22 July 2012

HSBC Scandal: Rampant Drug Money Laundering, Deals With Iran, Record Billion Dollar Fine Rumored

"And remember, where you have a concentration of power in a few hands, all too frequently men with the mentality of gangsters get control. History has proven that."

John Dalberg Lord Acton

This HSBC scandal is being overshadowed by LIBOR a bit in the States at least, and the usual diversions of the day to day, but it seems about to explode into the headlines of the insular major media.

There is chatter in banking circles that HSBC is about to be handed a record fine of one billion dollars, or more. At least this is what I hear. Obama will point to it as a 'get tough' approach to the rampant fraud and bad behaviour that is still plaguing the US recovery and financial system.

The US has been looking to make an example that whilst some banking excesses might be tolerated, there are areas of dirty financial dealing that go a step too far and will be dealt with.   Especially if the perpetrator is not in the official stable of monetary mavens.  The august Senators are still chafing at having to kowtow publicly to some of the pampered princes of Wall Street, whose deep pockets fill their campaign coffers.

Stephen Green, made Baron of Hurstpierpoint in November 2010, and the former head man at HSBC, a conservative politician and current Cabinet Minister for Trade and Investment, will almost certainly plead the CEO defense for the crimes that were committed during his tenure over the Bank. His profile is rather high now because of his role in the London Olympics.

When government officials and candidates refuse to answer questions or disclose information they often have something to hide, especially if it involves some of the dodgier financial havens of the world where cash is king and the law is just a piece of paper.

The deals with Iran rankle, but the drug money laundering through HSBC in Mexico and Brazil was utterly over the top.  I expect some of their money dealings in the Cayman Islands might prove interesting if they ever come to light, given the people and firms that are involved.  But that is not very likely for that very reason.

Let's see what happens.

The Independent
HSBC emails add to pressure on minister
Jane Merrick, Matt Chorley
Sunday 22 July, 2012

Lord Green must come clean on money laundering

Pressure on Lord Green, the trade and investment minister, to explain his role in the HSBC money-laundering scandal escalated last night, after documents showed he attended a meeting with senior bank staff at which "Iranian payments" were discussed.

Lord Green of Hurstpierpoint, who was chief executive and later chairman of Britain's biggest bank during the period of large-scale money-laundering at HSBC, has resisted calls by Labour to appear in the House of Lords to reveal how much he knew about the activities.

Labour's leader in the Lords, Baroness Royall, and the shadow City minister, Chris Leslie, stepped up calls for the minister to explain his role, as it emerged that Lord Green will be at the forefront of the Government's business campaign during the Olympics, hosting events that include a networking lunch on China Business Day on 27 July and a summit on healthcare and life sciences on 2 August.

The full scale of the HSBC scandal emerged last week when the Homeland Security sub-committee of the US Senate published a damning 340-page report into money-laundering at the bank, which included allowing cash transfers linked to Mexican drugs gangs, Iran, al-Qa'ida and Burma.

Emails published by the Senate committee, led by Carl Levin, a Democrat, show that Lord Green was copied in on a number of emails and attended a meeting in June 2005 at which, the emails claimed, top executives discussed how to make sure huge cash transfers from Iran would comply with US regulations on money-laundering.

David Bagley, the HSBC head of compliance who sensationally resigned during last week's Senate committee hearing into the investigation, wrote on 20 June 2005 that Iranian payments had been discussed in a meeting with Lord Green and the bank's top lawyer, Richard Bennett.

Mr Bagley wrote, in an email to another executive, David Hodgkinson, that Stephen Green, as he then was, wanted confirmation that the "agreed arrangements in relation to Iranian payments had been put in place" and that they would comply with the Office of Foreign Assets Control, a US regulator.

Mr Bagley wrote: "I thought it only right and proper however to alert you to the fact that Stephen is looking for confirmation that all payments are not being routed through HBME [HSBC Bank Middle East] via a non-Group clearer, or that a reasonably proximate date has been set by which time those arrangements will be in place."

The email suggests that Lord Green was alerted to the issue and was keen that the Iranian transfers complied with US regulations on money-laundering. There is no suggestion of wrongdoing on the part of Lord Green. However, despite the meeting, and the emails sent to Lord Green, money-laundering continued to be rife at HSBC for at least another two years. Lord Green was chief executive from 2003-06, before being appointed chairman. He stood down from the bank in 2010 when he was given a peerage and the job of trade minister by Mr Cameron.

Senator Levin said last week: "HSBC's chief compliance officer and other senior executives in London knew what was going on but allowed the deceptive conduct to continue." Contacted by The IoS yesterday, Senator Levin's office declined to comment on the role of Lord Green.

Mr Leslie, the shadow City minister, has written to Lord Green asking him to clarify what steps he took to crack down on money-laundering at the bank and its subsidiaries....

Read the rest here.