In another shameful decision by the US Department of Justice, earlier this month federal prosecutors reached a deferred prosecution agreement (DPA) with UK banking giant HSBC, Europe’s largest bank.
Shameful perhaps, but entirely predictable. After all, in an era characterized by economic collapse owing to gross criminality by leading financial actors, policy decisions and the legal environment framing those decisions have been shaped by oligarchs who quite literally have “captured” the state.
Founded in 1865 by flush-with-cash opium merchants after the British Crown seized Hong Kong from China in the aftermath of the First Opium War, HSBC has been a permanent fixture on the radar of US law enforcement and regulatory agencies for more than a decade.
Not that anything so trifling as terrorist financing or global narcotrafficking mattered much to the Obama administration.
As I previously reported, (here
), when the Senate Permanent Subcommittee on Investigations issued their mammoth 335-page report
, “U.S. Vulnerabilities to Money Laundering, Drugs, and Terrorist Financing: HSBC Case History,” we learned that amongst the “services” offered by HSBC subsidiaries and correspondent banks were sweet deals, to the tune of hundreds of billions of dollars, with financial entities with ties to international terrorism and the grisly drug trade.
Charged with multiple violations of the Bank Secrecy Act for their role in laundering blood money for Mexican and Colombian drug cartels, as a sideline HSBC’s Canary Wharf masters conducted a highly profitable business with the alleged financiers of the 9/11 attacks who washed funds through Saudi Arabia’s Al Rajhi Bank.
While the media breathlessly reported that the DPA will levy fines totaling some $1.92 billion (£1.2bn) which includes $655 million (£408m) in civil penalties, the largest penalty of its kind ever levied against a bank, under terms of the agreement not a single
senior officer will be criminally charged. In fact, those fines will be paid by shareholders which include municipal investors, pension funds and the public at large.
With some 7,200 offices in more than 80 countries and 2011 profits topping $22 billion (£13.6bn), Senate investigators found that HSBC’s web of 1,200 correspondent banks provided drug traffickers, other organized crime groups and terrorists with “U.S. dollar services, including services to move funds, exchange currencies, cash monetary instruments, and carry out other financial transactions. Correspondent banking can become a major conduit for illicit money flows unless U.S. laws to prevent money laundering are followed.” They weren’t and as a result the bank’s balance sheets were inflated with illicit proceeds from terrorists and drug gangsters.
Revelations of widespread institutional criminality are hardly a recent phenomenon. More than a decade ago journalist Stephen Bender published a Z Magazine
piece which found that “99.9 percent of the laundered criminal money that is presented for deposit in the United States gets comfortably into secure accounts.”
According to Bender: “The key institution in the enabling of money laundering is the ‘private bank,’ a subdivision of every major US financial institution. Private banks exclusively seek out a wealthy clientele, the threshold often being an annual income in excess of $1 million. With the prerogatives of wealth comes a certain regulatory deference.”
Such “regulatory deference” in the era of “too big to fail” and its corollary, “too big to prosecute,” is a signal characteristic as noted above, of state capture
by criminal financial elites.