1. Dear Drugs-Forum readers: We are a small non-profit that runs one of the most read drug information & addiction help websites in the world. We serve over 4 million readers per month, and have costs like all popular websites: servers, hosting, licenses and software. To protect our independence we do not run ads. We take no government funds. We run on donations which average $25. If everyone reading this would donate $5 then this fund raiser would be done in an hour. If Drugs-Forum is useful to you, take one minute to keep it online another year by donating whatever you can today. Donations are currently not sufficient to pay our bills and keep the site up. Your help is most welcome. Thank you.
    PLEASE HELP

Outrageous HSBC Settlement Proves the Drug War is a Joke

Rating:
5/5,
  1. enquirewithin
    View attachment 30338 Lord Green headed HSBC at the time. He is now UK Minister of State for Trade and Investment. He has 'no case to answer.'

    If you've ever been arrested on a drug charge, if you've ever spent even a day in jail for having a stem of marijuana in your pocket or "drug paraphernalia" in your gym bag, Assistant Attorney General and longtime Bill Clinton pal Lanny Breuer has a message for you: Bite me.

    Breuer this week signed off on a settlement deal with the British banking giant HSBC that is the ultimate insult to every ordinary person who's ever had his life altered by a narcotics charge. Despite the fact that HSBC admitted to laundering billions of dollars for Colombian and Mexican drug cartels (among others) and violating a host of important banking laws (from the Bank Secrecy Act to the Trading With the Enemy Act), Breuer and his Justice Department elected not to pursue criminal prosecutions of the bank, opting instead for a "record" financial settlement of $1.9 billion, which as one analyst noted is about five weeks of income for the bank.

    The banks' laundering transactions were so brazen that the NSA probably could have spotted them from space. Breuer 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."

    This bears repeating: in order to more efficiently move as much illegal money as possible into the "legitimate" banking institution HSBC, drug dealers specifically designed boxes to fit through the bank's teller windows. Tony Montana's henchmen marching dufflebags of cash into the fictional "American City Bank" in Miami was actually more subtle than what the cartels were doing when they washed their cash through one of Britain's most storied financial institutions.

    Though this was not stated explicitly, the government's rationale in not pursuing criminal prosecutions against the bank was apparently rooted in concerns that putting executives from a "systemically important institution" in jail for drug laundering would threaten the stability of the financial system. The New York Times put it this way:

    Federal and state authorities have chosen not to indict HSBC, the London-based bank, on charges of vast and prolonged money laundering, for fear that criminal prosecution would topple the bank and, in the process, endanger the financial system.

    It doesn't take a genius to see that the reasoning here is beyond flawed. When you decide not to prosecute bankers for billion-dollar crimes connected to drug-dealing and terrorism (some of HSBC's Saudi and Bangladeshi clients had terrorist ties, according to a Senate investigation), it doesn't protect the banking system, it does exactly the opposite. It terrifies investors and depositors everywhere, leaving them with the clear impression that even the most "reputable" banks may in fact be captured institutions whose senior executives are in the employ of (this can't be repeated often enough) murderers and terrorists. Even more shocking, the Justice Department's response to learning about all of this was to do exactly the same thing that the HSBC executives did in the first place to get themselves in trouble – they took money to look the other way.

    And not only did they sell out to drug dealers, they sold out cheap. You'll hear bragging this week by the Obama administration that they wrested a record penalty from HSBC, but it's a joke. Some of the penalties involved will literally make you laugh out loud. This is from Breuer's announcement:

    As a result of the government's investigation, HSBC has . . . "clawed back" deferred compensation bonuses given to some of its most senior U.S. anti-money laundering and compliance officers, and agreed to partially defer bonus compensation for its most senior officials during the five-year period of the deferred prosecution agreement.

    Wow. So the executives who spent a decade laundering billions of dollars will have to partially defer their bonuses during the five-year deferred prosecution agreement? Are you fucking kidding me? That's the punishment? The government's negotiators couldn't hold firm on forcing HSBC officials to completely wait to receive their ill-gotten bonuses? They had to settle on making them "partially" wait? Every honest prosecutor in America has to be puking his guts out at such bargaining tactics. What was the Justice Department's opening offer – asking executives to restrict their Caribbean vacation time to nine weeks a year?

    So you might ask, what's the appropriate financial penalty for a bank in HSBC's position? Exactly how much money should one extract from a firm that has been shamelessly profiting from business with criminals for years and years? Remember, we're talking about a company that has admitted to a smorgasbord of serious banking crimes. If you're the prosecutor, you've got this bank by the balls. So how much money should you take?

    How about all of it? How about every last dollar the bank has made since it started its illegal activity? How about you dive into every bank account of every single executive involved in this mess and take every last bonus dollar they've ever earned? Then take their houses, their cars, the paintings they bought at Sotheby's auctions, the clothes in their closets, the loose change in the jars on their kitchen counters, every last freaking thing. Take it all and don't think twice. And then throw them in jail.

    Sound harsh? It does, doesn't it? The only problem is, that's exactly what the government does just about every day to ordinary people involved in ordinary drug cases.

    It'd be interesting, for instance, to ask the residents of Tenaha, Texas what they think about the HSBC settlement. That's the town where local police routinely pulled over (mostly black) motorists and, whenever they found cash, offered motorists a choice: They could either allow police to seize the money, or face drug and money laundering charges.

    Or we could ask Anthony Smelley, the Indiana resident who won $50,000 in a car accident settlement and was carrying about $17K of that in cash in his car when he got pulled over. Cops searched his car and had drug dogs sniff around: The dogs alerted twice. No drugs were found, but police took the money anyway. Even after Smelley produced documentation proving where he got the money from, Putnam County officials tried to keep the money on the grounds that he could have used the cash to buy drugs in the future.

    Seriously, that happened. It happens all the time, and even Lanny Breuer's own Justice Deparment gets into the act. In 2010 alone, U.S. Attorneys' offices deposited nearly $1.8 billion into government accounts as a result of forfeiture cases, most of them drug cases. You can see the Justice Department's own statistics right here:


    Justice Department
    If you get pulled over in America with cash and the government even thinks it's drug money, that cash is going to be buying your local sheriff or police chief a new Ford Expedition tomorrow afternoon.
    And that's just the icing on the cake. The real prize you get for interacting with a law enforcement officer, if you happen to be connected in any way with drugs, is a preposterous, outsized criminal penalty. Right here in New York, one out of every seven cases that ends up in court is a marijuana case.

    Just the other day, while Breuer was announcing his slap on the wrist for the world's most prolific drug-launderers, I was in arraignment court in Brooklyn watching how they deal with actual people. A public defender explained the absurdity of drug arrests in this city. New York actually has fairly liberal laws about pot – police aren't supposed to bust you if you possess the drug in private. So how do police work around that to make 50,377 pot-related arrests in a single year, just in this city? Tthat was 2010; the 2009 number was 46,492.)

    "What they do is, they stop you on the street and tell you to empty your pockets," the public defender explained. "Then the instant a pipe or a seed is out of the pocket – boom, it's 'public use.' And you get arrested."

    People spend nights in jail, or worse. In New York, even if they let you off with a misdemeanor and time served, you have to pay $200 and have your DNA extracted – a process that you have to pay for (it costs 50 bucks). But even beyond that, you won't have search very far for stories of draconian, idiotic sentences for nonviolent drug crimes.

    Just ask Cameron Douglas, the son of Michael Douglas, who got five years in jail for simple possession. His jailers kept him in solitary for 23 hours a day for 11 months and denied him visits with family and friends. Although your typical non-violent drug inmate isn't the white child of a celebrity, he's usually a minority user who gets far stiffer sentences than rich white kids would for committing the same crimes – we all remember the crack-versus-coke controversy in which federal and state sentencing guidelines left (predominantly minority) crack users serving sentences up to 100 times harsher than those meted out to the predominantly white users of powdered coke.

    The institutional bias in the crack sentencing guidelines was a racist outrage, but this HSBC settlement blows even that away. By eschewing criminal prosecutions of major drug launderers on the grounds (the patently absurd grounds, incidentally) that their prosecution might imperil the world financial system, the government has now formalized the double standard.

    They're now saying that if you're not an important cog in the global financial system, you can't get away with anything, not even simple possession. You will be jailed and whatever cash they find on you they'll seize on the spot, and convert into new cruisers or toys for your local SWAT team, which will be deployed to kick in the doors of houses where more such inessential economic cogs as you live. If you don't have a systemically important job, in other words, the government's position is that your assets may be used to finance your own political disenfranchisement.

    On the other hand, if you are an important person, and you work for a big international bank, you won't be prosecuted even if you launder nine billion dollars. Even if you actively collude with the people at the very top of the international narcotics trade, your punishment will be far smaller than that of the person at the very bottom of the world drug pyramid. You will be treated with more deference and sympathy than a junkie passing out on a subway car in Manhattan (using two seats of a subway car is a common prosecutable offense in this city). An international drug trafficker is a criminal and usually a murderer; the drug addict walking the street is one of his victims. But thanks to Breuer, we're now in the business, officially, of jailing the victims and enabling the criminals.

    This is the disgrace to end all disgraces. It doesn't even make any sense. There is no reason why the Justice Department couldn't have snatched up everybody at HSBC involved with the trafficking, prosecuted them criminally, and worked with banking regulators to make sure that the bank survived the transition to new management. As it is, HSBC has had to replace virtually all of its senior management. The guilty parties were apparently not so important to the stability of the world economy that they all had to be left at their desks.

    So there is absolutely no reason they couldn't all face criminal penalties. That they are not being prosecuted is cowardice and pure corruption, nothing else. And by approving this settlement, Breuer removed the government's moral authority to prosecute anyone for any other drug offense. Not that most people didn't already know that the drug war is a joke, but this makes it official.

    Read more: http://www.rollingstone.com/politic...the-drug-war-is-a-joke-20121213#ixzz2FBQZWvr4

Comments

  1. enquirewithin
    [imgl=blue]http://www.drugs-forum.com/forum/attachment.php?attachmentid=30345&stc=1&d=1355669534[/imgl]
    The US said "dangerous practices" at HSBC allowed the bank to pass money to "drug kingpins and rogue nations", as it fined it $1.9bn (£1.2bn).

    HSBC agreed the fine, the largest of its kind, earlier on Tuesday. A US Senate investigation said the UK-based bank had been a conduit for drug barons and nations such as Iran against which it had sanctions, making it illegal to do business there. HSBC admitted having poor money laundering controls and apologised. Money laundering is the process of disguising the proceeds of crime so that the money cannot be linked to the wrongdoing.

    US Assistant Attorney General Lanny Breuer said in a statement: "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.

    Another official said it was implicated in "wilful and dangerous" practices.

    'Sorry'

    "We accept responsibility for our past mistakes," said HSBC group chief executive Stuart Gulliver in a statement.

    "We have said we are profoundly sorry for them, and we do so again."

    The bank said it had spent $290m on improving its systems to prevent money laundering and clawed back some bonuses paid to senior executives in the past.

    If HSBC had been indicted for these offences, that would have meant that the US government and others could no longer have conducted business with it, which would have been humiliating and highly damaging.” Robert Peston
    Business editor

    Last month it announced it had set aside $1.5bn to cover the costs of any settlement or fines.

    The news followed the announcement of a similar but much smaller settlement with UK-based Standard Chartered bank, which will pay $300m in fines for violating US sanctions.

    The cases are seen as part of a crackdown on money laundering and sanctions violations being led by federal government agencies and New York state authorities.

    Senate criticism

    The settlement had been widely expected following a report by the US Senate, published earlier this year, that was heavily critical of HSBC's money laundering controls.

    The report alleged that:

    HSBC in the US had not treated its Mexican affiliate as high risk, despite the country's money laundering and drug trafficking challenges
    The Mexican bank had transported $7bn in US bank notes to HSBC in the US, more than any other Mexican bank, but had not considered that to be suspicious.

    It had circumvented US safeguards designed to block transactions involving terrorists drug lords and rogue states, including allowing 25,000 transactions over seven years without disclosing their links to Iran.

    Providing US dollars and banking services to some banks in Saudi Arabia despite their links to terrorist financing.

    In less than four years it had cleared $290m in "obviously suspicious" US travellers' cheques for a Japanese bank, benefiting Russians who claimed to be in the used car business. The report suggested HSBC accounts in Mexico and the US were being used by drug barons to launder money.

    BBC business editor Robert Peston said that as big as the $1.9bn penalty looks, it could have been much worse.

    "HSBC has signed a Deferred Prosecution Agreement for breaches of the US Bank Secrecy Act, the Trading with the Enemy Act and assorted money laundering offences. This is in effect putting the bank on probation," he said.

    "But if HSBC had been indicted for these offences, that would have meant that the US government and others could no longer have conducted business with it, which would have been humiliating and highly damaging."

    'Failures'
    The bank stressed that it had taken on new senior management since the time the problems happened.

    Lord Green was chairman of HSBC from 2006 until late 2010 and is now Minister of State for Trade and Investment.

    In a statement, his department said: "The report by the US Senate Sub-Committee sets out in detail the evidence submitted to it, and the action taken by HSBC to ensure compliance with US regulations at the time that Lord Green was group chairman. It is for HSBC to respond to this report."

    HSBC has announced it has appointed a former US official to work as its head of financial crime compliance, which is a new position.

    Bob Werner was previously the head of the US Treasury's Office of Foreign Assets Control (OFAC) - the agency responsible for enforcing the US sanctions on countries including Iran.

    He will be responsible for beefing up HSBC's anti-money laundering and sanctions compliance systems.

    It is unclear what impact the case will have on HSBC's business. The bank is the biggest in Europe by market capitalisation, and made pre-tax profits of $12.7bn for the first six months of 2012.

    http://www.bbc.co.uk/news/business-20683421

    ___________________________

    When you start reading this it seems as the whole point is Iran not South America. In that case, the bank is being targeted for political reasons, because it seems hard to believe that the US actually cares about laundering drug money. Surely all the US banks do the same?

    The idea of the US Senate moralising about wrong doing whilst is sponsors war and killing around the world is almost funny.
  2. enquirewithin
    What’s a bank got to do to get into some real trouble around here?[imgl=red]http://www.drugs-forum.com/forum/attachment.php?attachmentid=30352&d=1355711419[/imgl]

    That’s a question we should be asking following HSBC’s $1.9 billion settlement with the U.S.

    The “I’ll never do it again” defense has probably never worked in a courtroom but it was a good-enough promise for U.S. regulators in the case of HSBC’s money laundering activity.

    By now there’s been plenty of criticism of the settlement with HSBC where money laundering was so egregious that not even a $2 billion fine could quench the appetite of an angry public. The New York Times is appalled by the lack of prosecution calling the settlement the result of the notion that “too big to fail is too big to jail.”

    Rightfully so considering a U.S. government report this summer found that HSBC had exposed the American financial system to a wide array of money laundering, drug trafficking, and terrorist financing.


    HSBC has, for its part, accepted responsibility with CEO Stuart Gulliver, saying he was profoundly sorry for the bank’s failure to catch, among other things, at least $881m in drug trafficking money that was laundered throughout the bank’s accounts.

    So, let’s get this straight. A major global bank failed to catch activity that put our country’s security at risk and now it is sorry.

    The lack of individual prosecutions in this case has rightfully sparked a new round of criticism against a regulatory system that’s still defending itself over its lack of prosecutions related to the financial crisis.

    The HSBC case brings to the forefront a big question for the U.S.: How much are we willing to tolerate from financial services companies? If we’re looking at the HSBC case then a lot, apparently.

    It’s not just HSBC we’re talking about here. Remember the Standard Chartered case where a New York regulator thought the British bank’s behavior was so terrible and unacceptable that he threatened to revoke its banking license? The New York Department of Financial Services (DFS) said the bank schemed with Iran and left the U.S. financial system vulnerable to terrorists and weapons dealers.

    As I asked back in August, it can’t get much worse than that, can it? But the DFS didn’t revoke the bank’s license. It agreed to settle the case for $370 million. No surprise there, I suppose.

    The scary part about the HSBC settlement is that U.S. authorities are essentially saying they couldn’t act on criminal charges because it would harm the larger financial system. That’s got many calling HSBC (and potentially others) too-big-to-jail.

    As Anthony Michael Sabino, a professor at St. John’s University‘s Peter J. Tobin College of Business, points out, “You can’t handcuff a bank. It’s an entity.” True, but then we should stop playing this game where we threaten with criminal charges, end up settling for a fraction of the alleged illicit profits and then announce we don’t have the ability to prosecute.

    Instead, let’s just call the world’s biggest, most systemically important financial firms what they are: Immune.

    So come on over, bad bankers of the world. Do your business here with the peace of mind that we’ll only just hit you with a fine when you break our laws. And don’t worry, it’s your shareholders that will suffer that fine, not you.

    http://www.forbes.com/sites/halahto...ement-how-much-bad-behavior-will-we-tolerate/

    _____________________________________________________________________

    "So come on over, bad bankers of the world. Do your business here with the peace of mind..." yes-- because the US banks have shown them the way. Good bankers-- where are they? :(
  3. kumar420
    Utterly disgraceful. Sends out the message that it doesn't matter how corrupt an institution is, just that as long as you can buy your way out it doesn't matter. Total bullshit and a slap in the face to the victims of mexico's drug war. I wouldn't be surprised to find out these guys have laundered money for terrorists, they seem unscrupulous enough.
  4. killer_demo
    another "we're rich and dont have to go to jail like ordinary citizens" case...corrupt system
  5. enquirewithin
    But is money laundering worse than the banks causing the last financial meltdown? It is, of course, outrageous, and I am sure the HSBC feels no guilt about what it has done. But is is unusual or systematic?

    Indeed. You can be assured that HSBC is not the only bank doing this. Please me show any big which is 'scrupulous'?

    Just one example: last year Wachovia, now part of the giant US bank Wells Fargo, was fined for drug money laundering. That was apparently only,

    http://www.guardian.co.uk/world/2011/apr/03/us-bank-mexico-drug-gangs
    http://www.bloomberg.com/news/2010-...rtels-admitted-in-wells-fargo-s-u-s-deal.html

    Money laundering is a very big business:

    http://www.fatf-gafi.org/pages/faq/moneylaundering/
  6. kumar420
    Thank god i only keep cash, i haven't made a deposit in years
    Unsurprising level of corruption given the sheer volume of currency flowing around. Greed is probably the most common human failing, apparently tens of billions wasn't enough revenue for these materlialistic motherfuckers. And its only the tip of a huge iceberg, more and more of what has been swept under the rug will appear and probably be dealt with in the same bullshit manner unless somebpdy decides to properly prosecute.
  7. talltom
    Woman Imprisoned for Life for Minor Drug Offense; Banking Giant Immune to Justice for Massive Drug Laundering

    The US is the world's largest prison state, imprisoning more of its citizens than any nation on earth, both in absolute numbers and proportionally. It imprisons people for longer periods of time, more mercilessly, and for more trivial transgressions than any nation in the west. This sprawling penal state has been constructed over decades, by both political parties, and it punishes the poor and racial minorities at overwhelmingly disproportionate rates.

    But not everyone is subjected to that system of penal harshness. It all changes radically when the nation's most powerful actors are caught breaking the law. With few exceptions, they are gifted not merely with leniency, but full-scale immunity from criminal punishment. Thus have the most egregious crimes of the last decade been fully shielded from prosecution when committed by those with the greatest political and economic power: the construction of a worldwide torture regime, spying on Americans' communications without the warrants required by criminal law by government agencies and the telecom industry, an aggressive war launched on false pretenses, and massive, systemic financial fraud in the banking and credit industry that triggered the 2008 financial crisis.

    This two-tiered justice system was the subject of my last book, "With Liberty and Justice for Some," and what was most striking to me as I traced the recent history of this phenomenon is how explicit it has become. Obviously, those with money and power always enjoyed substantial advantages in the US justice system, but lip service was at least always paid to the core precept of the rule of law: that - regardless of power, position and prestige - all stand equal before the blindness of Lady Justice.

    It really is the case that this principle is now not only routinely violated, as was always true, but explicitly repudiated, right out in the open. It is commonplace to hear US elites unblinkingly insisting that those who become sufficiently important and influential are - and should be - immunized from the system of criminal punishment to which everyone else is subjected.

    Worse, we are constantly told that immunizing those with the greatest power is not for their good, but for our good, for our collective good: because it's better for all of us if society is free of the disruptions that come from trying to punish the most powerful, if we're free of the deprivations that we would collectively experience if we lose their extraordinary value and contributions by prosecuting them.

    This rationale was popularized in 1974 when Gerald Ford explained why Richard Nixon - who built his career as a "law-and-order" politician demanding harsh punishments and unforgiving prosecutions for ordinary criminals - would never see the inside of a courtroom after being caught committing multiple felonies; his pardon was for the good not of Nixon, but of all of us. That was the same reasoning hauled out to justify immunity for officials of the National Security State who tortured and telecom giants who illegally spied on Americans (we need them to keep us safe and can't disrupt them with prosecutions), as well as the refusal to prosecute any Wall Street criminals for their fraud (prosecutions for these financial crimes would disrupt our collective economic recovery).

    A new episode unveiled on Tuesday is one of the most vivid examples yet of this mentality. Over the last year, federal investigators found that one of the world's largest banks, HSBC, spent years committing serious crimes, involving money laundering for terrorists; "facilitat[ing] money laundering by Mexican drug cartels"; and "mov[ing] tainted money for Saudi banks tied to terrorist groups". Those investigations uncovered substantial evidence "that senior bank officials were complicit in the illegal activity." As but one example, "an HSBC executive at one point argued that the bank should continue working with the Saudi Al Rajhi bank, which has supported Al Qaeda."

    Needless to say, these are the kinds of crimes for which ordinary and powerless people are prosecuted and imprisoned with the greatest aggression possible. If you're Muslim and your conduct gets anywhere near helping a terrorist group, even by accident, you're going to prison for a long, long time. In fact, powerless, obscure, low-level employees are routinely sentenced to long prison terms for engaging in relatively petty money laundering schemes, unrelated to terrorism, and on a scale that is a tiny fraction of what HSBC and its senior officials are alleged to have done.

    But not HSBC. On Tuesday, not only did the US Justice Department announce that HSBC would not be criminally prosecuted, but outright claimed that the reason is that they are too important, too instrumental to subject them to such disruptions. In other words, shielding them from the system of criminal sanction to which the rest of us are subject is not for their good, but for our common good. We should not be angry, but grateful, for the extraordinary gift bestowed on the global banking giant:

    "US authorities defended their decision not to prosecute HSBC for accepting the tainted money of rogue states and drug lords on Tuesday, insisting that a $1.9bn fine for a litany of offences was preferable to the 'collateral consequences' of taking the bank to court. . . .

    "Announcing the record fine at a press conference in New York, assistant attorney general Lanny Breuer said that despite HSBC"s 'blatant failure' to implement anti-money laundering controls and its wilful flouting of US sanctions, the consequences of a criminal prosecution would have been dire.

    "Had the US authorities decided to press criminal charges, HSBC would almost certainly have lost its banking licence in the US, the future of the institution would have been under threat and the entire banking system would have been destabilised.

    "HSBC, Britain's biggest bank, said it was 'profoundly sorry' for what it called 'past mistakes' that allowed terrorists and narcotics traffickers to move billions around the financial system and circumvent US banking laws. . . .

    "As part of the deal, HSBC has undertaken a five-year agreement with the US department of justice under which it will install an independent monitor to assess reformed internal controls. The bank's top executives will defer part of their bonuses for the whole of the five-year period, while bonuses have been clawed back from a number of former and current executives, including those in the US directly involved at the time.

    "John Coffee, a professor of law at Columbia Law School in New York, said the fine was consistent with how US regulators have been treating bank infractions in recent years. 'These days they rarely sue individuals in any meaningful way when the entity will settle. This is largely a function of resource constraints, but also risk aversion, and a willingness to take the course of least resistance,' he said."

    DOJ officials touted the $1.9 billion fine HSBC would pay, the largest ever for such a case. As the Guardian's Nils Pratley noted, "the sum represents about four weeks' earnings given the bank's pre-tax profits of $21.9bn last year." Unsurprisingly, "the steady upward progress of HSBC's share price since the scandal exploded in July was unaffected on Tuesday morning."

    The New York Times Editors this morning announced: "It is a dark day for the rule of law." There is, said the NYT editors, "no doubt that the wrongdoing at HSBC was serious and pervasive." But the bank is simply too big, too powerful, too important to prosecute.

    That's not merely a dark day for the rule of law. It's a wholesale repudiation of it. The US government is expressly saying that banking giants reside outside of - above - the rule of law, that they will not be punished when they get caught red-handed committing criminal offenses for which ordinary people are imprisoned for decades. Aside from the grotesque injustice, the signal it sends is as clear as it is destructive: you are free to commit whatever crimes you want without fear of prosecution. And obviously, if the US government would not prosecute these banks on the ground that they're too big and important, it would - yet again, or rather still - never let them fail.

    But this case is the opposite of an anomaly. That the most powerful actors should be immunized from the rule of law - not merely treated better, but fully immunized - is a constant, widely affirmed precept in US justice. It's applied to powerful political and private sector actors alike. Over the past four years, the CIA and NSA have received the same gift, as have top Executive Branch officials, as has the telecom industry, as has most of the banking industry. This is how I described it in "With Liberty and Justice for Some":

    "To hear our politicians and our press tell it, the conclusion is inescapable: we're far better off when political and financial elites - and they alone - are shielded from criminal accountability.

    "It has become a virtual consensus among the elites that their members are so indispensable to the running of American society that vesting them with immunity from prosecution - even for the most egregious crimes - is not only in their interest but in our interest, too. Prosecutions, courtrooms, and prisons, it's hinted - and sometimes even explicitly stated - are for the rabble, like the street-side drug peddlers we occasionally glimpse from our car windows, not for the political and financial leaders who manage our nation and fuel our prosperity.

    "It is simply too disruptive, distracting, and unjust, we are told, to subject them to the burden of legal consequences."

    That is precisely the rationale explicitly invoked by DOJ officials to justify their decision to protect HSBC from criminal accountability. These are the same officials who previously immunized Bush-era torturers and warrantless eavesdroppers, telecom giants, and Wall Street executives, even as they continue to persecute whistleblowers at record rates and prosecute ordinary citizens - particularly poor and minorities - with extreme harshness even for trivial offenses. The administration that now offers the excuse that HSBC is too big to prosecute is the same one that quite consciously refused to attempt to break up these banks in the aftermath of the "too-big-to-fail" crisis of 2008, as former TARP overseer Neil Barofsky], among others, has spent years arguing.

    And, of course, these HSBC-protectors in the Obama DOJ are the same officials responsible for maintaining and expanding what NYT Editorial Page editor Andrew Rosenthal has accurately described as "essentially a separate justice system for Muslims," one in which "the principle of due process is twisted and selectively applied, if it is applied at all." What has been created is not so much a "two-tiered justice system" as a multi-tiered one, entirely dependent on the identity of the alleged offender rather than the crimes of which they are accused.

    Having different "justice systems" for citizens based on their status, wealth, power and prestige is exactly what the US founders argued most strenuously had to be avoided (even as they themselves maintained exactly such a system). But here we have in undeniable clarity not merely proof of exactly how this system functions, but also the rotted and fundamentally corrupt precept on which it's based: that some actors are simply too important and too powerful to punish criminally. As the Nobel Prize-winning economist Joseph Stiglitz warned in 2010, exempting the largest banks from criminal prosecution has meant that lawlessness and "venality" is now "at a higher level" in the US even than that which prevailed in the pervasively corrupt and lawless privatizing era in Russia.

    Having the US government act specially to protect the most powerful factions, particularly banks, was a major impetus that sent people into the streets protesting both as part of the early Tea Party movement as well as the Occupy movement. As well as it should: it is truly difficult to imagine corruption and lawlessness more extreme than having the government explicitly place the most powerful factions above the rule of law even as it continues to subject everyone else to disgracefully harsh "justice". If this HSBC gift makes more manifest this radical corruption, then it will at least have achieved some good.

    UPDATE

    By coincidence, on the very same day that the DOJ announced that HSBC would not be indicted for its multiple money-laundering felonies,the New York Times published a story featuring the harrowing story of an African-American single mother of three who was sentenced to life imprisonment at the age of 27 for a minor drug offense:

    "Stephanie George and Judge Roger Vinson had quite different opinions about the lockbox seized by the police from her home in Pensacola. She insisted she had no idea that a former boyfriend had hidden it in her attic. Judge Vinson considered the lockbox, containing a half-kilogram of cocaine, to be evidence of her guilt.

    "But the defendant and the judge fully agreed about the fairness of the sentence he imposed in federal court.

    "'Even though you have been involved in drugs and drug dealing,' Judge Vinson told Ms. George, 'your role has basically been as a girlfriend and bag holder and money holder but not actively involved in the drug dealing, so certainly in my judgment it does not warrant a life sentence.'

    "Yet the judge had no other option on that morning 15 years ago. As her stunned family watched, Ms. George, then 27, who had never been accused of violence, was led from the courtroom to serve a sentence of life without parole.

    "'I remember my mom crying out and asking the Lord why,' said Ms. George, now 42, in an interview at the Federal Correctional Institution in Tallahassee. 'Sometimes I still can't believe myself it could happen in America.'"

    As the NYT notes - and read her whole story to get the full flavor of it - this is commonplace for the poor and for minorities in the US justice system. Contrast that deeply oppressive, merciless punishment system with the full-scale immunity bestowed on HSBC - along with virtually every powerful and rich lawbreaking faction in America over the last decade - and that is the living, breathing two-tiered US justice system. How this glaringly disparate, and explicitly status-based, treatment under the criminal law does not produce serious social unrest is mystifying.

    Glenn Greenwald
    Alternet
    December 17, 2012

    http://www.alternet.org/glenn-greenwald-woman-imprisoned-life-min
  8. enquirewithin
    'But this case is the opposite of an anomaly. That the most powerful actors should be immunized from the rule of law - not merely treated better, but fully immunized - is a constant, widely affirmed precept in US justice.'

    Exactly. This is not unusual at all. The NYT is a propaganda machine. This is just totally normal.
  9. methylman251
    So my take on all this is the moral of the story is:
    Kids if you are going to commit a 'crime' like possession of some weed we will destroy your life, unless you commit far more serious crimes such as money laundering then you'll get a fine and it'll all be ok?

    Is that really the message we want being sent out? buying a tiny amount of drugs which came from a cartel will land you in jail but if you launder money from them and have enough of it your all good.

    On a side note that is possibly one of the most disgusting things I've ever read it almost brought a tear to my eye I honestly don't understand how judges can sleep at night knowing that this inequality happens all the time
  10. Alfa
    I think that banks generally have a pretty good hunch who their clients are and what they are doing. If you really consider this, and include the harsh reality of all the dirty things that are going on, then banking seems to have many shades of grey.
    Consider arms trading, drug trade, alcohol & tobacco, exploitation of people and land, wars, thefts, by governments and corporations. Consider the activities of Shell, Blackwater, Halliburton, to name a few examples of corporations that are ethically questionable. All are backed by banks and banks have to deal with shady entities all the time.
    Considering this, I do not think it is strange that HSBC handled the banking for the Mexican Cartels. After all the Mexican government are not in control anymore and has not been for many years. Like it or not, the cartels can be considered to be the Mexican government. Just like banks have to deal with governments of other countries that may not be to their liking.
  11. enquirewithin
    The message that the US is trying to send out is that they that can do as they they wish, regardless of the rule of law.
  12. Calliope
    How to Halt the Terrorist Money Train
    January 2, 2013

    By ROBERT MAZUR
    Tampa, Fla.

    LAST month, HSBC admitted in court pleadings that it had allowed big Mexican and Colombian drug cartels to launder at least $881 million. The bank also admitted to using various schemes to move hundreds of millions of dollars to nations subject to trade sanctions, including Iran, Cuba and Sudan, in violation of the Trading With the Enemy Act. “On at least one occasion,” according to a statement by Assistant Attorney General Lanny A. Breuer, “HSBC instructed a bank in Iran on how to format payment messages so that the transactions would not be blocked or rejected by the United States.”

    Those were some of the transgressions uncovered during a two-year investigation led by the Justice and Treasury Departments and acknowledged by HSBC in a settlement, known as a deferred prosecution agreement, that was filed in a federal court in December. Not a single executive was charged with a crime. Instead, the bank paid $1.9 billion in fines and forfeitures — or roughly 10 percent of the pretax profits it earned in just 2010, one of the more than five years during which it admitted to criminal conduct.

    HSBC is hardly alone. Court filings show that, since 2006, more than a dozen banks have reached settlements with the Justice Department regarding violations related to money laundering. ING Bank paid a $619 million fine for altering records and secretly transferring more than $2 billion for entities trading with Iran and other nations under sanctions. American Express Bank International acknowledged that more than $55 million in drug proceeds may have been laundered through offshore shell accounts it maintained. The Justice Department has signed similar agreements, withholding prosecution in exchange for bank promises to tighten oversight, with Wachovia, Union Bank of California, Lloyds, Credit Suisse, ABN Amro Holding (now owned by Royal Bank of Scotland), Barclays and Standard Chartered. All admitted to criminal offenses; all were handed the equivalent of traffic tickets — pay a fine on your way out the door.

    This has been the government’s playbook in fighting terrorism and the drug trade. For make no mistake, without the ability to “wash” billions of dollars of money from illicit sources each year and bank the untraceable profits, both of these criminal enterprises would falter.

    In November, the House Subcommittee on Oversight, Investigations and Management issued a shocking report documenting the collaboration between Mexican and Colombian drug cartels and Hezbollah in narcotics and human trafficking, smuggling and financial crimes in the United States and Latin America — a partnership that, in just the border region between Brazil, Paraguay and Argentina, produces an estimated $12 billion in cash each year.

    Yet data from the Department of Justice Asset Forfeiture Fund and the United Nations Office on Drugs and Crime Research Report show that United States law enforcement tracks down and seizes no more than 1 percent of the drug fortunes generated each year by global cartels.

    The rest isn’t hiding in mattresses. It’s being washed — stripped clean of information that would identify its source, then transferred from one account to another, and often moved surreptitiously through various business enterprises, until it can settle safely in a criminal’s private offshore bank account. None of this happens without help from bankers, lawyers and businessmen.

    I have seen this firsthand. I was a federal agent for 27 years and worked undercover as a money launderer within this murky realm for five of them. I worked on teams that put leaders of drug cartels behind bars. The largest and most sophisticated of these criminal enterprises don’t trick banks into laundering their money — they partner with that small segment of the international banking and business community that recirculates drug profits and cash from other illicit trades, like black-market arms dealing.

    The only way to stop the flow of this dirty money is to get tough on the bankers who help mask and transfer it around the world. Banks themselves don’t launder money, after all; people do.

    The standard of proof needed to charge and convict a bank officer of money laundering is simple. If the person knows that funds are proceeds of a crime and, thereafter, he attempts to disguise or conceal the true source of the funds, he has committed the criminal offense of money laundering. Any individual who intentionally provides financial services to criminal organizations should be dealt with as harshly as possible under the law.

    Bank officers at HSBC branches in Mexico who facilitated the transfer of $881 million for the Sinaloa Cartel in Mexico, the Norte del Valle Cartel in Colombia and other narcotics traffickers — deposits that were often passed through teller windows in cash-filled boxes, some with hundreds of thousands of dollars in them — might contend that they were naïve about this money’s source. But there’s little incentive for them, or any bank officer, to be more vigilant when turning a blind eye comes with little or no penalty.

    The stakes are simply too high for such a soft-glove approach on money laundering. As long as drug traffickers can wash the stain from 99 percent of their ill-gotten gains, as long as terrorists can move their cash freely around the world, we’ll have no chance to halt their deadly trades. We can help put an end to both of these scourges by putting the bankers who facilitate them in jail.

    ~~~~

    Robert Mazur, a former federal agent, is the author of “The Infiltrator,” a memoir of his undercover life as a money launderer.

    http://www.nytimes.com/2013/01/03/opinion/how-bankers-help-drug-traffickers-and-terrorists.html
  13. enquirewithin
    $881 million is peanuts small fraction of the total if "...United States law enforcement tracks down and seizes no more than 1 percent of the drug fortunes generated each year by global cartels."

    The US needs to look at home-- to their banks and Wall Street.
  14. Phungushead
    Too Big to Jail: How HSBC Bank Got Away With Money Laundering for Drug Cartels

    [IMGL="white"]http://www.drugs-forum.com/forum/attachment.php?attachmentid=30964&stc=1&d=1358017341[/IMGL] Prison time? Felony record? Asset forfeiture? Not for drug trafficking executives of banks that are “too big to fail” or jail.

    The illicit drug trade relies heavily on money laundering because it is almost exclusively a cash business. Drug interdiction, while an essential component of attacking the illicit drug trade cannot, standing alone, reverse the tide of illicit drugs. Combating money laundering, combined with strong interdiction efforts, offers a more effective law enforcement response.
    - Money Laundering in Florida: Report of the Legislative Task Force, 1999

    Stuart Gulliver, the Chief Executive of the London-based international banking giant HSBC said: “We accept responsibility for our past mistakes. We have said we are profoundly sorry for them and we do so again… What happened in Mexico and the US is shameful, it’s embarrassing, it’s very painful for all of us in the firm…The HSBC of today is a fundamentally different organization from the one that made those mistakes.”

    What was Mr. Gulliver apologizing for and was he sincere? His bank got caught laundering tons of cash for drug cartels and alleged terrorists. That is a crime.

    Lanny Breuer, the Assistant Attorney General for the Department of Justice (DOJ) explained at a press conference, “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… The record of dysfunction that prevailed at HSBC for many years was astonishing.”

    U.S. Attorney Loretta Lynch added, “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…”

    As punishment, HSBC was assessed a fine of 1.9 billion — about four weeks’ worth of its pre-tax profits. No bank officials who were caught red-handed will be prosecuted or imprisoned.

    Take responsibility, apologize, pay a fine for your drug crimes and then call it a day. Go home to family who will forgive you for doing business with so-called “narco-terrorists.” Prison time? Felony record? Asset forfeiture? No. Not for drug trafficking executives of laundromat/banks that are “too big to fail” or jail.

    It is not so for those individuals and organizations that provide other, equally vital services to the $400 billion illicit drug trade. From the heads of Afghan drug cartels, to drug couriers like the Panamanian woman who had cocaine implanted in her breasts, to injection drug users in America’s needle parks, they will be demonized as purveyors of poison and death then punished severely. They won’t go home for a very long time, if ever.

    The U.S. justice system will mete out life sentences without the possibility of parole or mandatory minimum sentences of decades to drug kingpins, mules and the drug addicted. Drug law offender’s lives behind bars will become a dystopia that the profits of the privatized correctional industries depend on.

    The convicted will be disappeared in to twenty-first century concentration camps in remote, rural towns. Some prisoners will end up in solitary confinement and be driven mad. Their children will be orphaned and their families destroyed by shame, lack of visitation and communication.

    Everything will be legally stolen from drug law violators. Cars, jewelry, family heirlooms, clothes, cash, homes and property will be seized and put up for sale to benefit various branches of law enforcement.

    Check out the Asset Forfeiture Program at the DOJ website. You can bid on Rita A. Crundwell’s farmland in Dixon, Illinois. If you prefer a warmer climate, there is beachfront property for sale in the Dominican Republic.

    Admitting guilt, apologizing, promising “fundamental” change and paying a financial penalty will not suffice for the poor, low hanging fruit convicted of drug crimes. They have to be taught a “tough love” lesson in zero tolerance, and this: “You do the crime, you do the time.”

    This stripping the person of everything that connects them to society and to other human beings and locking them up in spaces smaller than a bathroom has to happen because as the Mission Statement of the Drug Enforcement Administration (DEA) asserts, those involved in the drug trade are criminals who “…perpetrate violence in our communities and terrorize citizens through fear and intimidation.” The DEA and the DOJ’s unapologetic modus operandi in the forty-year long War on Drugs is, Lock ‘em up and throw away the key!

    Except when the criminals are rich, well-connected bankers who wash drug trafficker’s dirty Benjamin Franklin’s clean. Tough on crime and the rule of law doesn’t apply to them.

    DOJ attorneys argued that aggressively prosecuting HSBC could destabilize the entire international banking system. Breuer said in an interview with the Washington Post, “If you prosecute one of the largest banks in the world, do you risk that people will lose jobs, other financial institutions and other parties will leave the bank, and there will be some kind of event in the world economy?” In other words, banks that break the law by laundering money for drug cartels and rogue states are immune from criminal prosecution because a global financial meltdown could be triggered.

    But that didn’t happen twenty-five years ago when the Bank of Credit and Commerce International Bank (BCCI) was prosecuted for laundering drug profits. Like HSBC, BCCI did business with an international cast of unsavory drug dealers and dictators. BCCI helped former Panamanian dictator Manuel Noriega and the Columbian Medellin cocaine cartel convert millions of dollars into pesos. An aggressive investigation led by Senator John Kerry and New York District Attorney Robert Morgenthau concluded that BCCI was “one of the biggest criminal enterprises in world history.”

    BCCI was indicted for money laundering, grand larceny and bribery. Bank branches were shut down in seven countries and restricted in dozens more. The criminals at BCCI were punished and effectively put out of business. They got drug war tough love and the world banking system didn’t crash.

    The convictions almost didn’t happen. The Bush Administration only wanted a slap on the wrist for BCCI, but Kerry was apoplectic. He went on national television slamming the hypocrisy: “We send drug people to jail for the rest of their life, and these guys who are bankers in the corporate world seem to just walk away, and it’s business as usual…When banks engage knowingly in the laundering of money, they should be shut down. It’s that simple, it really is.”

    That was in 1999. Where is Senator Kerry and the rest of Congress’s outrage for the career drug criminals at HSBC that facilitated the illegal deposit of millions of dollars packed into specially designed boxes that would fit through the bank’s teller windows in Mexico?

    Why isn’t the Senate Permanent Subcommittee on Investigations that accused HSBC of exposing the United States “financial system to money laundering and terrorist financing risks” and for violating the Trading With the Enemy Act screaming hysterically that those who fund “narco-terrorism” must be punished to keep America safe?

    The most Congress could muster was a letter written by Rep. Barney Frank to Attorney General Eric Holder asking him to reconsider the agreement with HSBC. A letter. Wow! That’s tough on crime?

    How come the nation’s top drug warrior Michelle Leonhart, Administrator of the DEA, isn’t demanding that HSBC officials pay for their crimes? According to an investigation by Immigration and Customs Enforcement (ICE), from 2006 to 2010 the bank laundered millions in profits for the Sinaloa drug cartel in Mexico and the Norte Del Valle cartel in Columbia through the Black Market Peso Exchange (BMPE.)

    And why isn’t Leonhart extraditing Gulliver and other senior bank executives to the United States to face drug trafficking and narco-terrorism charges?

    The DEA and the DOJ gloat in their ability to extradite or simply seize alleged drug kingpins from all over the world and bring them to the United States to stand trial – especially suspects from Afghanistan and Latin America. They’re not concerned about the impact that these extraditions will have on the international drug trade. The consequence is often an uptick in violence and murder as internecine fighting erupts to reconfigure drug markets.

    The case of Haji Bagcho, a 70-year-old Afghan man convicted of drug trafficking and narco-terrorism reveals the double standard of the DEA and the DOJ when it comes to who they chose to criminally prosecute for drug crimes. Afghan drug traffickers are shown no leniency, are never offered sweetheart deals and are prosecuted to the full extent of the law.

    Both Breuer and Leonhart expressed outrage and contempt for Bagcho’s alleged crimes. Breuer said, “Haji Bagcho led a massive drug production and trafficking operation that supplied heroin in more than 20 countries, including the United States. In 2006 alone, he conducted heroin transactions worth more than $250 million. Today’s life sentence is an appropriate punishment for one of the most notorious heroin traffickers in the world.”

    Leonhart added with her usual bravado, “This is DEA at its finest, working in close collaboration with our Afghan partners to end the long reign of this Afghan drug lord whose drug proceeds financed terror. One of the world’s most prolific drug traffickers who helped fund the Taliban will spend his remaining days behind bars in a U.S. prison…”

    Now imagine those words being hurled at Mr. Gulliver and his “massive” operation (HSBC has branches in 85 countries) “whose drug proceeds financed terror.” Imagine “notorious,” high-level HSBC officials spending their “remaining days behind bars in a U.S. prison.” Hard to imagine isn’t it?

    But not for Afghans like Haji Bagcho or Haji Bashar who was also given a life sentence even though he cooperated with the DEA and the DOJ. And there’s Haji Juma Khan. He’s been held in solitary confinement awaiting trial since he was extradited to the United States in 2008. Incarcerating Bagcho, Bashar and Khan hasn’t weakened the Taliban or made a dent in the Afghan drug trade. Afghanistan retains its premier position as the number one grower of poppy and exporter of heroin to Central Asia and Europe. Moreover, Afghans are involved in the illicit drug trade out of economic necessity as are Mexicans, because the legal economies in both countries are in shambles. British bankers have no such reason – their motive is pure greed.

    It is a mathematical certainty that as long as drugs are illegal, banks will continue to launder drug trafficker’s money. Superprofits are guaranteed and the financial penalties aren’t a deterrent.

    The HSBC scandal shows how the illicit drug trade is completely integrated into the world financial system. I In the face of the enormous economic power of the global banking industry to circumvent anti-laundering regulations, winning the war on drugs is utterly futile.

    The only solution is to legalize and regulate the sale of all drugs. It is an inescapable reality that heroin, cocaine, methamphetamine and marijuana are global commodities that cross all borders. Millions of people buy drugs and making them illegal has never stopped the use or abuse of them.

    Ending the war on drugs would not only save human lives and billions of dollars, it would free up law enforcement agencies to investigate and prosecute banks whose real crimes are far worse than laundering drug money.


    January 9, 2013

    Helen Redmond
    http://www.alternet.org/too-big-jail-how-hsbc-bank-got-away-money-laundering-drug-cartels?paging=off
To make a comment simply sign up and become a member!