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The shadow hand of HSBC: from drug lords to the House of Lords

Cartel drug money, pernicious Saudi financial bodies, tax evasion and the Opium Wars. MILES ELLINGHAM outlines the moral apathy of Europe’s biggest bank, and the Conservative government’s failure to reprimand.

BACK in 2012, HSBC, Europe’s biggest bank, paid $1.9 billion to the United States’ Department of Justice to avoid prosecution for allowing its global subsidiaries to move at least $881 million in proceeds from Columbian and Mexican cartels. A report from a 2012, US Senate-led committee detailed that HSBC had “transported billions of dollars of cash in armoured vehicles, cleared suspicious travellers’ cheques worth billions, and allowed Mexican drug lords to buy planes with money laundered through Cayman Islands accounts.”

But HSBC’s willingness to turn a blind eye to its customers’ criminal activities extends far beyond Mexico and the drugs market. Bad as this seems — and, make no mistake, the notorious Sinaloa Cartel built by “El Chapo” Guzman, which dominated the world’s narcotics market used a ruthlessness and brutality previously unimaginable, developing people trafficking and kidnap as buoyant sidelines — there were other beneficiaries of the bank’s iniquitous approach.

Indeed the blood-smeared, white-gloved hand of the “Hong Kong and Shanghai Banking Corporation” was simultaneously reaching out to regimes in the Middle East.

According to the report, HSBC helped a suspect Saudi bank move money to the US, a bank that was later discovered to have connections with al-Qaeda. The Senate report led to the resignation of David Bagley, the company’s head of compliance since 2002.

And despite the US’s commitment to deposing him at the time, the bank happily carried out transactions from Syria on behalf of the Assad government.

Paul Thurston, chief executive of retail banking and wealth management, whose job it was to manage HSBC’s Mexican banking business, in 2007 defended the company by arguing that many executives were at risk of “being targeted for bribery, extortion, and kidnapping…”

While the cartels in Mexico are renowned for such behaviour, you would imagine a financial corporation harbouring total assets of US$2.558 trillion (almost twice that of Mexico’s GDP) might be able to better safeguard their employees against extortion from organised crime. It begs the question — did HSBC truly comply with the whims of brutal, tyrannical criminals out of fear, moral apathy, or both?

In an interview with MarketWatch, Kristi Jacobson, who researched and directed the excellent documentary “Cartel Bank” (part of the 2018 series “Dirty Money”), with testimony from whistleblower Everett Stern, asserted that “it wasn’t just HSBC’s money-laundering crimes over many years for the most notorious drug cartels. It was their admission of it and then their audacity to continue to commit those crimes…” This somewhat contradicts the emotional grain of Thurston’s defence of the company and its executives.

At this point, it is worth bringing in the British government; HSBC is, after all, a British bank with its headquarters in the City of London.  Interestingly, in 2010, when the kinds of malpractice that would soon become documented in the 2012 report were at their most rife (including the laundering of cartel money), Stephen Green, group chairman of HSBC, accepted an invitation from then Prime Minister David Cameron to become Minister of State for Trade and Investment. To enable him to be accountable to Parliament he was awarded a life peerage along with the job, as Baron Green of Hurstpierpoint.

While some may say that it would be impossible to prove Green’s knowledge of the bank’s malpractice, it’s important to mention that the 335-page report by the Senate subcommittee had provided evidence that Green had been notified by regulators of potential money laundering but had failed to act. 

Green remained British Minister of State for Trade and Investment in both the Department for Business, Innovation and Skills and the Foreign and Commonwealth Office until December 11 2013 — almost a year after the damning report was released. He also failed to attend a House of Lords Labour questioning about the affair.

This all goes to show two things. First, that HSBC is an unyieldingly callous corporate body, willing to serve the holdings of brutal criminals, terrorist groups and pariah states.

Second, that the Conservative government failed not only to reprimand the upper echelons of the company but went as far as to appoint a man condemned by a US national report for a role requiring him to routinely oversee “dubious transactions” to the highest reaches of public service.

This is egregious and cynical, occurring as it did in the direct aftermath of the 2008 sub-mortgage crisis, when trust in the financial sector was — rightly — at its absolute lowest point.

But HSBC was formed in the shadow of empire, and it has retained those same imperialistic, dead-eyed misgivings that it has harboured from the very start.

Here’s a brief history: the Hong Kong and Shanghai Banking Corporation was formed in 1865 by Thomas Sutherland. Back then, its chief revenue came from funnelling trade into China, very much not excluding the forced importation of opium to the colonised Chinese population, in the wake of the British opium wars of 1839–42 and 1856–60. 

During HSBC’s humble beginnings, opium provided around 70 per cent of Hong Kong trade with the Indies, which would have been overseen, at least in part, or more likely for the most part, by Sutherland’s pernicious dealings.

After Mao’s revolution, the bank was forced to retreat to Hong Kong, until it moved its headquarters to London in 1993, where the monstrous skyscraper at 8 Canada Square still towers over Greenwich, buttressing the skyline of the Isle of Dogs.

Perhaps we should not be surprised to learn that indictments of the bank’s maleficence did not end with the findings of the 2012 report, nor should we be so naive as to have expected it to. 

In 2015, BBC’s Panorama exposed “HSBC’s Swiss private bank, HSBC Private Banking Holdings (Suisse) SA, in helping more than 100,000 clients from over 200 countries evade tax worth hundreds of millions of pounds.” When confronted, Green, who allegedly oversaw the tax evasion for Swiss Bank, or, in the words of Margaret Hodge MP, “may have been asleep at the wheel,” refused to discuss the issue saying, “as a matter of principle I will not comment on the business of HSBC past or present.” 

It seems, “as a matter of principle,” HSBC's principles are best left unsaid.

Miles Ellingham is a poet and writer based in London.

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