So what did we learn in 2012? (quite a lot from HSBC México actually)
So what did we learn in 2012?
Between 2008 and 2011 we learnt that if you’re running a bank, and you ever happen to face the mother of all debts, the united nation of governments will bail you out like there is no tomorrow. This means that you can fail at what is at the heart of your business (to assess risk and make loans accordingly), you can break the rules of common sense and flog loans that your customers will never be able to repay (to the point of shooting yourself a bullet in the foot and get overwhelmed by mortgage defaults), and yet have the governments flood you with all the cash you need to stay afloat. In 2008 we learnt that you were Too Big To Fail.
Well, it that wasn’t enough, in 2012 we learnt that you can not only be totally negligent at doing your banking business, but also be conducting outright criminal activities and still completely escape charges. This is exactly what happened to HSBC that escaped criminal prosecution for money laundering for Mexican drug cartels and settled for a fine worth 5 weeks of the bank’s income. Even better, this magic trick was not even pulled by some clever defence lawyer, but by the US prosecution who estimated that the loss of license that HSBC would inevitably face, would “threaten the stability of the global financial system”. So in 2012 we learnt that you were not only Too Big To Fail, but also Too Big to Indict,.. Too Big to Jail!
Concepts like “money laundering” can be sometime elusive to grasp so this bears repeating
HSBC accepted 15 BILLION dollars for nearly a decade until 2010 from drug cartels. The money was deposited in cash at the branches. The US prosecutor admitted that drug dealers would sometimes come to HSBC’s Mexican branches and “deposit hundreds of thousands of dollars in cash, in a single day, into a single account, using boxes designed to fit the precise dimensions of the teller windows.” In some branches the boxes of cash being deposited were so big the tellers’ windows had to be enlarged.
Despite the known risks of doing business in Mexico, the bank put the country in its lowest risk category, which excluded $670 billion in transactions from the monitoring systems, according to the documents.
Bank officials repeatedly ignored internal warnings that HSBC’s monitoring systems were inadequate, the Justice Department said. In 2008, for example, the CEO of HSBC Mexico was told that Mexican law enforcement had a recording of a Mexican drug lord saying that HSBC was *the place* to launder money. If you remember the movie ‘Traffic‘, it seems that once again the reality had caught up with the fiction…
And by ‘criminal activities’ we’re not just talking about breaking the law by taking a few financial or fiscal liberties. No. We’re literally contemplating complicity with criminals who have a serious amount of blood on their hands.
Indeed, we’re not exactly talking about kids stealing lollies at your local 7-Eleven. With the “war on drugs” raging, Mexico has descended into civil war. This started after the demise of Colombia’s Cali and Medellin cartels in the 1990s as their Mexican counterparts took over, and has escalated since then. Mexican drug barons now control 90% of the drugs that enter the US, and have methodically divided the country in areas of influence.
To help grasp the magnitude of the tragedy, and HBSC’s felony, a recent report has put a number for the first time on the human toll: 20,851 people disappeared over the past six years, although not every case on the list has been proven related to the drug war. With at least another 70,000 deaths tied to drug violence, the numbers point to a brutal episode that ranks among Latin America’s deadliest in decades.
In Chile, nearly 3,100 people were killed, among them 1,200 considered disappeared, for political reasons during Augusto Pinochet’s 1973-1990 dictatorship, and at least 50,000 people disappeared during 40 years of internal conflict in Colombia.
This is what we are talking about. HSBC has helped fund those drug barons, and their activities. So this year we learnt that for doing that, the bank escaped responsibility with a fine of $1.9 billion equivalent to just 5 weeks of its income; whilst a kid caught on the streets of the US for drug possession will face 5 years in jail, as Cameron Douglas – the son of Michael Douglas – can attest after getting just that sentence.
As for the last question burning everyone lips: but where are the bosses who presided over HSBC’s years as banker to drug lords and terrorists? The Guardian diligently put a quick list for us: HSBC chairman Sir John Bond moved on to other board positions, Chief Executive Stephen Green is the current UK trade minister, while other executives became consultants or simply retired.
This is what we learnt these past years…
… That if you want to be able to lose your head, and still not be blamed,
If you can’t trust yourself but can’t be bothered making allowance for others doubting you,
If you can lie or be hated, but don’t really give a fuck about it all,
If you want to meet with Triumph and Disaster, and always twist them your way,
If you want to risk it on one turn of pitch-and-toss, and always manage to make it your win,
Be a banker, my son!