Why Cherie’s bank is still a haven for crooks
BRITAIN’S biggest bank is still being used by criminals – almost four years after it was fined £1.1billion for money laundering.
HSBC yesterday revealed that an independent ‘monitor’ installed by the US government had flagged up ‘significant concerns about the pace of progress’ fighting crime.
In the worst case scenario, the bank could now face restrictions on its ability to process US dollar payments through America or could even lose its banking licence in the US.
The damning revelations – contained in the high street giant’s annual report – emerged days after its involvement in a murky deal between the corrupt Maldives government and Cherie Blair was exposed by the Daily Mail.
MPs have called for an investigation into HSBC, and suggested that the payment should have been blocked by its anti-money laundering systems.
HSBC – the bank used by Mrs Blair’s law firm Omnia Strategy – accepted a £210,000 payment from a suspected conman and terrorist for its work for the Maldives’ autocratic president, Abdulla Yameen.
The transaction, which landed in Omnia Strategy’s HSBC bank account last September, was routed via a clothing import export busi- ness in Male, the Maldives capital. HSBC said the monitor – former New York prosecutor Michael Cherkasky – had found ‘instances of potential financial crime’ and ‘deficiencies’ in systems set up by the bank to combat money laundering and other wrongdoing.
The bank confirmed that Mr Cherkasky had also refused to sign off on its efforts to improve compliance and raised concerns over whether it can clean up its act within the fiveyear target set by US authorities.
The lender caused further anger as it announced that it made a £13.2billion profit last year and dished out £2.4billion in bonuses to staff. Some 453 staff around the world received more than 1million euros – £780,000 – including HSBC’s chief executive Stuart Gulliver, who received a £7.3million pay package.
One MP said last night that Mr Cherkasky’s conclusion that HSBC had not done enough to tackle financial crime suggests the apparent lapse with Mrs Blair may be symptomatic of a wider problem.
John Mann, a Labour member of the Treasury Select Committee said: ‘This clearly shows HSBC has failed to sort itself out. Accepting a suspicious payment from the Maldives would appear to reflect wider failings in the business. HSBC should be replacing people rather than paying huge bonuses.’
HSBC was fined £1.1billion in the US in 2012 after being caught laundering billions of pounds for Mexican drugs cartels and rogue states.
Its systems were so lax that US lawmakers said the lender became the ‘bank of choice’ for drug dealers. As part of the settlement with the US government, HSBC entered a five-year ‘deferred prosecution agreement’. The deal stipulated that criminal charges would be dropped after five years if HSBC introduced tougher anti-money laundering controls and committed no further offences. Mr Cherkasky was installed in the bank’s offices to monitor its progress.
HSBC bosses yesterday stressed that they are installing tougher anti-money laundering systems this year. Mr Gulliver said there is ‘no evidence of bad apples or bad actors in HSBC’, adding: ‘We have 47million customers in 71 countries – this is a multi-year journey.’
The latest scandal to hit HSBC is a US inquiry over its hiring of people with links to government officials in Asia, known as ‘princelings’.
It is also facing criminal investigations around the world into helping wealthy clients dodge tax in Swiss bank accounts and offshore trusts, and has been caught up in the bribery probe into world football’s governing body FIFA.
Fionn Travers- Smith, of campaign group Move Your Money, said: ‘The bank has faced no repercussions from the Government or the supine regulator for designing and abetting illegal tax evasion, and now its executives are pocketing huge wads of cash as a reward.’
HSBC last week said it will keep its headquarters in London after threatening to leave over tougher regulation and higher taxes.
NO ONE should be too surprised that the fastmoving EU events of the past couple of days have sparked a new bout of volatility for the pound.
The enthusiasm with which Boris Johnson, a chunk of the Cabinet and an increasing number of Tory MPs have embraced the Brexit cause was bound to bring on a bout of the collywobbles.
A more sensible reaction is that of Tesco, Sainsbury’s, Lloyds et al, which is to say it is up to their UK customers, who are the voting citizens, to decide. Top executives of FTSE 100 boardrooms, with earnings of 150 times those of their average employees, are likely to see things through a very different prism to the public.
As it happens, bosses of BAE and others that have signed a letter supporting David Cameron’s deal stand to gain from the latest 2.5pc fall in the value of the pound against the dollar. The depreciation of the currency should make direct exports more competitive and make income repatriated from the US (where BAE has 40pc of its sales) more valuable.
A closer look at what is happening on the markets is also worthwhile. Sure the pound fell against the euro, but what is really interesting is that the markets fear the impact of Britain’s exit from the EU could be deeply damaging to the European project and the euro.
If Brussels had been far more sensitive to British concerns about European intrusion and regulation they might have headed off a great deal of turbulence before and after the exit plebiscite, when the focus may shift towards who may be next to go.
As Barclays strategist Nikolaos Sgouropoulos notes, Right-wing parties are polling strongly across the Continent, many countries are closing borders and ‘trying essentially to replicate what the UK has done.’
A problem for George Osborne is that he has been conducting open warfare against European meddling in the City’s financial affairs ranging from bonus restrictions to the financial transactions tax. Now the Chancellor has to show that the Government’s new deal will give it the powers to repudiate such rules when it is by no means clear that it will.
The markets also tell us that the skids are under the euro. Brexit is seen as a deterrent for investment in the single currency at a time when business activity in the region is at its lowest point for a year.
The corollary of that is once Britain has voted and the uncertainty starts to dissipate the UK could see the pendulum swing back its way.
HSBC skewered
AT TIMES it seems that HSBC cannot win.
When Britain’s largest bank moved to close the bank accounts of the Finsbury Park Mosque and some Islamic charities last year there was a mighty outcry about discrimination. The bank’s actions were, however, part of an effort to cleanse itself of any relationships which might potentially cause it regulatory problems.
As the latest accounts show, HSBC’s Group Audit Committee still has significant concerns as to whether the company has sufficiently robust systems in place to track down those financial crimes, such as money laundering, covered by the terms of its deferred prosecution deal with authorities on both sides of the Atlantic.
In an institution of HSBC’s scale, diversity and complexity, new problems are bound to pop up. The latest probe by intrusive US regulators is into whether HSBC has hiring practices which favour people tied to government officials in Asia – or good old-fashioned nepotism.
Be that as it may, HSBC has more than its fair share of detractors. Potentially losing the confidence of the US Justice Department is the most serious because of the threat to its banking licence and the right to clear dollar transactions through New York.
On the commercial front, life is not entirely smooth either. Yes, it is good that HSBC still made £13.2bn of profits over the last year. But the disclosure of potential rotten loans to the oil and gas sector in the final quarter will raise concerns about worse to come – not just for HSBC, but all the banks.
The real lesson for HSBC is that it is too large, too complicated and operates in too many markets. It has begun the process of trimming but should perhaps be thinking of something far more bold in terms of separation and break up.
That would make command and control easier and could deliver better value to investors.
Open sesame
IS TIM Cook finally smelling the cordite?
The Apple chief says that the fight with US justice was not just about unlocking one phone ‘but the security of hundreds of millions of law-abiding people’.
He then goes on to suggest that maybe the government should convene a panel on encryption so as to resolve the stand-off over discovery of the iPhone secrets of San Bernardino shooting terrorist Rizwan Farook.
The back door looks to be loosening.