WASHINGTON – The $1.9 billion settlement crafted in 2012 by U.S. attorney general nominee Loretta Lynch with HSBC bank for massive money-laundering practices was seen by some critics as a sellout from the beginning.
Now Lynch’s role in the deal, which allowed HSBC to escape criminal prosecution for its part in what is being called “Launder-gate,” a scandal first exposed by WND months earlier, is being investigated by members of the U.S. Senate in connection with her confirmation hearings to succeed outgoing Attorney General Eric Holder.
While Lynch talked tough in announcing the fine Dec. 11, 2012, some asked how such a massive money-laundering operation of cash tied to drug-running and illicit arms sales involving Middle East terrorist operations by one of the biggest financial institutions in the world and a cover-up that resulted in the firing of a whistleblower inside the bank could be settled without criminal prosecution and jail time for top executives.
“Today we announce the filing of criminal charges against HSBC, one of the largest financial institutions in the world,” said then-U.S. Attorney Lynch in announcing the Justice Department’s settlement with international bank HSBC, the Hong Kong Shanghai Banking Corporation, headquartered in London. “HSBC’s blatant failure to implement proper anti-money laundering controls facilitated the laundering of at least $881 million in drug proceeds through the U.S. financial system. HSBC’s willful flouting of U.S. sanctions laws and regulations resulted in the processing of hundreds of millions of dollars in OFAC-prohibited transactions. Today’s historic agreement, which imposes the largest penalty in any BSA prosecution to date, makes it clear that all corporate citizens, no matter how large, must be held accountable for their actions.”
Within days of the announcement by Lynch, then U.S. attorney for the Eastern District of New York, shock was being expressed by critics who suggested the announcement came just before Christmas to minimize scrutiny by the public.
In a Feb. 14, 2013, Rolling Stone article headlined “Gangster Bankers: Too Big to Jail,” Matt Taibbi wrote : “The deal was announced quietly, just before the holidays, almost like the government was hoping people were too busy hanging stockings by the fireplace to notice.”
“Flooring politicians, lawyers and investigators all over the world, the U.S. Justice Department granted a total walk to executives of the British-based bank HSBC for the largest drug-and-terrorism money laundering case ever,” wrote Taibbi. “Yes, they issued a fine – $1.9 billion, or about five weeks’ profit – but they didn’t extract so much as one dollar or one day in jail from any individual, despite a decade of stupefying abuses.”
The article blasted the Obama administration for letting U.S.-based HSBC senior management and top executives escape federal criminal charges.
“People may have outrage fatigue about Wall Street, and more stories about billionaire greedheads getting away with more stealing often cease to amaze,” Taibbi continued. “But the HSBC case went miles beyond the usual paper-pushing, keypad-punching sort-of-crime, committed by geeks in ties, normally associated with Wall Street. In this case the bank literally got away with murder – well aiding and abetting it, anyway.”
The Rolling Stone article proceeded to detail how “the storied British colonial banking power helped to wash hundreds of millions of dollars for drug mobs, including Mexico’s Sinaloa drug cartel, suspected in tens of thousands of murders just in the past 10 years – people so totally evil, jokes former New York Attorney General Eliot Spitzer, that ‘they make the guys on Wall Street look good.’ The bank also moved money for organizations linked to al-Qaida and Hezbollah and for Russian gangsters; helped countries like Iran, the Sudan and North Korea evade sanctions; and, in between helping murderers and terrorists and rogue states, aided countless common tax cheats in hiding their cash.”
But the HSBC saga of criminal activity on a massive international scale evidently does not end there.
Meanwhile, it’s not just Republican congressmen who are now questioning the Lynch-crafted HSBC deal. Sen. Elizabeth Warren, D-Mass., and a potential Democratic presidential contender in 2016, is demanding federal prosecutors should “come down hard” on HSBC if the bank is found to have aided U.S. taxpayers in evading the Internal Revenue Service in a scheme concocted by HSBC’s Switzerland branch that reportedly helped wealthy customers, including Hillary Clinton donors, avoid taxes.
The London Guardian noted that U.S. government officials were scrutinizing the criminal implications for HSBC bank, as well as HSBC executives and the U.S. taxpayers involved in the HSBC scheme.
“The government comes down hard on individuals who break the law time after time, and it should do the same for large financial institutions,” Warren said. “The new allegations that HSBC colluded to help wealthy people and rich corporations hide money and avoid taxes are very serious, and, if true, the Department of Justice should reconsider the earlier deferred prosecution agreement it entered into with HSBC and prosecute the new violations to the full extent of the law.”
The Guardian, too, reported that the controversial Lynch deal permitted HSBC to escape “criminal charges and kept the banking charter that enables it to operate in the U.S.”
WND reported Thursday that Sen. David Vitter, R-La., has announced the opening of an investigation into why Lynch, in her capacity as U.S. attorney, allowed the banking giant to avoid criminal prosecution of bank officers and other employees, an investigation that threatens to derail Senate confirmation of Lynch’s nomination to become the next attorney general.
Vitter’s staff examined evidence provided by whistleblower John Cruz, a former HSBC manager, who turned over 1,000 pages of bank account records and recordings of employees and numerous state and federal law enforcement agents who refused since 2009 to do anything about HSBC’s systematic law-breaking activities. Cruz was instrumental in WND’s 2012 investigative series that finally led to involvement by the U.S. Justice Department.
The meeting left one member of Vitter’s staff asking, “How can we allow Loretta Lynch to be the nation’s top federal law-enforcement officer when the HSBC money-laundering scandal raises questions about a cover-up that may be continuing even today?”
At the time of the 2012 settlement, Cruz called the fine “a joke” and filed a $10 million lawsuit for “retaliation and wrongful termination.”
In response to WND’s reporting of Cruz’s evidence, HSBC lodged a complaint that temporarily blocked access to one of the WND stories, and senior staff writer Jerome Corsi, who wrote the investigative series with the help of Cruz, was fired by the New York City investment firm he had worked with for two years as a senior managing director, Gilford Securities, within days of publishing the first of a continuing series of WND articles on the HSBC money-laundering scandal.