Wednesday, January 23, 2013

HSBC Did Bad Things (Mexican Drug $, Illegally Helped Iran)

HSBC Did Bad Things (Mexican Drug $, Illegally Helped Iran)

HSBC (originally known as the Hongkong and Shanghai Banking Corporation) has been accused by the USA, and has partially admitted to,  laundering Mexican cartel drug money, engaging in secret and illegal transactions with Iran, and otherwise violating American and international banking rules and laws. According to a Congressional subcommittee, one HSBC executive encouraged the bank to work with the Al Rajhi bank in Saudi Arabia, which has supported Al Qaeda.

As pointed out by a former Undersecretary for Enforcement, US Department of Treasury (who is now a law professor at Notre Dame, "the bank has an obligation to monitor financial transactions through the bank to determine whether or not they're suspicious of criminal activity, including money laundering and terrorist financing." According to the US Department of Justice and Congress, HSBC intentionally turned a blind eye to the incredible sums of money - billions of dollars - which were illegally flowing through it to and from Mexican drug cartels, to and from Iran, and to and from Saudi banks with terrorist ties. America has generally been the biggest contributor to HSBC's profits, ironically.

At the end of the day, however, instead of following through on a criminal case against HSBC - which some believe would have effectively ended HSBC as a major financial institution - a settlement was reached by which HSBC is to pay $1.92 billion  - a mere fraction of the illegal amounts of money which it facilitated. The general opinion of experts is that HSBC did not ultimately face criminal prosecution (amazingly, none of its leaders or employees were indicted either) because it is "too big to fail" - in other words, if HSBC were to be properly punished, the impact on the world economy would be negative. Having been a prosecutor myself, I recognize the public relations spin that comes after a case is resolved but not in the manner it truly could have or should have been; while the accusations were incredibly serious and damning, after the criminal case was dropped, things were portrayed quite differently by the DOJ: "“This is not a case where the HSBC people intended to create money laundering. They did not have the controls in place that they needed.” Oh, well, then, by all means. This is the equivalent of leaving your bank vault open and then claiming some lack of intent when it's robbed.

According to one expert, the former US Department of Treasury enforcement officer referenced above: "I think the HSBC settlement makes a mockery of justice, of the criminal justice system because I don't think until a bank official or bank officials are indicted, prosecuted and sent to jail are bank officials going to take their obligations seriously to prevent money laundering and terrorist financing."

We will never know the details, but it is certain that at least some of this money assisted in the terror that the Mexican drug cartels have spread in recent years throughout Mexico and even to the United States, not to mention the millions of lives that continue to be ruined by drug addictions. In fact, the Mexican gangs have begun to murder journalists who report stories which portray them negatively.

Disgusting at it may be, HSBC is actually having a great run right now, otherwise, with its stock up 31%. Wonderful.

HSBC Mortgage (with which I have dealt on behalf of mortgage relief and foreclosure clients) has approximately $15.5 billion in prime mortgages, and it services another $36.6 billion in mortgage loans for other lenders. It is unknown if this $1.92 billion settlement will impact Americans who have HSBC mortgage loans.