HSBC Caught in Global Tax Evasion, Obama Appointee in Coverup

February 10, 2015

HSBC, one of the largest British banks, whose history traces back to the 19th-Century Opium Wars, has been once again caught in the center of a major worldwide criminal enterprise. The scandal also throws new "Wall Street" light on a "deal" made between the Justice Department and HSBC in 2011, by Obama's present nominee for Attorney General, Loretta Lynch.

Last night, CBS' "60 Minutes" aired a lengthy exposé of HSBC's Swiss-based private banking unit, which has been caught helping clients from over 200 countries evade an estimated $120 billion in taxes, while also facilitating money laundering for drug traffickers and terrorists. The International Center for Investigative Journalism (ICIJ) worked with CBS, Britain's Guardian, BBC Panorama, and other news organizations for months assembling the material for the "60 Minutes" show, which will also be aired tonight on Britain's "Panorama" investigative program.

The evidence against HSBC was provided in 2007 by an information technology employee of the bank's Swiss branch, Hervé Falciani, who stole massive numbers of computerized bank records, which included detailed notes from private account managers on how money laundering and tax evasion structures were created to serve individual clients' needs.

At the time of the fraud, Sir Peter (now Lord) Green was CEO of HSBC. And although the British Treasury had been provided this documentation of crime by 2010, it did less than nothing: Lord Green was made Minister of Trade in the Cameron government in 2011, and remains in that position.

All told, 30,000 accounts were created at the Swiss branch of HSBC to evade taxes and facilitate other financial crimes. Falciani turned over the computer data to French authorities in 2008 and they shared the data with American and British law enforcement agencies, among others.

The revelations on "60 Minutes" have provoked strong reactions from some Members of Congress, with Sen. Sherrod Brown (D-Oh.) vowing to fully investigate. In 2012, Sen. Carl Levin (D-Mich.), who chaired the Senate Permanent Subcommittee on Investigations, published a 300-page report, detailing HSBC's central role in laundering Mexican and Colombian drug money between Mexico City and New York branches of the bank. The same report detailed HSBC's role in laundering terrorist funds, in league with Saudi banks, and in bypassing sanctions against Iran.

At the time of the report's publication, Sen. Levin suggested that HSBC could have its charter to do business in the U.S. revoked, thus shutting down the money laundering route. Instead, however, the Department of Justice negotiated a deferred prosecution agreement with the bank, fining them $1.9 billion, but deferring prosection of any bank executives. In the "60 Minutes" broadcast, Jack Blum, an expert on bank money laundering who worked for the Senate Foreign Relations Committee and the UN, assailed the failure to prosecute HSBC, and described the $1.9 billion fine as the equivalent of a traffic ticket for the bank, given the enormous profits HSBC realized through the criminal activity. At the time of the deferred prosecution deal, Sen. Elizabeth Warren (D-Mass.) also decried the DOJ sweetheart deal.

The Justice Department official who cut the deal with HSBC is Loretta Lynch. The new revelations indicate that the DOJ, at the time of the 2012 deal over Senator Levin's report, also had the evidence of HSBC's tax evasion and Swiss money laundering operations. That raises the question of coverup of the bank's criminal operations.

The contrast could not be more sharp with Argentina, much maligned by Wall Street's friends. Argentina on Aug. 13, 2014 charged HSBC with being a "criminal enterprise," and on Sept. 10, 2014, filed criminal charges against executives of the bank in Buenos Aires, for money-laundering and aggravated tax evasion.

HSBC, formerly the Hongkong and Shanghai Banking Corporation, was a central target of EIR's bestseller Dope, Inc. and EIR intervened to attempt to block HSBC from being given its original toehold in the U.S. banking system in the late 1970s, when they attempted to take over Marine Midland Bank of New York. Although the New York State Banking Commissioner did block the transaction, the Federal Reserve granted Marine Midland a Federal bank charter and allowed the takeover to go forward.