If you keep 6s [the six-month Japanese yen Libor rate] unchanged today … I will fucking do one humongous deal with you. Like a 50,000-buck deal, whatever. I need you to keep it as low as possible … if you do that … I’ll pay you, you know, $50,000, $100,000 … whatever you want … I’m a man of my word.
- UBS phone call on 18 September 2008 – just days after the collapse of Lehman Brothers.
Harnessing Social Media to Fight Corruption
Systematic Corruption is the Main Reason for the Problems in Many Developing Countries
Systematic Corruption – Top Banks are Leading the Way
Banks are global leaders in the growth area of money laundering, tax evasion and fraud. Every major British bank is being indicted on numerous charges. The Libor scandal alone has profound implication on banking. Recent Federal Reserve Bank of Cleveland report said that about 45% of U.S. home loans were tied to the Libor rate. For subprime loans, the percentage is even higher. State prosecutors are imposing fines on many large banks but the damage to banks does not end there; civilian may seek damages through class action lawsuits as well. In the UK, there are insurance mis-selling schemes and many others which expose the degree of rot in the global banking industry.
HSBC facilitated the biggest money laundering forfeiture in banking history – trillions of dollars in wire transfers that the bank did not monitor and hundreds of millions of dollars of dirty money that moved through it. HSBC failed to supervise 9 billion dollars of assets. These crimes were so obvious that apparently the cartels in Mexico specifically designed boxes to put cash in so that they would fit through the windows of HSBC teller windows. How could a bank be so asleep? It is more likely that it turned a blind eye while raking in the profits. Who’s going to jail? nobody.
To add to it’s illustrious portfolio of money laundering is tax fraud on a massive scale in Europe.
Department of Justice
“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, and to facilitate hundreds of millions more in transactions with sanctioned countries,” said Assistant Attorney General Breuer. “The record of dysfunction that prevailed at HSBC for many years was astonishing. Today, HSBC is paying a heavy price for its conduct, and, under the terms of today’s agreement, if the bank fails to comply with the agreement in any way, we reserve the right to fully prosecute it.”
“Today we announce the filing of criminal charges against HSBC, one of the largest financial institutions in the world,” said U.S. Attorney Lynch. “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. HSBC’s willful flouting of U.S. sanctions laws and regulations resulted in the processing of hundreds of millions of dollars in OFAC-prohibited transactions. Today’s historic agreement, which imposes the largest penalty in any BSA prosecution to date, makes it clear that all corporate citizens, no matter how large, must be held accountable for their actions.”
“Cartels and criminal organization are fueled by money and profits,” said ICE Director Morton. “Without their illicit proceeds used to fund criminal activities, the lifeblood of their operations is disrupted. Thanks to the work of Homeland Security Investigations and our El Dorado Task Force, this financial institution is being held accountable for turning a blind eye to money laundering that was occurring right before their very eyes. HSI will continue to aggressively target financial institutions whose inactions are contributing in no small way to the devastation wrought by the international drug trade. There will be also a high price to pay for enabling dangerous criminal enterprises.”
In addition to forfeiting $1.256 billion as part of its deferred prosecution agreement (DPA) with the Department of Justice, HSBC has also agreed to pay $665 million in civil penalties – $500 million to the Office of the Comptroller of the Currency (OCC) and $165 million to the Federal Reserve – for its AML program violations.
Matt Tabbi’s Response to the DOJ Sentence: Outrageous HSBC Settlement Proves the Drug War is a Joke
Keiser Report: Too Big To Jail
Keiser Report: Monetized Genocide
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.
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. – Matt Tabbi, Rolling Stones
- Barclay’s has been fined $450 million by British and American authorities in July 2012 connected to the Libor rate-rigging scandal
- The United States Federal Energy Regulatory Commission has fined Barclay’s another $470 million related to past energy trading activities in the bank’s American operations
- Is setting aside £2 billion for compensating clients who were sold insurance inappropriately
- Fined $327 Million for flouting United States sanctions on foreign countries by funneling money for Iranian and Sudanese clients.
- Is setting aside more than £5 billion to compensate clients who were sold insurance inappropriately
- May be fined $1.5 billion for Libor manipulation
- The Swiss bank is fined $1.5 billion for Libor rigging
- Hong Kong Monetary authority is investigating UBS for Libor rigging in Hong Kong
- More than 2,000 requests for “inappropriate submissions” to the libor were documented by the Financial Services Authority, which found 45 UBS traders, managers and senior managers were involved in, or aware of, the practice of manipulating the benchmark rate.
- Some 1,000 of these requests were made to 11 brokers at six brokerage firms, the FSA said. While the participants were not named, the UK regulator found that brokers had accepted “corrupt” payments – as much as £15,000 a quarter – for helping UBS to manipulate the rate
- American regulators also found that UBS colluded with at least four other banks on the panel that set Libor to make false submissions, and induced at least five interdealer brokers to disseminate false information or otherwise influence other panel banks’ submissions.
- may be fined up to £400 million for Libor rate manipulation