You have to give it up to HSBC;
it’s senior management somehow, incredibly, manage to avoid any jail time and
get handed a fine by US regulators that is a minor fraction of their yearly profits
despite US officials pointing out that there was a “mountain of evidence against the bank”[1]
Despite all the hoopla and
negative spotlight over their charge by US, HSBC still remain profitable even in
the face of a profit drop and are in good shape indicated Europe’s biggest bank
reaching Basel III capital requirements, one of the major issues behind why
banks for the last five years have failed to lend due to the fact many banks didn’t have enough capital reserves to hedge against bad loans[2].
It’s almost as if people have
forgotten HSBC’s crime and look to place it in the past but it’s crimes are
hard to forget if you have a strong inclination for justice.
"If you're caught with an
ounce of cocaine, the chances are good you're going to jail," said Sen.
Elizabeth Warren (D-Mass.). "Evidently, if you launder nearly $1 billion
for drug cartels and violate our international sanctions, your company pays a
fine and you go home and sleep in your own bed at night." (Elizabeth
Warren, Quoted by Mosk)[3]
HSBC reputation took a great
hit when it was revealed that the bank had helped launder the ill-gotten gains of Mexican drug lords and terrorist groups , however this is not the real crime
as according to a report in the guardian
the bank continued to deal with a business as it’s competitor had wisely “stopped
on fears that they were fronts for drug cartel money laundering”[4].
The HSBC effectively funnelled funds from the Cayman Islands for the business (“casas
de cambio”) despite the business being a shell company with no “staff or
offices” to the tune of 7 bn moving cash “ “to the US from in 2007 and 2008 [5].
HSBC, unperturbed by the United
States strict sanction regime on its enemies, flouted “US sanctions on
countries including Cuba and Iran” managing to process a whopping “25,000
transactions involving $19.4bn over seven without disclosing the transaction
links to Iran”[6].
HSBC’s biggest crime in this whole debacle was, thanks to it less than
stringent vetting of clients, providing “US dollars and banking services to
banks in Saudia Arabia and Bangladesh despite links to terrorist financing”[7].
Individuals who have committed
the same crimes have been buried under jails for laundering or stealing less
than HSBC handled yet HSBC got away with a fine simply because the US Justice Department
were preoccupied with keeping the markets happy. According to
Matthew Mosk of ABC News, US Senators were less than impressed when US Attorney
with a straight face and in public stated that:
"It does become difficult for us to
prosecute when we are hit with indications that if we do... it will have a
negative impact on the national economy, perhaps even the world economy."[8]
HSBC indictable behaviour were not found in the US as thanks
to an investigation by the HMRC and a brave whistle-blower, HSBC’s clients in Tax
friendly Jersey were published revealing some interesting and telling names
such as Daniel Bayes, who according to the Telegraph, is a “drug dealer”[9].
The story only gets better as more names were revealed including Michael Lee “who
was convicted for possessing more than 300 weapons at his house…three bankers
facing fraud allegations and a man once dubbed London’s “number two computer
crook”[10].
HSBC have been caught many times for breaking the rules it’s
almost like they do it knowing nothing will happen but a lot of lip service and
pen ink expended in critiquing the bank that will be ignored by the next crisis
or news cycle and for the large part, they are mostly right to be so
complacent. This is only because HSBC are not the only bank at the same game
and to punish them all would mean curtains for the British economy which has
become way too dependent on it financial sector over the last few decades.
After all the crimes and rule breaking, HSBC strides across
the financial world like the colossus that they are as HSBC report another year
of healthy profit and have the temerity to give their CEO Stuart Gulliver, in
spite of a year of scandal and embarrassment, a hefty bonus package to the tune
of £2m[11].
Such galling and unjustified Bonuses in
the face of a year full of banking scandal after banking scandal have rightly
drawn the ire of critics and the hate of the public but be sure for HSBC to
stick around as HSBC as well every other bank knows that in a market, thanks to
the Great Recession of 2007-2008, with fewer players and an undying demand,
market fearing politicians, regulators and business analyst know that , for the
lack of a better phrase, have Britain and the world by the short and curlies.
[1]
M.Mosk, 2013, Senators: ‘Prosecution Free Zone’ for Big Banks, http://abcnews.go.com/Blotter/hsbc-case-senators-prosecution-free-zone-big-banks/story?id=18678686
[2] T.
Wallace, 2013, HSBC meets Basel capital
target early, http://www.cityam.com/article/hsbc-meets-basel-capital-target-early
[3]
M.Mosk, 2013, Senators: ‘Prosecution Free Zone’ for Big Banks, http://abcnews.go.com/Blotter/hsbc-case-senators-prosecution-free-zone-big-banks/story?id=18678686
[4]
D.Rushe, 2012, HSBC fail to act on money laundering, says US Senate, http://www.guardian.co.uk/business/2012/jul/17/hsbc-money-laundering-us-senate
[5]
Ibid
[6] Ibid
[7]
Ibid
[8] M.Mosk,
2013, Senators: ‘Prosecution Free Zone’ for Big Banks, http://abcnews.go.com/Blotter/hsbc-case-senators-prosecution-free-zone-big-banks/story?id=18678686
[9] H.
watt, 2012, HSBC investigation: Clients
of Britain biggest Bank exposed, http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/9665741/HSBC-Investigation-clients-of-Britains-biggest-bank-exposed.html
[10]
Ibid
[11]
N.Pratley, 2013, HSBC: banking to a set of rules reaps dividends and stability,
http://www.guardian.co.uk/business/2013/mar/04/hsbc-bonus-shareholder-dividends
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