Mike Welch, the former head of the FBI's bureaus outside the US, was hired to bolster a team staffed by former spies, police detectives, compliance officers and bankers, all accredited through a programme with the City of London Police.

Standard Chartered is far from alone in tightening conduct rules as banks around the world dig deeper to cut costs and seek to avoid falling foul of bribery laws. To avoid the appearance of conflicts of interest, expenses are also in Fein and Walkden's crosshairs.

Since 2014, Barclays has banned employees from giving or receiving gifts or entertainment of any value and requires all broker meetings to be in-house. Goldman Sachs is increasingly rejecting spending on airfare, hotels and entertainment unless it directly serves clients as the firm cuts costs, people with knowledge of the effort said in April.

"We've done a lot of training around what is the right way to submit your expenses and what are legitimate expenses - you cannot go and spend US$1,000 on a fancy dinner with champagne," Walkden said.

"If you accidentally charge an orange juice from the mini bar, that's not the end of the world. But if you take out 20 people and make the most junior person pay for it, that's big trouble."