http://www.rollingstone.com/politics/news/gangster-bankers-too-big-to-jail-20130214
Gangster Bankers: Too Big to Jail
How HSBC hooked up with drug traffickers and terrorists. And got
away with it
by Matt Taibbi <http://www.rollingstone.com/politics/blogs/taibblog>
February 14, 2013 8:00 AM ET
The deal was announced quietly, just before the holidays, almost like
the government was hoping people were too busy hanging stockings by the
fireplace to notice. Flooring politicians, lawyers and investigators all
over the world, the U.S. Justice Department granted a total walk to
executives of the British-based bank HSBC for the largest
drug-and-terrorism money-laundering case ever. Yes, they issued a fine
-- $1.9 billion, or about five weeks' profit -- but they didn't extract
so much as one dollar or one day in jail from any individual, despite a
decade of stupefying abuses.
People may have outrage fatigue about Wall Street, and more stories
about billionaire greedheads getting away with more stealing often cease
to amaze. But the HSBC case went miles beyond the usual paper-pushing,
keypad-punching sort-of crime, committed by geeks in ties, normally
associated with Wall Street. In this case, the bank literally got away
with murder -- well, aiding and abetting it, anyway.
Daily Beast: HSBC Report Should Result in Prosecutions, Not Just Fines,
Say Critics
<http://www.thedailybeast.com/articles/2012/07/18/hsbc-report-should-result-in-prosecutions-not-just-fines-say-critics.html>
For at least half a decade, the storied British colonial banking power
helped to wash hundreds of millions of dollars for drug mobs, including
Mexico's Sinaloa drug cartel, suspected in tens of thousands of murders
just in the past 10 years -- people so totally evil, jokes former New
York Attorney General Eliot Spitzer, that "they make the guys on Wall
Street look good." The bank also moved money for organizations linked to
Al Qaeda and Hezbollah, and for Russian gangsters; helped countries like
Iran, the Sudan and North Korea evade sanctions; and, in between helping
murderers and terrorists and rogue states, aided countless common tax
cheats in hiding their cash.
"They violated every goddamn law in the book," says Jack Blum, an
attorney and former Senate investigator who headed a major bribery
investigation against Lockheed in the 1970s that led to the passage of
the Foreign Corrupt Practices Act. "They took every imaginable form of
illegal and illicit business."
That nobody from the bank went to jail or paid a dollar in individual
fines is nothing new in this era of financial crisis. What is different
about this settlement is that the Justice Department, for the first
time, admitted why it decided to go soft on this particular kind of
criminal. It was worried that anything more than a wrist slap for HSBC
might undermine the world economy. "Had the U.S. authorities decided to
press criminal charges," said Assistant Attorney General Lanny Breuer at
a press conference to announce the settlement, "HSBC would almost
certainly have lost its banking license in the U.S., the future of the
institution would have been under threat and the entire banking system
would have been destabilized."
It was the dawn of a new era. In the years just after 9/11, even being
breathed on by a suspected terrorist could land you in extralegal
detention for the rest of your life. But now, when you're Too Big to
Jail, you can cop to laundering terrorist cash and violating the Trading
With the Enemy Act, and not only will you not be prosecuted for it, but
the government will go out of its way to make sure you won't lose your
license. Some on the Hill put it to me this way: OK, fine, no jail time,
but they can't even pull their charter? Are you kidding?
But the Justice Department wasn't finished handing out Christmas
goodies. A little over a week later, Breuer was back in front of the
press, giving a cushy deal to another huge international firm, the Swiss
bank UBS, which had just admitted to a key role in perhaps the biggest
antitrust/price-fixing case in history, the so-called LIBOR scandal, a
massive interest-raterigging conspiracy involving hundreds of trillions
("trillions," with a "t") of dollars in financial products. While two
minor players did face charges, Breuer and the Justice Department
worried aloud about global stability as they explained why no criminal
charges were being filed against the parent company.
"Our goal here," Breuer said, "is not to destroy a major financial
institution."
A reporter at the UBS presser pointed out to Breuer that UBS had already
been busted in 2009 in a major tax-evasion case, and asked a sensible
question. "This is a bank that has broken the law before," the reporter
said. "So why not be tougher?"
"I don't know what tougher means," answered the assistant attorney general.
Also known as the Hong Kong and Shanghai Banking Corporation, HSBC has
always been associated with drugs. Founded in 1865, HSBC became the
major commercial bank in colonial China after the conclusion of the
Second Opium War. If you're rusty in your history of Britain's various
wars of Imperial Rape, the Second Opium War was the one where Britain
and other European powers basically slaughtered lots of Chinese people
until they agreed to legalize the dope trade (much like they had done in
the First Opium War, which ended in 1842).
A century and a half later, it appears not much has changed. With its
strong on-the-ground presence in many of the various ex-colonial
territories in Asia and Africa, and its rich history of cross-cultural
moral flexibility, HSBC has a very different international footprint
than other Too Big to Fail banks like Wells Fargo or Bank of America.
While the American banking behemoths mainly gorged themselves on the
toxic residential-mortgage trade that caused the 2008 financial bubble,
HSBC took a slightly different path, turning itself into the destination
bank for domestic and international scoundrels of every possible persuasion.
Three-time losers doing life in California prisons for street felonies
might be surprised to learn that the no-jail settlement Lanny Breuer
worked out for HSBC was already the bank's third strike. In fact, as a
mortifying 334-page report issued by the Senate Permanent Subcommittee
on Investigations last summer made plain, HSBC ignored a truly awesome
quantity of official warnings.
In April 2003, with 9/11 still fresh in the minds of American
regulators, the Federal Reserve sent HSBC's American subsidiary a
cease-and-desist letter, ordering it to clean up its act and make a
better effort to keep criminals and terrorists from opening accounts at
its bank. One of the bank's bigger customers, for instance, was Saudi
Arabia's Al Rajhi bank, which had been linked by the CIA and other
government agencies to terrorism. According to a document cited in a
Senate report, one of the bank's founders, Sulaiman bin Abdul Aziz Al
Rajhi, was among 20 early financiers of Al Qaeda, a member of what Osama
bin Laden himself apparently called the "Golden Chain." In 2003, the CIA
wrote a confidential report about the bank, describing Al Rajhi as a
"conduit for extremist finance." In the report, details of which leaked
to the public by 2007, the agency noted that Sulaiman Al Rajhi
consciously worked to help Islamic "charities" hide their true nature,
ordering the bank's board to "explore financial instruments that would
allow the bank's charitable contributions to avoid official Saudi
scrutiny." (The bank has denied any role in financing extremists.)
(snip--part 1 of 4)
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