HSBC are in the news for attempting to suppress a report into money laundering. This is no surprise as the company’s entire history, right up to the present day, is one of financing drug cartels.
HSBC are not known for their transparency. Britain’s wealthiest company, with a stock market valuation of $215billion, has enough advertising muscle in the British press to ensure that critical investigative pieces have been spiked in both the Sunday Times and the Daily Telegraph – in the latter case, causing that newspaper’s chief political commentator to resign in protest. Then last year, the bank’s friends in the Swiss government sentenced the whistleblower who exposed the bank’s massive facilitation of tax avoidance to five years in prison, the longest sentence ever demanded by the country’s public ministry for a banking data theft case. And back in 2011 HSBC was revealed to be the UK financial sector’s most enthusiastic user of tax havens, with no less than 556 subsidiary companies based in offshore jurisdictions. Tax havens, as leading expert Nicholas Shaxson notes, “are characterised by secrecy…what they are fundamentally about is escape – escape from the rules, laws, regulations of jurisdictions elsewhere. You move your money offshore and you can then escape the laws that you don’t like”. This is clearly an institution with much to hide.
So it should not have surprised anybody when, earlier this month, it was revealed that HSBC are now seeking to block the publication of a report into HSBC’s compliance with anti-money laundering laws. After all, it was only three years ago that HSBC were hit with a massive $1.9 billion fine for laundering around $1 billion on behalf of some of the world’s most vicious gangsters. According to US assistant attorney general Lanny Breuer, “from 2006 to 2010, the Sinaloa cartel in Mexico, the Norte del Valle cartel in Colombia, and other drug traffickers laundered at least $881 million in illegal narcotics trafficking proceeds through HSBC Bank USA. These traffickers didn’t have to try very hard.” This is putting it mildly; in fact HSBC went to great lengths to facilitate the drug cartels. As Matt Taibbi wrote in his definitive piece on the scandal, HSBC “ran a preposterous offshore operation in Mexico that allowed anyone to walk into any HSBC Mexico branch and open a US-dollar account (HSBC Mexico accounts had to be in pesos) via a so-called ‘Cayman Islands branch’ of HSBC Mexico. The evidence suggests customers barely had to submit a real name and address, much less explain the legitimate origins of their deposits.” The bank did have a system in place to identify ‘suspicious activity’; but it routinely flouted it. As Nafeez Ahmed has written, “By 2010, HSBC had racked up a backlog of 17,000 suspicious activity alerts that it had simply ignored. Yet the bank’s standard response when it received its next government cease-and-desist order was simply to ‘clear’ the alerts, and give assurances that everything was fine. According to former HSBC compliance officer and whistleblower Everett Stern, the bank’s executives were deliberately ignoring and violating anti-money laundering regulations.” Taibbi wrote that “In one four-year period between 2006 and 2009, an astonishing $200 trillion in wire transfers (including from high risk countries like Mexico) went through without any monitoring at all. The bank also failed to do due diligence on the purchase of an incredible $9 billion in physical US dollars from Mexico and played a key role in the so-called Black Market Peso Exchange, which allowed drug cartels in both Mexico and Colombia to convert US dollars from drug sales into pesos to be used back home. Drug agents discovered that dealers in Mexico were building special cash boxes to fit the precise dimensions of HSBC teller windows”. HSBC’s customers – cartels like Colombia’s Norte del Valle and Mexico’s Sinaloa – were at the time involved in mass murder and abuse of the most psychopathic variety, including beheadings and torture videos. The official death toll from these groups in Mexico alone is 83,000 over the past decade. That they have the capacity to carry out violence on such a massive scale is the result of the massive financial growth of their industry. And that growth was wilfully facilitated by HSBC.
Given that this has all now been established in court, were the rule of law actually applied, the bank’s Charter would have been revoked, and its directors (including former UK Trade Minister Stephen Green) would now be in jail. The reason this did not happen is that the sheer size of HSBC’s operations make it too strategically important to close down. “Had the US authorities decided to press charges”, explained Assistant Attorney General Lenny Breuer, “HSBC would almost certainly have lost its banking licence in the US, the future of the institution would have been under threat and the entire banking system would have been destabilised.” That is to say, HSBC’s wealth and power put it officially above the law. Even its $1.9 billion fine, massive though it might seem, amounted to a mere five weeks profit for the bank.
But all of this is entirely in keeping for a bank whose roots lie precisely in illegality, drug trading and massive violence.
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Little wonder, then, that wherever you look – from Afghanistan, to Kosovo, to Libya, to Mexico to Colombia, and even ‘at home’ – the policies of the world’s leading financial centres serve to boost the production, distribution and profitability of the drugs trade. And little wonder that HSBC are still keeping their ‘money laundering checks’ to themselves.
