Executives with Europe’s biggest bank, HSBC, were subjected to a humiliating onslaught from US senators on Tuesday over revelations that staff at its global subsidiaries laundered billions of dollars for drug cartels, terrorists and pariah states.
Lawmakers hammered the British-based bank over the scandal, demanding to know how and why its affiliates had exposed it to the proceeds of drug trafficking and terrorist financing in a “pervasively polluted” culture that persisted for years.
A report compiled for the committee detailed how HSBC’s subsidiaries transported billions of dollars of cash in armoured vehicles, cleared suspicious travellers’ cheques worth billions, and allowed Mexican drug lords buy to planes with money laundered through Cayman Islands accounts.
Other subsidiaries moved money from Iran, Syria and other countries on US sanctions lists, and helped a Saudi bank linked to al-Qaida to shift money to the US.
David Bagley, HSBC’s head of compliance since 2002, and who had worked with the bank for more than 20 years, resigned before the committee.
“Despite the best efforts and intentions of many dedicated professionals, HSBC has fallen short of our own expectations and the expectations of our regulators,” he said.
The bank has been under investigation for nearly a decade, and faces a massive fine from the US justice department for lapses in its safeguards. Senators Carl Levin and Tom Coburn, who conducted the hearing, said the permanent subcommittee of investigations had examined 1.4m documents as part of its review and thanked the bank for its co-operation.
The bank has apologised for its lapses and said reforms had been put in place. Paul Thurston, chief executive of retail banking and wealth management, who was sent in to try and clear up HSBC’s Mexican banking business in 2007, said he was “horrified” by what he found.
“I should add that the external environment in Mexico was as challenging as any I had ever experienced. Bank employees faced very real risks of being targeted for bribery, extortion, and kidnapping – in fact, multiple kidnappings occurred throughout my tenure,” he said.
The committee had released a damning report on Monday, which detailed a collapse in HSBC’s compliance standards. The report showed executives at the bank has consistently warned of problems. At its Mexican subsidiary, one executive had warned the bank was “rubber-stamping unacceptable risks”, according to one email gathered by the committee.
HSBC’s Mexican operations moved $7bn into the bank’s US operations, and according to its own staff, much of that money was tied to drug traffickers. Before the bank executives testified, the committee heard from Leigh Winchell, assistant director for investigative programs at US immigration & customs enforcement. He said 47,000 people had lost their lives since 2006 as a result of Mexican drug traffickers.
The senators highlighted testimony from Leopoldo Barroso, a former HSBC anti money-laundering director, who told company officials in an exit interview that he was concerned about “allegations of 60% to 70% of laundered proceeds in Mexico” going through HSBC’s affiliate.
“In hindsight,” said Bagley, “I think we all sometimes allowed a focus on what was lawful and compliant rather than what should have been best practices.”
Levin and Coburn directed particular ire at a Cayman Islands subsidiary set up by the Mexico division of HSBC. That bank handled 50,000 client accounts and $2.1bn in holdings, but had no staff or offices. Money from the Cayman Islands was used to buy planes for Mexican drug traffickers, said the senators. Bagley said those accounts were all now in the process of being closed.
“Forget hindsight,” said Levin. “Is there any way that should have been allowed to happen?”
“No, senator,” said Thurston.
Levin repeatedly said that HSBC must have been aware of the problems. “This is something that people knew was going on at the bank,” he said.
Bagley and Thurston said that HSBC’s compliance had been fragmented and that oversight had been poor. They said that had now been changed. The bank has now adopted a global compliance structure and doubled the amount of money it is spending on oversight.
“Criminals operate globally and if we are to combat them and stop them from accessing and abusing the financial system, we must look at issues from a global perspective. Institutions which operate internationally, like HSBC, will be targeted by these criminals, and our experience in Mexico vividly demonstrates that you are no stronger than your weakest link,” said Thurston.
While much of the hearing focused on Mexico, the senators also slammed the bank for dealings in Iran, Syria, Cuba, and other countries on US sanctions lists. HSBC executives continued to so business with Al Rajhi Bank in Saudi Arabia, even after it emerged that its owners had links to organizations financing terrorism and that one of the bank’s founders was an early financial benefactor of al-Qaida.
While Coburn was unsparing of his criticism of HSBC, he thanked the bank for its co-operation and said there were issues at other institutions including Citigroup, Wachovia and Western Union.
But the report comes at a highly sensitive moment for British banks in the US. Following Barclays fine in the Libor-interest rate scandal and the massive losses at JP Morgan Chase’s London offices US politicians have become increasingly critical of the UK’s financial services sector.
At a recent hearing into the JP Morgan losses, Carolyn Maloney, a Democratic representative from New York, said: “It seems to be that every big trading disaster happens in London.”
Now, it can be made clear as to why the FBI Director James Comey had been flip-flopping with his statements regarding the Clintons’ slew of high crimes, i.e. he has multiple conflicts of interest when it comes to investigating the affairs of the latter and the Deep State, at large.
He is deeply involved in their shady enterprise.
FBI Director Comey was board member of HSBC – Clinton Foundation & Drug Cartel ‘bank of choice’
21st Century Wire says…
Much has been made recently about the FBI and the Department of Justice letting off favored presidential candidate Hillary Clinton for admittedly mishandling classified information and using her own private email servers to do state business during her time as US Secretary of State. FBI Director James Comey was manning the key choke-point in the decision to not hold Clinton accountable for what so many before her have received convictions for. What many are not aware of is the political and organizational links between Hillary Clinton and James Comey behind the curtain of international high finance.
An argument can be made that FBI Director James Comey has multiple conflicts of interest when it comes to interfacing with the great and the good, and the Clintons in particular. Based on the evidence available to hand – one could easily flag-up Comey’s relationships and past and present involvement with questionable banks, and the Clintons – as a type of conflict of interest (albeit indirect), if not an accessory to institutional corruption, where Comey’s role as a top-level ‘fixer’ is self-evident – fixing outcomes for those members of an elite international club of high finance and organized crime. Could this be the case?
Many are unaware that Comey’s served on the board of banking giant HSBC (‘international drug money clearing house’) before parachuting softly into the head of the FBI in 2013. That’s only the beginning…
It appears that James Comey (who is actually a lawyer by trade) also has long history of cases ending favorable to Clintons, including the case of Sandy Berger, a former Clinton Administration aid. During the Berger probe, Comey said publicly that ‘we take issues of classified information very seriously’, all the while seeming to undermine the scope of the investigation – presumably to protect the Clintons:
“In 2004, Comey, then serving as a deputy attorney general in the Justice Department, apparently limited the scope of the criminal investigation of Sandy Berger, which left out former Clinton administration officials who may have coordinated with Berger in his removal and destruction of classified records from the National Archives. The documents were relevant to accusations that the Clinton administration was negligent in the build-up to the 9/11 terrorist attack.”
“Curiously, Berger, Lynch and Cheryl Mills all worked as partners in the Washington law firm Hogan & Hartson, which prepared tax returns for the Clintons and did patent work for a software firm that played a role in the private email server Hillary Clinton used when she was secretary of state.”
“Hogan & Hartson in Virginia filed a patent trademark request on May 19, 2004, for Denver-based MX Logic Inc., the computer software firm that developed the email encryption system used to manage Clinton’s private email server beginning in July 2013. A tech expert has observed that employees of MX Logic could have had access to all the emails that went through her account.
In 1999, President Bill Clinton nominated [Loretta] Lynch for the first of her two terms as U.S. attorney for the Eastern District of New York, a position she held until she joined Hogan & Hartson in March 2002 to become a partner in the firm’s Litigation Practice Group.” (Source WND)
Many will also be unaware that before Comey was installed by the Obama Administration as FBI Director, he was on the board of Director at HSBC Bank – a bank implicated in international money laundering, including the laundering of billions on behalf of international drugs and narcotics trafficking cartels.
Forbes also points out where Comey was also at the key choke-point during the case involving dodgy auditor KPMG which followed on by the HSBC criminal case:
“If Comey, and his boss Attorney General Alberto Gonzalez, had made a different decision about KPMG back in 2005, KPMG would not have been around to miss all the illegal acts HSBC and Standard Chartered SCBFF +% were committing on its watch.
Bloomberg reported in 2007 that back in June of 2005, Comey was the man thrust into the position of deciding whether KPMG would live or die for its criminal tax shelter violations.”
So according to the establishment narrative, Comey is the who will “keep an eye on the banks” and “help stamp out corruption,” while the opposite seems to be happening. Has Comey been put in place to stop corruption, or to enable it? His record certainly warrants some study on this point.
Good qualification to be FBI Director? Not really…
It seems that our beloved FBI Director is or until very recently was a director and board member of HSBC, which is tightly connected to the Clinton Foundation.
“Mr. Comey’s appointment will be for an initial three-year term which, subject to re-election by shareholders, will expire at the conclusion of the 2016 Annual General Meeting.”
“Clinton foundation received up to $81m from clients of controversial HSBC bank”
It’s like a revolving door of money and special projects that the bank and the CF are involved in.
This is the same HSBC that was accused of laundering drug cartel money, was heavily involved in the LIBOR scandal, and who knows what else, and all the while our esteemed FBI Director James “she didn’t intend it” Comey was part of the senior leadership.