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  July 17, 2016

Decades of Money Laundering by HSBC Ignored by Holder at DOJ


Bill Black says the Republicans could embarrass Barack Obama, Hillary Clinton, and Loretta Lynch by demanding further investigation into the failure to prosecute HSBC for its world-historical money laundering operation
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biography

William K. Black, author of THE BEST WAY TO ROB A BANK IS TO OWN ONE, teaches economics and law at the University of Missouri Kansas City (UMKC). He was the Executive Director of the Institute for Fraud Prevention from 2005-2007. Black was a central figure in exposing Congressional corruption during the Savings and Loan Crisis.


transcript

Decades of Money Laundering by HSBC Ignored by Holder at DOJSHARMINI PERIES: It’s the Real News Network. I’m Sharmini Peries coming to you from Baltimore.

A report prepared by Republican staff of the Financial Services Committee was released on Monday stating that Eric Holder, the former Attorney General ignored recommendations of the Justice Department prosecutors to charge the UK based HSBC Bank for money laundering. The report states that Department of Justice officials thought prosecuting the bank could result in global financial disaster. It’s also being reported that UK Chancellor George Osborn was also implicated in preventing a prosecution against HSBC. Now HSBC was accused of being used by drug cartels to launder money. They also engage in financial transactions with countries under sanction by the U.S. like Iran, Libya, and Cuba.

To discuss all of this I’m being joined by Bill Black. Bill is an Associate Professor of Economics and Law at the University of Missouri, Kansas City. He’s a white collar criminologist and former financial regulator and author of, The Best Way to Rob a Bank is to Own One. Thank you for joining us Bill.

BILL BLACK: Thank you.

PERIES: So Bill, tell us about the gravity of this issue. Holder ignoring the recommendation of his own department prosecutors.

BLACK: So there are two stories in this. One is that the substance and the second is the rather curious moves of the Republicans in Congress about all of this. Substantively HSBC was one of 2 or 3 largest banks in the world at the time it was doing this. It laundered money for at least a decade. It did so primarily in Mexico for the Sinaloa Cartel and it did so to the tune of at least a billion dollars.

HSBC’s Mexican operations were so much part of the criminal enterprise. So much part of the Sinaloa Cartel that the Cartel actually built specialized boxes to transfer the cash that exactly fit the teller cages. Things like your drive up windows and such. So this was something where hundreds of HSBC officials new that this was going on. It was a principle part of the operations of HSBC in Mexico.

And as you say, on top of that if you want to come back to the Republicans for a moment, if you wanted to really play this up you’d say hey HSBC is providing funds to Libya, to Iran, it is supporting terrorism. It is supporting the creation allegedly of nuclear weapons, etc., etc., right? It would be a really good issue for the Republicans and guess who was Secretary of State during much of this time?

Substantively as well, there’s a scandal in all of this and the wonderful scandal from the standpoint of the Republicans were the Democrats were in power. And Eric Holder despite recommendations from the professional prosecutors and despite the fact that HSBC, these are not alleged facts. HSBC has admitted these facts. Despite this one of the laundering operations in world history. One of the longest drug operations, money laundering operations in world history. Holder refused to prosecute.

And he claimed that there was no basis for prosecuting. Now that never made any sense as I said because it’s kind of a problem for that HSBC is in fact admitting all the elements of the felony and supposedly no one could be prosecuted? Even though they admit the facts. But Holder kept secret the fact that he had reversed the recommendation of the professionals.

PERIES: How did he keep that secret?

BLACK: Well the Republicans allege by lying in his congressional testimony about the HSBC settlement. So let me go briefly to the weirdness from the Republican side, right. Republicans have been trying desperately to find something to attack Obama with forever. And they’ve been really desiring something that attacks Obama and potentially Hillary Clinton for obvious reasons. And this is a perfect one.

It’s got all the [helmets] helping people launder for the Mexican cartel for all the Trump-y stuff about Mexico. It’s got terrorism, it’s got nuclear weapons, it’s got Iran you don’t even have to say the words, Libya. These are all the things Republicans theoretically would want to say. But they have been silent on the failure to prosecute, overwhelmingly. There are a few exceptions [inaud.] in a committee.

Notice also as you correctly said that this is a leaked report to the Wall Street Journal. Well that’s no surprise, that happens all the time. But from the Republican staff only. Now if you’re a [wonk] you know that the really great congressional stuff on the run up to this crisis was done by Senator [Levin] with different Republican counter parts but always jointly. And they produced joint reports and those of course have far more credibility than a leaked report that is only from one side of the staff. So this again is the Republicans are unwilling to work with the Democrats but also if they tried they got no one willing to go with them on the Democratic side.

HSBC, on top of that, is the case that was handled by Loretta Lynch's office. And of course, she's now Eric Holder's successor. And not only should HSBC have been prosecuted, and as the documents show--.

PERIES: Didn't she actually assist HSBC in this case?

BLACK: Well, a different attorney at the Office of Foreign Asset Control. Now, those are the sanction people, right. And you talked about the sanctions. Those sanctions are against funding for groups that we believe to be terrorists, and with regard to Iran it was funding that we thought could lead to the development of nuclear weapons. Again, those are, from a Republican standpoint, that's ideal kind of stuff, right.

So the Office of Foreign Asset Control attorney, they have documents because--they being Congress. This is the House Financial Services Committee, and it more precisely, it's the majority, which is to say the Republicans. Jeb Hensarling is the chairman. They have those documents because they subpoenaed them from the Treasury Department. And the Treasury Department complied with the subpoena. The Justice Department refused to comply with the subpoena. So again, in Republican politics this is great, right? A coverup by the Department of Justice of a coverup.

Meanwhile, you get some of the key facts from Treasury, and they show that this Office of Foreign Asset Control person, who you would normally expect to be a hawk on anything involving sanctions, is actually fighting against bringing a criminal prosecution. And shortly after that, she leaves the government--and I know it will shock you--but she ends up working for HSBC.

On top of that, as you said, you have all the folks at Treasury being implored by Osborne, who was the British equivalent of the Secretary of the Treasury, and the number two guy in power in the Tory party as well, say you must not prosecute HSBC because it's too big to prosecute. It will cause devastating harm to the world economy. Now, that's complete BS. Obviously what can cause harm to the global economy is having one of the largest banks in the world be a criminal enterprise that is working hand-in-glove with one of the largest drug cartels in the world, and with the Libyan folks and the Iranian folks to avoid sanctions. Right? That would be how you would screw up the world, not removing the crooks from HSBC.

Well, what did the Justice Department do after Holder killed the prosecution? They did one of these, you know, non-prosecution, allegedly deferred to prosecution, agreements. But except, you know, deferred means never. It's one of those stupid euphemisms. And we know that because as part of these agreements you get a monitor. And that monitor reported that HSBC was not fully complying. And Loretta Lynch and her successors have refused to prosecute even with that. And on top of that, the Panama disclosures and other disclosures show that HSBC was engaged in massive violations, again basically money laundering-type activities to help the wealthiest folks in many countries, HSBC operates globally, escape and evade taxes that they owe.

So they are at least three-time losers, liars, after this settlement, where supposedly their extraordinary cooperation, some cooperation, right, after a decade of massive frauds, and they're caught red-handed, they supposedly cooperate. Well, we've now seen that they haven't under the deferred prosecution agreements. We could have used their admissions against them, prosecuted them much more easily, and the Justice Department has continued to refuse.

And those claims that Holder--remember, Holder testified that he thought that some banks were too big to prosecute. And then he walked that back within a couple of days because he got such severe criticism. Well, now it comes out that's exactly what's been going on. That they view these as too big to jail, and that it's not just here in the United States that--they work with the city of London. And where are the two biggest financial centers in the world, and it ain't close, they would be Wall Street and the City of London. And that's why we have this ability to rig the system to get incredibly wealthy as CEOs of these banks with complete immunity from criminal laws.

So now the question is, what are the Republicans going to do with this? And what are the Democrats going to do with this? It's the perfect Republican issue, but of course it's embarrassing to a whole lot of Republican supporters in terms of the massive banks, or major political contributors, both to Hillary and to the Republican Party, traditionally. So are we going to get more of the sort of conspiracy of silence? Or are the Republicans actually going to try to make this a major issue?

PERIES: Now, Bill, one quick question for you: didn't this come up in Loretta Lynch's confirmation hearings?

BLACK: Some of it came up, but not very hard. Again, the clear thing is, as opposed to all kinds of other congressional investigations which have had no merit to very little merit, and little ability to embarrass Obama, this is the perfect one for embarrassing Obama. It's a good one for embarrassing Hillary Clinton. It is a wonderful one for embarrassing the attorney general, Loretta Lynch, who they are going after because of her decision not to prosecute, and because of her unfortunate meeting with Bill Clinton, right?

So it's the great Republican issue. They should be screaming about it with all of their surrogates every day. They should be demanding an investigation. And they control Congress. They have subpoena authority. They could be going after, and the Democrats obstructed those investigations, the Democrats would pay heavily. But they haven't ever gone--not only have the Republicans not gone full force, you know, on a scale of 1-10 this is about 0.0001, historically, that the Republicans have been building to complain about the Democrats' failure to prosecute the banksters. We'll see.

PERIES: We'll wait and see, and the Republicans should give you a fee for this report. Thank you so much for joining us today, Bill. Thank you.

BLACK: Thank you.

PERIES: And thank you for joining us on the Real News Network.

End

  

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