Wednesday 12 December 2012

U.S. Justice Department legitimizes corruption with $1.92 billion “tax” on HSBC

The news that the London-based bank HSBC has agreed to pay at least $1.92 billion to settle money laundering probes is a staggering admission that global criminal activity will be tolerated.

The settlement with the U.S. Justice Department, which will result in no criminal prosecutions and only a minimal attempt at redressing shady practices, comes after revelations that from 2006 to 2010 the Sinaloa cartel in Mexico and the Norte del Valle Cartel in Colombia moved more than $881 million through the bank’s U.S. unit.

Together HSBC’s U.S. and Mexican operations turned a blind eye to $670 billion in wire transfers and more than $9.4 billion in U.S. dollar purchases from HSBC Mexico.

Lanny A. Breuer gets tough

David S. Cohen, undersecretary of the U.S. Treasury, has admitted that no-one really knows how big or bad the problem was, given that, according to the New York Times, “trillions of dollars in wire transfers every year were excluded from its review, billions of dollars in ‘suspicious bulk cash’ entered its vaults, and hundreds of millions of dollars in ‘dirty money’ from Mexican drug proceeds went through the bank’s U.S. accounts.”

Specific to Latin American cartel activity, Colombian dealers would sell narcotics in the United States, and then move the cash to HSBC Mexico. From here, goods were purchased, then resold, with the laundered cash returned to the Colombians, thus ensnaring untold numbers of businesses and individuals in criminal activity.

Speaking at a press conference in Brooklyn, Lanny A. Breuer, the head of the Justice Department’s criminal division, said that the “traffickers didn’t have to try very hard” and that they would “sometimes deposit hundreds of thousands of dollars in cash in a single day into a single account using boxes designed to fit the precise dimension of the tellers’ windows in HSBC’s Mexico branches.”

The deal is a “deferred prosecution agreement”, otherwise known as one-off tax that removes all criminal liability. Apparently, there are to be reforms either under a “monitor” or an “internal compliance panel”. There will also be a “money laundering reporting officer” and a new board to oversee anti-money laundering controls.

Given past performance, and the most recent sweet deal, these new measures may soon be put to good use in determining the best way to stick-handle any oversight and get back to the proper business of making big bucks from criminals.

 “We accept responsibility for our past mistakes,” said Stuart Gulliver, the chief executive of HSBC.

Really? This organization has been laundering money for organizations that have been directly responsible for some of the 60,000 Mexican civilians killed in that country’s drug war, yet there has not been one criminal charge. 

The corrupting effect of such huge volumes of drug money to Mexico’s civil society is staggering. It moves through governments and police forces small and large. The long-term damage to innocent lives is incalculable.

And the punishment? Less than if a migrant worker stole a pizza in Texas.

The United States Justice Department, in explaining its leniency, said that the people at HSBC did not intend to create money laundering schemes. All they did was allow it to happen by willingly violating the Bank Secrecy Act.

Such idiocy would not be tolerated in other forms of criminal negligence. Sorry, I got loaded and drove, but I didn’t mean to kill her. Sorry, I falsified flight maintenance records, but I didn’t mean the plane to crash. not enough when criminal negligence leads to crippling violence and destroys entire populations.

Maybe the HSBC execs should take a tour of the toll their failed oversight has wrought.  Come on down to Mexico. Any night will do. If you can’t stomach a trip to the morgue, just watch the evening news.

Breuer has said that what HSBC did was “insidious and wrong and had occurred over decades” while in the same breath claiming that “we’ve held them very much accountable”.

This deal has been in the works for some time. In July, a United States Senate committee complained that lax oversight at the bank had given terrorists and drug cartels access to the U.S. financial system. The challenge was to look tough but, as with the financial collapse, avoid having anyone take personal responsibility.

A La politica request for comment on any possible changes to management received this terse response: "Whilst we won't comment on any individuals, HSBC has taken a number of actions, including termination, claw-backs and pay cuts."

Shiver me timbers. There might be a shakeup now that Fitch Ratings has lowered its credit ratings on HSBC Holdings, with a similar action taken against HSBC Latin America Holdings (UK) Limited.

After all, if you’re a heartless bank, the only place where it really hurts is in the pocket book. That’ll learn ‘em.

(TE Wilson is the author of Mezcalero, a Detective Sánchez novel.)

Twitter: @TimothyEWilson
Email: lapoliticaeslapolitica [at] gmail [dot] com

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