By | February 3, 2016
A federal judge ruled last week that the Hong Kong and Shanghai Banking Corporation (HSBC) will be forced to share a report on its business practices with the public — a decision both the bank and the Department of Justice (DOJ) fought in court to prevent. The report is based on the findings of an ongoing government audit of the bank initiated amid revelations in 2012, that it laundered money for drug cartels and terrorist organizations.
When HSBC’s sordid dealings were discovered in 2012, the DOJ declined to press charges, arguing the bank was too important to prosecute. As the Guardian reported at the time, Assistant Attorney General Larry Breuer argued “the Justice Department had looked at the ‘collateral consequences’ to prosecuting the HSBC or taking away its US banking license. Such a move could have cost thousands of jobs, he said.”
Further, “Had the US authorities decided to press criminal charges,” theGuardian summarized, “HSBC would almost certainly have lost its banking license in the US, the future of the institution would have been under threat and the entire banking system would have been destabilized.”
The DOJ’s refusal to prosecute those responsible was widely criticized, as HSBC was found to have laundered over $850 million for cartels, while also laundering money for Saudi banks with ties to terrorist groups. The bankalso helped nations like Libya and Iran bypass American financial laws. The lack of punishment for these transgressions appeared to reveal a double standard.
As Glenn Greenwald observed at the time:
“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.”
Rather than directly prosecute HSBC, the DOJ opted for a “deferred prosecution” and imposed a five-year monitoring program wherein government authorities would regularly audit the bank’s internal reforms to ostensibly prevent similar criminal behavior in the future. The bank was also ordered to pay a $1.9 million fine, which DOJ officials bragged was the largest ever for such a case.
A private individual, Hubert Dean Moore, recently sued in an eastern New York district court to publish the findings of the first annual audit, but both HSBC and the DOJ resisted. HSBC reportedly argued in a letter to U.S. District Judge John Gleeson that Moore “had not identified a public interest case for publishing the report that would outweigh the negative consequences.”