By Franklin Délano López
former United Press International and The Associated Press Newswriter
“Corruption is a cancer that erodes People’s trust in it’s institutions and decays the foundation of democracy” -paraphrasing President Joe Biden.
But What is the relationship of Greenspan awith Bernanke? Lets see:
The same arguments used by Wall Street to derail any regulatory initiative to impose controls over the insatiable appetite and greedyness of bankers were the same used during the great depression of the nineteen thirdtees. But all the work that Bernanke did betwen 2008-2010 was thrown down the water closet when the Federal Chair again joined forces with Gaithner and Rubin to give multiples “free out of Jail card” to the directors and bankers of Honkong Shanghai Banking Corporation (HSBC). U.S attorney for the Eastern District of New York, Loretta Lynch, conducted a successful criminal investigation that led to four charges of criminal fraud, money laundering and false statements against HSBC director and officers. HSBC accepted the charges. When Lynch was ready to initiate the process to prosecute HSBC officers, “the Financial Gang of Four” this time Bernanke, Gaithner, Rubin and Summer” lobbied very hard to impose a $1 .9 billion dollar fine and proceed with civil action against HSBC officers and directors rather than prosecuting them criminally. The amount of the fine represent the profits of 5 weeks of operations of HSBC. It ws pocket change. The Loretta King prosecution was sparked by several anonimous reports sent to Federal law enforcement that HSBC’s affiliated in Mexico laundered $881 millions of drug money coming from the Chapo Guzman and the Sinaloa drug Cartel.
HSBC formidable presence in China will create a formidable earthquake in destabiliing the global financial system with the collapse of China’s housing industry.Many financial analist believes the following negative effect of “Engrande” collapse in China is already affecting the global financial system in the following manner:
- A spillover of the crisis at China Evergrande Group into other parts of the economy could become a systemic problem, warned Jenny Zeng from Alliance Bernstein.
- Zeng said a sizable number of developers in the offshore dollar market appear to be “highly distressed” and may not survive much longer if the refinancing channel remains shut for a prolonged period.
- These developers may be small individually, but when combined, they make up about 10%-15% of the total market, she added.
- all of this seem to give you a “dejavu” of 2008 financial collapse! Be ready!
Once the letter of “Dear Ben” of September 10, 2010 was received and distributed Attornet General Erick Holder instructed his deputy Lanny Breuer to “advise” U.S. attorney Lynch to forget the criminal prosecution option and to follow the civil route negotiating the largest fine to a financial entity in history. Breuer was responsible for writing the Department of Justice policy memorndum of “to big to Jail” enabling giving the bankers responsible for the collapse to get ” a free out of jail card.” None of the culprits responsible for the financial collapse, that cost trillions in losses to people and workers in the world was prosecuted and instead walked out with tens of billions in bonuses. Mr. Breauer and A.G Holder after leaving their post at Justice went to work with the largest law firm, representing the banking industry in Washington: Convington and Burling, both earnings millions of dollars in legal fees. The London law firm retained by HSBC had the un-precedented access to the negotiation process with the Department of Justice criminal division. The whole HSBC scandal was such that Senator Chuck Grassley (Republican Iowa) wrote this letter to Attorney General Erick Holder:
HSBC directors made a vital strategic decisions of moving it’s headquarter from Hong Kong to Beijing and the same time created a sister headquarter in London. This was done when Great Britain passed the Hong Kong territory to the People’s Repubblic of China on July1, 1997. Atthat time the Thatcher administration adopted a series of strong banking deregulations measures that made London ( and the United KIngdom) the largest money laundering justidiction in the World. The collapse of the Soviet Union promoted the laundering of billions of dollar from Russian oligarchs and drug dealers using HSBC and UK banking platform. Bernanke was aware of the criminal aggressive operation of HSBC laundering dark money from drug Cartels, Mexians and Colombian, as well as terrorist groups from Lybia, Iran, Cuba, Venezuela and others. He knew that the laundered money from drug Cartels came from criminal activities that included assasination, kipnapping extortion and the whole of the criminal menu.
Via Electronic Transmission
The Honorable Eric H. Holder, Jr.
U.S. Department of Justice
950 Pennsylvania Avenue, N.W.
Washington, DC 20530
Dear Attorney General Holder:
I write today to express my continuing disappointment with the enforcement policies of the Department of Justice (Department). On December 12, 2012, the Department entered into a Deferred Prosecution Agreement (DPA) with HSBC, a global bank that has now admitted to violating federal laws designed to prevent drug lords and terrorists from laundering money in the United States. While the Department has publicly congratulated itself for this settlement, the truth is that the Department has refused to prosecute any individual employees or the bank responsible for these crimes. This troubling lack of real enforcement will have consequences for the health of our economy and the safety and prosperity of the American people.
HSBC’s record on facilitating international money laundering—and therefore endangering America’s economy and national security—is well documented. Last July, the Senate Homeland Security and Governmental Affairs Permanent Subcommittee on Investigations published a report revealing that HSBC’s failure to implement effective anti-money laundering (AML) controls has “exposed the U.S. financial system to a wide array of money laundering, drug trafficking, and terrorist financing risks.” The Department’s investigation determined that HSBC “severely understaffed” and “failed to implement” an adequate AML compliance program, resulting in over $670 billion in wire transfers and over $9.4 billion in physical money to enter the U.S. from Mexico unmonitored. Indeed, as a result of the DPA, HSBC has now admitted to willfully violating federal AML laws.
In spite of this egregious criminal conduct, the DPA fails in finding the proper punishment for the bank or its employees. Under its terms, the DPA obligates HSBC to pay $1.92 billion to the federal government, improve its internal AML controls, and submit to the oversight of an outside monitor for five years. Despite the fact that this is a “record” settlement, for a bank as gigantic as HSBC this is hardly even a slap on the wrist. It only amounts to between 9 and 11% of HBSC’s profits last year alone, and is a bare fraction of the sums left unmonitored. Additionally, the DPA states that “at least $881 million in drug proceeds” entered the U.S. financial system, but how much more remains undiscovered? Did HSBC profit from the DPA because it actually made more than $1.92 billion by providing services to drug kingpins and terrorists? The American people may never know, because you have declined to prosecute.
Even more concerning is the fact that the individuals responsible for these failures are not being held accountable. The Department has not prosecuted a single employee of HSBC—no executives, no directors, no AML compliance staff members, no one. By allowing these individuals to walk away without any real punishment, the Department is declaring that crime actually does pay. Functionally, HSBC has quite literally purchased a get-out-of-jail-free card for its employees for the price of $1.92 billion dollars.
There is no doubt that the Department has “missed a rare chance to send an unmistakable signal about the threat posed by financial institutions willing to assist drug lords and terror groups in moving their money.” One international banking expert went as far as to argue that, despite the “astonishing amount of criminal behavior” from HSBC employees, the DPA is no more than a “parking ticket.” Financial impunity of corruption leads to major crisis eroding the people’s trust in its’ institutions. A former banking regulator added that it is “mind-boggling” how the Department believes that “you can have a financial system and allow this kind of impunity.” Future bank employees with a choice between following the law or profiting from illegal activities will have been taught the lesson that they will never face prison time for their actions. Consequently, this DPA does little to discourage future lawbreakers, and leaves the U.S. financial system highly vulnerable to exploitation by drug cartels and terrorists.
The Department’s inexcusable reluctance to prosecute is the continuation of a failed policy allowing lawbreakers to escape justice. In a letter to the Department on March 9, 2012, I noted that the Department had “brought no criminal cases against any of the major Wall Street banks or executives who are responsible for the financial crisis.” The Department’s response contained no such banks or their executives; rather, it simply confirmed my suspicion that the Department is not enforcing federal laws against corporate criminals with enough vigor. As others have repeatedly warned, failing to prosecute individuals or banks when they have committed crimes will result in perverse incentives and ultimately undermine the integrity of the U.S. financial system and economy.
The United States is already seeing the results of these failed policies. Past settlements with large banks prove that they do nothing to change what appears to be a culture of noncompliance for some businesses. In March 2010, the Department arranged a then-record $160 million deferred prosecution agreement with Wachovia based on its laundering of more than $110 million from Colombian and Mexican drug cartels. Officials at the time stated that “blatant disregard for our banking laws gave international cocaine cartels a virtual carte blanche to finance their operations.” In this case, a bank escaped with a record monetary settlement and a conspicuous absence of individuals behind bars. If the story sounds eerily similar, that’s because it is. It happened again with HSBC.
As the Ranking Member of the Senate Judiciary Committee, I have an obligation to ensure that the executive branch is fully, fairly, and effectively enforcing the law. But what I have seen from the Department is an inexplicable unwillingness to prosecute and convict those responsible for aiding and abetting drug lords and terrorists. I cannot help but agree with an editorial in the New York Times that “the government has bought into the notion that too big to fail is too big to jail.”
To better understand the Department’s decision making, I have requested a staff briefing on this settlement and encourage you to direct the relevant Department officials to fulfill this request as soon as possible. Notwithstanding this request, I strongly urge the Department to prosecute the responsible individuals and send a powerful message to the banks that laundering money for America’s enemies will not be tolerated.
Charles E. Grassley
Cc: The Honorable Patrick Leahy
1 HSBC Exposed U.S. Financial System to Money Laundering, Drug, Terrorist Financing Risks, SENATE COMMITTEE ON HOMELAND SECURITY & GOVERNMENTAL AFFAIRS PERMANENT SUBCOMMITTEE ON INVESTIGATIONS (July 16, 2012), http://www.hsgac.senate.gov/subcommittees/investigations/media/hsbc-expo….
2 Press Release, U.S. Dep’t of Justice, HSBC Holdings PLC. and HSBC Bank USA N.A. Admit To Anti-Money Laundering and Sanctions Violations, Forfeit $1.256 Billion in Deferred Prosecution Agreement (Dec. 11, 2012) (on file with author).
5 Brian Ross, Matthew Mosk, & Carlos Boettcher, HSBC: Too Big To Prosecute?, ABCNEWS.COM, Dec. 11, 2012, http://abcnews.go.com/Blotter/hsbc-pay-record-19-billion-settle-money-la….
6 See id. (9%); Andrew Tangel, HSBC To Pay $1.9 Billion To Settle U.S. Money-Laundering Case, L.A. TIMES, Dec. 11, 2012, http://www.latimes.com/business/la-fi-hsbc-fine-20121212,0,2422326.story (11%).
7 See Press Release, U.S. Dep’t of Justice, supra note 2.
8 See Ross, Mosk, & Boettcher, supra note 5.
10 See Tangel, supra note 6.
11 Letter from U.S. Senator Charles E. Grassley to U.S. Attorney General Eric H. Holder (March 9, 2012) (on file with author).
12 See, e.g., No Crime, No Punishment, N.Y. TIMES, Aug. 25, 2012, http://www.nytimes.com/2012/08/26/opinion/sunday/no-crime-no-punishment…. (arguing that “what is needed are cases with convictions [of executive] and settlements severe enough to deter future bad behavior”); William K. Black, Senator Grassley Calls Attorney General Holder’s Bluff, NEW ECONOMIC PERSPECTIVES, March 14, 2012, http://neweconomicperspectives.org/2012/03/senator-grassley-calls-attorn… (describing the “failure to prosecute the elite fraudulent financial CEOs who drove the ongoing [financial] crisis” as one of the “big problems” in federal law enforcement).
13 Pascal Fletcher, Wachovia Pays $160 Million To Settle Drug Money Probe, REUTERS, March 17, 2010, http://www.reuters.com/article/2010/03/17/us-wachovia-settlement-idUSTRE….
15 Ed Vulliamy, How A Big U.S. Bank Laundered Billions From Mexico’s Murderous Drug Gangs, THE OBSERVER, Apr. 2, 2011, http://www.guardian.co.uk/world/2011/apr/03/us-bank-mexico-drug-gangs.
16 Too Big To Indict, N.Y. TIMES, Dec. 11, 2012, http://www.nytimes.com/2012/12/12/opinion/hsbc-too-big-to-indict.html?_r=0.
The HSBC matter is an emblematic case of the Justice Departmen Policy of “to big to fail”. To continue granting “get out of jail card to official of Large Banks is letimizing the theory “in animal farms some animals are better than others”, the equal protection of the law is then a farse!
No one, either a citizen or corporation should be above the law. To allow it is and foundations to plan the seeds of future crises and the people’s trust in its’ institutions.
The Nobel Prize organization fatally tarnishes the image of the founder and objectives of awarding and recognition of people who contribute to the improvement of the human race!