This is the story of a bank. Sexy I know, but try and keep it in your pants for this one because I’m about to talk about a bunch of death and violence and I don’t want this Christian website to be associated with anything weird. The reason this story about a bank includes so much death and violence is that this is the story of the worst bank in the world.
It’s the story of a bank that knowingly allowed criminal organizations to launder millions of dollars in illegal profit; intentionally dodged U.S. sanctions on companies linked to ‘rogue nations,’ Russian organized crime, and the funding of terrorism; and has faced no real consequences while continuing to benefit from immoral activities. This is the story of the creation of a class of people who exist above accountability and a failure to protect—or even try to protect—the vulnerable members of society. This is the story of the Hong Kong and Shanghai Banking Corporation, better known as HSBC.
Dramatic right? That’s kind of what I was going for, it’s hard to make a story about financial crime jump out at you, but the fact of the matter is that all of that is true. HSBC’s actions over the years, actions that they have admitted to and admitted were illegal, are indisputably responsible for thousands of deaths. So for the next little while, I’m going to talk about what HSBC did wrong, what the consequences were, and how the bank’s been doing in the aftermath of all that. Then and only then can you take your pants back off.
Until 2012, when the U.S. Senate Permanent Subcommittee on Investigations released its scathing report on HSBC's conduct, nobody really understood just how sketchy the bank was. But one of the things that tipped the government off was that from 2007 to 2008, HSBC’s affiliate in Mexico, a medium-sized bank sent $7 billion to the US, more than any other bank in the country. There was one very simple explanation for this: drug money.
When the British bank first ventured into Mexico it found itself entering a financial culture that was completely saturated with corruption. The thing is, they knew what to expect, but instead of preparing for it by hiring more investigators or tightening security, which costs money, they leaned into the culture hard. It would be like getting invited to your first middle school party and knowing that they would be playing spin the bottle so you show up completely naked with a bag of molly shoved up your ass. They allowed suspicious accounts to continue to carry out transactions despite repeated red flags within the company’s anti-money laundering (AML) system, which meant that members of the Sinaloa cartel, one of the largest and most deadly drug cartels in the world, could and did change blood money into legit money without anyone giving a shit, all because it was cheaper.
Joaquin "El Chapo" Guzman, former head of the Sinaloa cartel
And when you’re in a drug cartel, legal, legit money is the literal end goal. Nothing comes after that, all the murder, the extortion, the trafficking, the brutal territorial wars are all in pursuit of clean money. And HSBC wasn’t even trying to stop these people from getting it. It wasn’t just cartels either, HSBC affiliates were found to be allowing banks and corporations subject to sanctions from the Office of Foreign Asset Control to do business in the US by altering the names of the barred institutions on wire transfer records, often by one character. That’s like if the movie theatre ticket guy let three children in a trench coat into the R rated movie because the head had a particularly convincing fake moustache, except instead of childhood trauma, the consequences are human lives.
The good news is, they got caught. The bad news is they had been caught before like a bunch of times. The U.S. Office of the Comptroller of the Currency, HSBC’s American federal regulator “tolerated [the bank]’s weak AML system for years,” the subcommittee's chairman Carl Levin said in a statement about his investigation. The even worse news is that even after they were caught (for real this time,) nothing came of it.
Do you remember when, in this country, there was a period of time where the first words out of the mouth of anyone you spoke to above the age of 50 were “SNC Lavalin?” That whole controversy stemmed from an allegation that the Prime Minister had inappropriately pushed for something called a deferred prosecution agreement, or DPA. A DPA is a bullshit settlement where prosecutors will agree not to press charges if an offender pays a fine and promises to do better. They are often deployed when the economic (and sometimes political) consequences of going through with a full prosecution are too great.
In 2012, Obama’s Justice Department decided that despite HSBC’s transgressions, the economic consequences of prosecuting the bank and its executives to the fullest extent on the heels of the 2009 financial crisis were too spooky to go through with. Or, as Rolling Stone correspondent Matt Taibbi has suggested, Justice Department officials were scared of pissing off their future clientele and throwing away the cushy private sector jobs that awaited them upon their departure from Washington. Either way, instead, they ordered HSBC to pay a $1.9 billion fine, made them admit to their crimes, and assigned the bank a monitor to make sure it didn’t do it again. By the way, as was pointed out by anyone who has ever written about this story, that’s about 5 months profit for these guys. 5 months profit for financing the destruction of thousands of lives.
And this is where we get to the root of the issue. In 2009, after a disgusting amount of negligence on the part of investment banks crashed the global economy, not one person went to jail. The banks were rescued because they were “too big to fail” and a lot of their executives walked free because they were too big to jail. In an even more clear-cut case of criminality, not one HSBC executive was held accountable. The only thing that changed was that they had a new regulator to blow off while pretending to try to fix their shit.
And, as BuzzFeed News and the ICIJ reported, even with the monitor from the DPA looking over the bank’s shoulder, it still did business with criminals, and then the Justice Department concluded the agreement in 2017 saying it was satisfied with HSBC’s progress anyway, which is fucking ridiculous. This is what I meant by a new class of people above accountability. The executives at these banks exist above the law. The western world, chief among the values of which is supposed to be equality, has decided that the lives of some are worth more, an actual dollar amount more, than the lives of others.
You can go to jail for the rest of your life in the U.S. for carrying drugs without even the intent to sell them, and yet the freaks who made the decisions that provided funding for the whole ass operation got a slap on the wrist. And not only that but the families of the victims of the crimes HSBC helped finance have received nothing.
Worse still is that the bank continues to profit from bad behaviour. Last winter, Saudi Arabia’s massive state oil company, Saudi Aramco, moved to become a publicly traded company through something called an initial public offering or IPO, where a private company sells off a percentage of shares to public investors in order to raise money. IPOs require a lot of coordination and often big investment banks will consult with a company to help make the transition smoother, pulling massive consulting fees in the process. Saudi Aramco was set to be the biggest IPO in history and all the global investment banks were jockeying for consulting positions. In the end, the only international bank involved was HSBC.
Crown Prince of Saudi Arabia Mohammed Bin Salman
Analysts credit the decision to go with only HSBC with the ties the bank and its past and present executives have in the region. In the wake of the murder of journalist Jamal Khashoggi on the orders of Saudi Crown Prince Mohammed Bin Salman, western attitudes toward the kingdom soured and bankers distanced themselves, but HSBC remained loyal in the face of one of the most despotic actions a world leader can take. They made a killing.
I honestly think the most terrifying part of this story is not the drug cartels or the terrorist financing or the Saudi Arabia suck-job, it’s the fact that nobody seems to have a plan. I’m not naive, I understand why some banks are too big to fail, and I understand that greed is going to overrule conscience, but how the fuck is this just the way it is now? How is there an entire class of people and organizations that are straight up above the law, and when they act in their best interest, they actively harm the interests of the public and there’s nothing we can do about it? That’s not how any of this shit is supposed to work. I’m not saying I have a better idea but I would love it if we could all have a big think so that someone who is smarter than me can get one, because the way things are right now, these banks could be selling nukes to aliens and I don’t think anyone would stop them.