HSBC building, Canary Wharf, London, England
A certain vendetta against HSBC has emerged amongst legislators around the world. In London, the Parliamentary Public Affairs Committee recently hosted its second hearing in a month on HSBC. Labour MP Margaret Hodge introduced the multinational bank to witnesses as “rich in bureaucracy but short on common sense,” blasting its executives for facilitating tax evasion. The executives feigned ignorance, placing blame not on top leadership, but on managers at its Swiss subsidiary. An incensed Margaret Hodge retorted: “So either you were incompetent, completely and utterly incompetent…or you knew about it.”
Ms. Hodge is far from the first lawmaker to voice strong opinions on the matter. On American soil, Senator Elizabeth Warren echoed similar frustrations, famously asking, “What does it take?” In 2012, HSBC received “only a slap on the wrist” after admitting to financial misconduct — crimes which included “money-laundering for drug cartels, and [breaching] US sanctions on countries such as Iran and Libya.” The $1.9 billion fine was the largest in US history, but no criminal charges were pressed nor were any individuals banned from banking. Worst of all, according to Senator Warren, no hearings were held on HSBC’s charter in the United States. For everything HSBC had admittedly done, the bank quickly resumed operations as usual.
Only three years later, we return to Senator Warren’s question: How many billions must an institution launder or sanctions must it violate, before anyone considers shutting it down? Amidst recent accusations against HSBC, we may soon get an answer.
“The $1.9 billion fine was the largest in US history, but no criminal charges were pressed, nor were any individuals banned from banking.”
HSBC Holdings PLC faced a fresh volley of criminal investigations in 2015 with over ten separate claims under governments spanning Europe, Asia, and the Americas. Vitally, Swiss prosecutors recently spearheaded an inquiry into HSBC Bank (Suisse), the Geneva-based subsidiary at the heart of these illegal activities.
This renewed sense of urgency can be credited to the “Swiss Leaks” made public earlier this February, containing nearly 60,000 financial documents organized by the International Consortium of Investigative Journalists. The files were first compiled by whistleblower Herve Falciani, then transferred to French authorities in 2008. The records have since served as the basis for formal investigations, but the public nature of this latest release has brought many stagnant cases back to the fore.
Punitive measures are “high on the list,” according to officials. Argentinian authorities, for example, have raided HSBC’s Buenos Aires office, demanding the bank repatriate $3.5 billion in pirated funds to Argentina. In Brazil, authorities are investigating the link between leaked accounts and recent corruption scandals, and earlier this week, French prosecutors formally filed criminal charges against the bank.
“How many billions must an institution launder, or sanctions must it violate, before anyone considers shutting it down?”
The “many billions” it took to reach this critical mass of attention is staggering. As a whole, criminally hidden funds have been conservatively estimated at $7.6 trillion — the implications of which can hardly be exaggerated for the international community. Tax evasion on this industrial scale has cost governments at least $200 billion a year.
However, HSBC’s activities go beyond simple “white collar” crimes. Certainly, it’s a great burden for governments when the super-rich, millionaire and billionaire, citizens conceal their fortunes from national treasuries. But the arms, drug, and diamond dealers that HSBC has helped are undeniably worse — regardless of what “side of the aisle” you’re on.
The problems caused by circumventing government regulations go beyond “socioeconomic class conflict.” There’s more to certain financial policies than simply “balancing the economy” or “equalizing society.” They serve as peace-keeping measures directly related to international security. The Swiss Leaks have revealed disturbing realities regarding “arms dealers who channeled mortar bombs to child soldiers, bag men for Third World dictators, and traffickers in blood diamonds,” all of whom HSBC has profited from greatly.
No longer do we need to ask about “billions laundered” or “sanctions broken.” Simply count the lives lost. Just as these merchants of death enable the most heinous international crimes, their bankers must also be held responsible for complicity. Going forward, governments must fight without compromise for sure systems of accountability and practical ethics among financial service providers such as HSBC.
Andy Kim is a senior in the School of Industrial & Labor Relations at Cornell University, minoring in English and Creative Writing.
Image Attribution: “Canary Wharf HSBC 3” by Barry Caruth, licensed under CC BY-SA 2.0
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