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In the Media

article imageOp-Ed: HSBC criminals escape punishment in money laundering settlement

By Ken Hanly
Dec 16, 2012 in World
1 more article on this subject:
New York - While HSBC was fined $1.9 billion for money laundering activities as well as illegal transactions involving several sanctioned countries, not a single individual at the bank faced criminal charges.
Writing in his Rolling Stone blog, Matt Taibbi, claims what he calls the outrageous HSBC settlement proves that the war on drugs is a joke. While I am sure that it does not prove that, it does prove that the government is inconsistent and hypocritical to put it mildly.
As Taibbi points out, individuals can be arrested and put in jail for having a stem of marijuana in their pocket or "drug paraphernalia" in their gym bag.
Assistant Attorney General, Lanny Breuer signed off on a deal that will see HSBC pay a financial settlement of $1.9 billion dollars. There were no criminal charges against any individuals, even though the bank admits to laundering billions for Mexican drug cartels, violating the Bank Secrecy Act and also the Trading with the Enemy Act. There were no criminal prosecutions against the bank either.
Breuer admitted that some of the laundering transactions were so brazen they could be easily detected. In some HSBC's Mexican branches, there were deposits of hundreds of thousands of cash in one day into a single account. The depositors used boxes specially made to fit into the precise dimensions of the teller windows!
Although not explicitly stated, apparently the rationale of the government for not pursuing criminal cases against individuals at the bank was that to do so when the individuals were employees of such an important bank, might threaten the stability of the financial system.
Taibbi thinks that such action, far from protecting the system, can leave investors with the impression that even the most reputable banks can work for the interests of drug dealers and for countries that are supposed to be under sanction. Instead of individuals being found criminally culpable, the bank is given a fine that could very well be seen just as a cost of doing business.
Some of the financial penalties are ludicrous. Breuer announced that as a result of the government investigation HSBC has "clawed back" deferred compensation bonuses for some of its most senior U.S. anti-money laundering and compliance officers over the next five years. So they still get bonuses even after what they allowed to happen but are forced only to partially defer them! Taibbi contrasts this "punishment" of culpable individuals at HSBC with what often happens to ordinary Americans involved in drug cases.
Anthony Smelley received $50,000 in a settlement for a car accident. He was carrying $17,000 cash in his car. Cops stopped him and searched it for drugs. Drug sniffing dogs gave alerts twice. However, no drugs were found. The cops took the cash anyway. Even after he produced documentation of the source of money, Putnam County officials tried to keep the money on the grounds he might buy drugs with it in the future. Lanny Breuer's Justice Department does well in forfeiture cases depositing almost $1.8 billion a year.
In New York city, one out of every seven cases ending up in court involves marijuana. In 2010 New York police made 50,377 pot-related arrests. This is even though the laws are relatively liberal compared to many jurisdictions. The public defender explains how it works:
"What they do is, they stop you on the street and tell you to empty your pockets. Then the instant a pipe or a seed is out of the pocket – boom, it's 'public use.' And you get arrested."
People often spend nights in jail after arrest. Even if the person is let off with a misdemeanor plus time served, you must pay $200 and have your DNA extracted. You need to pay an extra $50 dollars for that!
The HSBC decision shows that if you happen to be an important cog in an important institution in the global financial system you will not serve time nor a fine. Taibbi concludes that the U.S. government is in the business of jailing the drug addict, the victim of the drug cartels, but at the same time doing nothing to those in the banking system who serve as enablers, at least nothing in the way of criminal prosecutions.
None of this makes the war on drugs a joke. It is a profitable business. Fighting the war, not only provides salaries for all those involved but also collects revenues through fines and forfeitures,.and now an extra bonus of $1.9 billion from a large bank. There are also all the multiplier effects, including the need for more jails which can be farmed out to private contractors, and jobs created as new prisons must be built and staffed.
This opinion article was written by an independent writer. The opinions and views expressed herein are those of the author and are not necessarily intended to reflect those of DigitalJournal.com
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