NEW YORK – As the Senate Judiciary Committee investigates attorney-general nominee Loretta Lynch’s role in deferring prosecution of HSBC for laundering money for drug cartels and terrorists, the key whistleblower in the case is telling WND he believes the banking giant’s crimes haven’t stopped.
“I’m confident HSBC never quit money-laundering despite the Department of Justice settlement in December 2012,” Cruz told WND.
Cruz – whose trove of original evidence was reported first by WND and has led to a delay in Lynch’s nomination vote as Senate staff investigate his allegations – said he’s been in contact with former HSBC colleagues.
“About six months ago, I called some of my friends at the bank and found out the same bank employees that were involved in the money laundering before I was fired are still there,” he said.
“We checked, and bank managers refused to close the accounts they were using for money laundering.”
“The court imposed an independent corporate compliance monitor in this case, and the government files quarterly reports with the court providing updates regarding the implementation of the deferred prosecution agreement,” he explained.
An April 1, 2014, report of the first annual review implied that while HSBC was cooperating, the changes that need to be made to ensure the money-laundering is eliminated were not completed.
“While it is clear from the Initial Review, and HSBC itself acknowledges, that HSBC Group still has much work to be done, the Monitor believes that HSBC Group is working in good faith to meet the requirements imposed by the DPA,” the report said.
WND asked Carr whether or not the Justice Department believes money laundering continued after the agreement and, if so, what it would take for the DOJ to go ahead and prosecute HSBC, but he declined to comment.
Carr said the next quarterly filing, in April, will include information from the monitor’s second annual review.
The Department of Justice investigation of HSBC culminated Dec. 11, 2012, in a deferred prosecution agreement signed by Lynch – the U.S. attorney for the Eastern District of New York – in which HSBC admitted “willful criminal activity” and paid a $1.9 billion fine in return for the Justice Department agreeing not to bring criminal charges against any HSBC employee.
At the time, Assistant Attorney General Lanny A. Breuer said HSBC “is being held accountable for stunning failures of oversight – and worse – that led the bank to permit narcotics traffickers and others to launder hundreds of millions of dollars through HSBC subsidiaries, and to facilitate hundreds of millions more in transactions with sanctioned countries.”
Breuer said that under the terms of the agreement, “if the bank fails to comply with the agreement in any way, we reserve the right to fully prosecute it.”
The DOJ presented to WND copies of three of the quarterly updates (here, here and here) Lynch and her assistant attorneys must submit to Judge John Gleeson of United States District Court Eastern District of New York regarding HSBC’s compliance with the agreement.
HSBC was founded in 1865 as the Hong Kong and Shanghai Banking Corporation in the then-British colony of Hong Kong and, a month later, in Shanghai, as trade began in China, including the lucrative opium trade.
Cruz, pointing a newly reported Swiss investigation of HSBC money-laundering money for international criminals, says he believes HSBC “is still doing the criminal money-laundering activity they were found to be doing in the first place.”
“The recent allegations coming out of HSBC’s private bank in Switzerland only provide more proof for the allegations I’ve made from the beginning that HSBC is a criminal enterprise engaged in massive tax evasion schemes as they launder money for drug cartels and terrorists around the world,” he said.
Cruz gave WND a list of the names of 15 people who worked at HSBC while he was an employee that he either suspected of being involved in the money-laundering or were made aware of it.
WND phone calls found that six on the list were still HSBC employees. However, none were willing to discuss Cruz or his allegations of HSBC money-laundering.
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WND reported Feb. 11 that Senate Judiciary Committee member Sen. David Vitter, R-La., is investigating Cruz’s allegations that Lynch participated in a cover-up engineered by the Obama administration to allow HSBC to avoid criminal prosecution in return for what Cruz has characterized as a “wrist-slap fine,” amounting to no more than a few days operating profit for a bank the size of HSBC. As a result of the Cruz investigation, the committee has postponed the Senate vote until Congress returns from the Presidents’ Day recess. WND reported Thursday that Senate Judiciary Committee staff conducted a two-hour session with Cruz.
Gary Osen, who is litigating a case against HSBC and other banks in Lynch’s U.S. District Court in the Eastern District of New York, told WND that while he has no hard evidence that the bank is continuing money laundering, it’s difficult to change the ways of a bank the size of HSBC.
“Occasionally, there really are changes in management and culture in a bank like HSBC after a settlement like the 2012 settlement HSBC reached with the Department of Justice that really do improve the culture of the bank,” Osen said.
“But as a general rule, it’s really had to turn around a large international bank like HSBC except on the most superficial level.”
Osen said the reason is that foreign, multinational banks “have a tremendous competitive advantage to engage in illegal money-laundering.”
“When you think about it, the profit margins in illegal money-laundering are incredibly high; it’s super profitable,” he said.
“It’s a niche market where banks like HSBC can compete with U.S. banks, and it’s hard for the multinational large commercial banks to forgo illegal money-laundering or dealing with government-sanctioned foreign banks, because they know their competitors will come in and sweep up the business from them.”
Osen is suing HSBC along with Credit Suisse, Barclays, Standard Chartered and Royal Bank of Scotland in a case brought by Charlotte Freeman, whose husband died in an attack by Iranian-trained militants in Karbala, Iraq, on Jan. 20, 2007.
Osen represents a group of U.S. citizens with family in the U.S. military who were killed in combat in Afghanistan or Iraq. The plaintiffs allege the international banks handled hundreds of billions of dollars in international transfers for U.S.-sanctioned Iranian financial banks that Osen contends were responsible directly or indirectly for losses of loved ones suffered by his clients.
Hervé Falciani, the whistleblower in the HSBC private bank scandal in Geneva, also has expressed his belief HSBC has not stopped illegal banking activities, despite its insistence every time it is caught that tighter internal compliance procedures will be instituted.
“It is impossible that the system of finance and banking at HSBC have changed their manner of functioning,” Falciani said in an article published in Mexico Feb. 12, 2014. “Where is the control that everybody thinks exist in banking but in reality do not exist?”
Osen affirmed it’s particularly hard for large, foreign-domiciled international bank like HSBC to change.
Banks of that kind, he said, “have these off-shore capabilities and have made a lot of money in these illegal rackets to ignore the constant earnings pressure change the corporate culture so they give any credence at all to compliance.”
“All too often these multinational banks have the architecture for compliance, but they do not treat compliance issues seriously,” he said.
“It’s sort of like when we depose bankers and they point to their giant, shiny software package that cost them $12 million to install; and they are very proud of what they have bought until you find out they never actually put it into their system,” Osen said.
“They may have bought the compliance package, but they never installed it.”
‘Central bank of the global drug trade’
The raid of HSBC in Switzerland came a week after completion of a massive investigation by the the Indian Express, an English-language newspaper based in Mumbai, in conjunction with the Paris-based Le Monde newspaper and International Consortium of Investigative Journalists, a global network of 185 investigative reporters in more than 65 countries who collaborate in in-depth investigative journalism under the auspices of the Washington-based Center for Public Integrity.
The investigation uncovered secret documents from HSBC’s Swiss private banking arm containing the names of HSBC account holders and their balances in more than 200 countries with a the total balance of more than $100 billion.
Reporting on the investigation, the news website Great Game India observed last week that for years, “when banks have been caught laundering drug money, they have claimed that they did not know, that they were but victims of sneaky drug dealers and a few corrupt employees.”
“Nothing could be further from the truth. The truth is that a considerable portion of the global banking system is explicitly dedicated to handling the enormous volume of cash produced daily by dope traffickers.”
Great Game India said that contrary to popular opinion, “it is not ‘demand’ from the world’s population which creates the mind destroying drug trade.”
“Rather, it is the world financial oligarchy, looking for massive profits and the destruction of the minds of the population it is determined to dominate, which organized the drug trade. The case of HSBC underscores that point. Serving as the central bank of this global apparatus, is HSBC.”
Great Game India traced HSBC back to the 1890s when British intelligence agents operating the drug trade in the Opium Wars launched the Hong Kong Shanghai Bank Corporation “as a repository for their opium proceeds.”
‘A criminal organization’
Cruz began working at HSBC on Jan. 14, 2008, as a commercial bank accounts relationship manager, and was terminated for “poor job performance” on Feb. 17, 2010, after he refused to stop investigating the HSBC criminal money-laundering scheme from within the bank.
Cruz worked in the HSBC southern New York region, which accounts for approximately 50 percent of HSBC’s North American revenue. He was assigned to work with several branch managers to identify accounts to which HSBC might introduce additional banking services.
Cruz told WND he recorded hundreds of hours of meetings he conducted with HSBC management and bank security personnel in which he charged various bank managers were engaging in criminal acts.
“I have hours and hours of recordings, ranging from bank tellers, to business representatives, to branch managers, to executives,” he said. “The whole system is designed to be a culture of fraud to make it look like it’s a legal system. But it’s not.”
Cruz explained that after many repeated efforts, he gave up on the idea that HSBC senior management or bank security would pursue his allegations to investigate and stop the wrongdoing.
“My conclusion was that HSBC wasn’t going to do anything about this account, because HSBC management from the branch level, to senior bank security, to executive senior management was involved in the illegal activity I found,” he said.
Despite repeated attempts to bring the information to the attention of law enforcement officers, Cruz hit a brick wall until WND examined his documentation and determined his allegations were sufficiently substantiated to merit publication.
“HSBC is a criminal organization,” Cruz stressed. “It is a culture of crime.”
In 2011, Cruz published a book about his experience with HSBC titled “World Banking World Fraud: Using Your Identity.”
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