The Department of Justice Inspector General’s report on the FBI’s handling of the Hillary Clinton server and e-mail investigation was released Thursday. Inspector General Michael Horowitz found that although then FBI Director James Comey had deviated from FBI protocol, it was done without political bias. Thursday’s report said that Comey’s move to hold a press …
Tag: Department of Justice
Jun 15 2018
Jun 12 2018
The war with the press did not start with Donald Trump. It began under George W. Bush and expanded when Barack Obama went after New York Times reporter James Risen in that administration’s prosecution of Jeffrey Sterling, a former undercover CIA agent accused of espionage. The Justice Department wanted Mr. Risen to testify at the …
Sep 29 2017
Back in October of 2016 the FBI and computer experts were looking at a Russian bank’s servers examining if there was a connection between the bank and the Trump organization. It appeared that Alpha Bank was using a secret server to interact with the Trump Tower during the campaign. The investigation was dismissed by some …
Mar 10 2017
Griping about his administration being undermined by Obama holdovers and some fantasy about the existence of a “deep state“, Attorney General Jefferson Beauregard Sessions III has requested the immediate resignations of 46 US Attorneys, including including Preet Bharara, the United States attorney in Manhattan. The firings were a surprise — especially for Mr. Bharara, who …
Jan 31 2017
Monday night, three hours after acting Attorney General Sally Yates issued a letter instructing US Attorneys not to defend Donald Trump’s Muslim ban, Trump fired her. The last time that happened was in 1973, when Richard Nixon fired Special Prosecutor Archibald Cox at the height of the Watergate scandal. It precipitated the resignation of Attorney …
Jul 10 2015
After six years of protecting them, former Attorney General Eric Holder triumphantly returned to his roots, the law firm where he defended Wall Street and the banking industry before his appointment as AG. As though this was ever in doubt.
Eric Holder, Wall Street Double Agent, Comes in From the Cold
Matt Taibbi, Rolling Stone
Barack Obama’s former top cop cashes in after six years of letting banks run wild
Eric Holder has gone back to work for his old firm, the white-collar defense heavyweight Covington & Burling. The former attorney general decided against going for a judgeship, saying he’s not ready for the ivory tower yet. “I want to be a player,” told the National Law Journal, one would have to say ominously.
Holder will reassume his lucrative partnership (he made $2.5 million the last year he worked there) and take his seat in an office that reportedly – this is no joke – was kept empty for him in his absence.
The office thing might have been improper, but at this point, who cares? More at issue is the extraordinary run Holder just completed as one of history’s great double agents. For six years, while brilliantly disguised as the attorney general of the United States, he was actually working deep undercover, DiCaprio in The Departed-style, as the best defense lawyer Wall Street ever had.
Holder denied there was anything weird about returning to one of Wall Street’s favorite defense firms after six years of letting one banker after another skate on monstrous cases of fraud, tax evasion, market manipulation, money laundering, bribery and other offenses. [..]
In this light, telling reporters that you’re going back to Covington & Burling to be “engaged in the civic life of this country” seems like a joke for us all to suck on, like announcing that he’s going back to get a doctorate at the University of Blow Me.
Holder doesn’t look it, but he was a revolutionary. He institutionalized a radical dualistic approach to criminal justice, essentially creating a system of indulgences wherein the world’s richest companies paid cash for their sins and escaped the sterner punishments the law dictated.
The transcript can be read here
Eric Holder Returns as Hero to Law Firm That Lobbies for Big Banks
By Lee Fang, The Intercept
After failing to criminally prosecute any of the financial firms responsible for the market collapse in 2008, former Attorney General Eric Holder is returning to Covington & Burling, a corporate law firm known for serving Wall Street clients.
The move completes one of the more troubling trips through the revolving door for a cabinet secretary. Holder worked at Covington from 2001 right up to being sworn in as attorney general in Feburary 2009. And Covington literally kept an office empty for him, awaiting his return.
The Covington & Burling client list has included four of the largest banks, including Bank of America, Citigroup, JPMorgan Chase and Wells Fargo. Lobbying records show that Wells Fargo is still a client of Covington. Covington recently represented Citigroup over a civil lawsuit relating to the bank’s role in Libor manipulation.
Covington was also deeply involved with a company known as MERS, which was later responsible for falsifying mortgage documents on an industrial scale. “Court records show that Covington, in the late 1990s, provided legal opinion letters needed to create MERS on behalf of Fannie Mae, Freddie Mac, Bank of America, JPMorgan Chase and several other large banks,” according to an investigation by Reuters.
The Department of Justice under Holder not only failed to pursue criminal prosecutions of the banks responsible for the mortage meltdown, but in fact de-prioritized investigations of mortgage fraud, making it the “lowest-ranked criminal threat,” according to an inspector general report.
May 28 2015
On Wednesday in the early morning hours in Zurich, Switzerland, at a five star hotel, there were six phone calls made by the concierge to six rooms telling the occupants: “Sir,” the concierge said in English, “I’m just calling you to say that we’re going to need you to come to your door and open it for us or we’re going to have to kick it in.” How polite.
The hotel, which overlooks Lake Zurich, provided an unlikely setting for the apprehension of six global soccer executives who were arrested on corruption charges and now face extradition to the United States. The operation took less than two hours and was strikingly peaceful – no handcuffs, no guns drawn. It also involved an unusual use of a bedsheet.
Raids in the United States are typically led by armed SWAT team members wearing bulletproof vests and helmets, but the Swiss took a more subtle approach. Rather than storming into the executives’ rooms and hauling them out in their pajamas, the officers waited for the men to come to the door and then gave them a chance to get dressed and pack their bags.
The officers appeared to lead the officials out one by one, through several exits, including a side door, the hotel’s garage and, in one case, the main entrance.
Thus started the arrests of six global soccer executives on corruption charges. The indictments were brought by the US Justice Department stemming from an FBI and IRS investigation into the business practices of FIFA, the world governing body of the world’s most popular sport. soccer.
The Justice Department, F.B.I. and I.R.S. described soccer’s governing body in terms normally reserved for Mafia families and drug cartels, saying that top officials treated FIFA business decisions as chits to be traded for personal wealth. One soccer official took in more than $10 million in bribes, Attorney General Loretta E. Lynch said.
The schemes involving the fraud included the selection of South Africa as the host of the 2010 World Cup; the 2011 FIFA presidential elections; and several sports-marketing deals. [..]
The Department of Justice indictment names 14 people on charges including racketeering, wire fraud and money laundering conspiracy. In addition to senior soccer officials, the indictment also named sports-marketing executives from the United States and South America who are accused of paying more than $150 million in bribes and kickbacks in exchange for media deals associated with major soccer tournaments. [..]
The promise that the investigation would continue raised the specter of more arrests, but officials would not comment on whether they were investigating Sepp Blatter, the FIFA president and the man widely regarded as the most powerful person in sports. One federal law enforcement official said Mr. Blatter’s fate would “depend on where the investigation goes from here.” [..]
United States law gives the Justice Department wide authority to bring cases against foreign nationals living abroad, an authority that prosecutors have used repeatedly in international terrorism cases. Those cases can hinge on the slightest connection to the United States, like the use of an American bank or Internet service provider.
Switzerland’s treaty with the United States is unusual in that it gives Swiss authorities the power to refuse extradition for tax crimes, but on matters of general criminal law, the Swiss have agreed to turn people over for prosecution in American courts.
What Esquire’s Charlie Pierce said:
Here and overseas, the entire corporate universe is shot through with metastatic corruption and crime. It is an essential part of the business model almost everywhere, from Wall Street offices to the pitch at Wembley. FIFA’s corruption is more than an endemic phenomenon. FIFA was simply one corrupt enterprise working with and through hundreds of other corrupt enterprises. There are governments, and there are communications empires, and there are all manner of companies advertising their wares — the “corporate partners” of a claque of brigands. If you did business with the crooks of FIFA, you’re a crook, too. There’s no way to avoid it. All of them are guilty. All of them are responsible. All of them are complicit in the corruption in the spotlight today, and in the death of anonymous workers in Qatar whose names they don’t even know. The whole goddamn corporate universe is begging for a gigantice RICO indictment.
It seems the Justice Department is capable of investigating and obtaining indictments against officials of an organization whose business practices have been described as “byzantine and impenetrable,” why can’t the DOJ do the same for the bankers of JPMorgan Chase, HSBC, Citibank, Bank of America, et al? It apparently is not that hard, Loretta.
May 22 2015
The new Attorney General Loretta Lynch proves why she should not have been confirmed, as she rubber stamps the same weak polices of her predecessor Eric Holder regarding the prosecution of the “Too Big to Jail” bankers.
By Ben Protess and Ben Corkery, The New York Times
Adding another entry to Wall Street’s growing rap sheet, five big banks have agreed to pay about $5.6 billion and plead guilty to multiple crimes related to manipulating foreign currencies and interest rates, federal and state authorities announced on Wednesday.
The Justice Department forced four of the banks – Citigroup, JPMorgan Chase, Barclays and the Royal Bank of Scotland – to plead guilty to antitrust violations in the foreign exchange market as part of a scheme that padded the banks’ profits and enriched the traders who carried out the plot. The traders were supposed to be competitors, but much like companies that rigged the price of vitamins and automotive parts, they colluded to manipulate the largest and yet least regulated market in the financial world, where some $5 trillion changes hands every day, prosecutors said. [..]
A fifth bank, UBS, will also plead guilty on Wednesday to manipulating the London Interbank Offered Rate, or Libor, a benchmark rate that underpins the cost of trillions of dollars in credit cards and other loans. Federal prosecutors had previously agreed not to prosecute the Swiss bank over the Libor scheme. But in a rare stand against corporate recidivism, the Justice Department voided that non-prosecution agreement after learning that UBS was also taking part in the effort to manipulate currency prices.
The guilty pleas, which the banks are expected to enter in federal court in Connecticut on Wednesday, represent a first in a financial industry that has been dogged by numerous scandals and investigations since the 2008 financial crisis. Until now, banks have either had their biggest banking units or small subsidiaries plead guilty. But with the four banks charged with currency violations, the guilty pleas will come from their parent companies. [..]
For the banks, though, life as a felon is likely to carry more symbolic shame than practical problems. Although they could be technically barred by American regulators from managing mutual funds or corporate pension plans or perform certain other securities activities, the banks have obtained waivers from the Securities and Exchange Commission that will allow them to conduct business as usual. In fact, the cases were not announced until after the S.E.C. had time to act.
Senator Elizabeth Warren (D-MA) and Wall Street watchdog group Better Markets weighed in on the lack of any criminal prosecutions:
Better Markets called it a “slap on the wrist” and Sen. Elizabeth Warren (D-Mass.) said in an e-mail: “That’s not accountability for Wall Street. It’s business as usual, and it stinks.” [..]
Dennis Kelleher, president of Better Markets, a non-profit group, said that the Justice Department had not done enough, saying “it talks tough, but winks at Wall Street’s too-big-to-fail banks’ criminal conduct, structuring sweetheart deals to minimize the impact on the criminals.”
Kelleher said the fines alone wouldn’t deter future criminal acts and that the Justice Department should punish bank executives and their supervisors for bad behavior. “Banks don’t commit crimes, bankers do,” he said.
Warren said “the big banks have been caught red-handed conspiring to manipulate financial markets, and several have even admitted in court that they’re felons – but not a single trader is being held individually accountable, and regulators are stumbling over themselves to exempt the banks from the legally required consequences of their criminal behavior.”
At Esquire Politics, Charles Pierce is not impressed by Ms. Lynch:
What a fake. What a fraud. What an insult to any stick-up kid doing five-to-fifteen for robbing a bodega. The banks don’t even have to look between the cushions on the sofa for the loose change they’ll use to pay the fines. They get to use their stockholders’ money to pay the fine. [..]
This is altogether remarkable. Here we have a staggering series of crimes that did very real damage to thousands of people all over the world. Here we have a staggering series of crimes, but not a single identifiable criminal. Who rigged the markets? The bank buildings? A shadowy cabal of ledgers? Motorcycle gangs made up of quarterly reports? This is the only area of criminal justice where law-enforcement actively avoids identifying anyone as a criminal.
Let us face facts. Within these institutions, there have to be hundreds of people who were involved in some way with a scam this large. There were people who supervised those hundreds of people, and people who supervised them. Somewhere, in that mass of criminal activity, I’m willing to bet something substantial that a human being committed an actual crime.
But, no. “The banks” get fined. This is just too freaking hilarious.
After all this evidence and investigation, not one person has been arrested. Sure some were fired at insistence of some regulators, but never criminally charged. So, the crooks are still getting away with breaking the law. Fines are a joke. Most of these banks will recoup those fines in less than a day and, at the end of the year, deduct them as business losses, so the tax payer once again foots the bill. I would hardly call that a victory. It’s a joke.
May 01 2015
Last week the Senate finally confirmed Loretta Lynch as the 83rd Attorney General after a 5 month delay. She was sworn in on Monday by Vice President Joe Biden. The reasons the Republican majority made for the hold on her confirmation were baseless and revealed just how dysfunctional the congress really is. Using the fight over abortion provisions in an human trafficking bill that Democrats found untenable, looked more like hostage taking than politics. Ms. Lynch had sailed through her other confirmations with unanimous bipartisan support. She has a history of being tough on political corruption and police brutality. She famously prosecuted the New York City Police officers who had brutally abused Abner Louima and was investigating the officer involved in the choke hold death of Eric Garner last year.
But the one really good reason the Republicans had to not confirm her was never mentioned by them or the media, the banks. As the article by William K. Black, a professor of economics and law, discusses, “(Ms.) Lynch’s failure to prosecute HSBC and its officers exemplified a real Obama scandal, the effective end of the rule of law for criminal bankers.”
GOP opposition to Lynch was a missed opportunity
By William K. Black, Al Jazeera
The Republicans’ failed tactics against Loretta Lynch reveal the big banks’ hold on both parties
The reason Lynch was such a godsend to the GOP never appeared in the Times article: HSBC. The biggest bank in Europe and the most disreputable large bank in the world, HSBC was the subject of the most important case Lynch ever handled. It demonstrated that Lynch’s “formidable reputation as a prosecutor” is undeserved, making Republican opposition to her nomination legitimate. More important, her failure to prosecute HSBC and its officers exemplified a real Obama scandal, the effective end of the rule of law for criminal bankers.
Lynch’s sweetheart deal with HSBC, her indefensible reactions to the bank’s failures to comply even with the sweetheart deal and the bank’s continued commission of thousands of felonious transactions after the sweetheart deal offered Republican leaders the ideal circumstances to attack the Obama administration. The Republicans did not need to suddenly develop investigative skills and honest congressional reports. The Democrats, Lynch’s appointee as HSBC’s monitor and the whistleblowers have done all the heavy investigative lifting for the GOP. The ultrashort version is that HSBC and its personnel were caught red-handed having laundered over $1 billion for Mexico’s Sinaloa drug cartel – one of the most violent cartels in the world – and helped Sudan and Iran violate U.S. anti-terrorism and anti-genocide sanctions with impunity. This was all documented in a Senate investigation by former Sen. Carl Levin – a Democrat and Congress’ most respected and competent investigator – in a report that the Republicans could have joyfully quoted. The bank was found to have engaged in massive efforts to aid and abet tax fraud. HSBC’s monitor discovered that the bank was not complying with even the sweetheart nonprosecution agreement that Lynch negotiated. She nevertheless failed to prosecute any of the numerous felonies at HSBC outlined in the Levin report.
Remarkably, the supposedly liberal New York Times and GOP leaders have something in common: Both refused to mention HSBC as a key reason for rejecting Lynch’s nomination. What the GOP’s embarrassingly self-destructive strategy for opposing Lynch proves is that even when the Republicans have the perfect opportunity to embarrass the Obama administration and highlight one of its largest scandals – the failure to prosecute a single bank officer who led the most destructive epidemics of financial fraud in history that caused our Great Recession – the Republicans refused, lest they upset their leading source of political contributions. The approval of the Lynch nomination demonstrates that bipartisanship does exist on Capitol Hill: when it favors the big banks and their lobbyists
Prosecuting these bank criminals was too hard for former AG Eric Garner, it obviously will be for AG Lynch, as well. The banks not only own congress, they own the White House and the Department of Justice.
Mar 24 2015
There is a double standard when it comes to the Obama administration prosecuting individuals for leaking information under the Espionage Act of 1917. If you’re a general in the US military leaking information to a reprter or head of the CIA having an affair, it’s fairly safe to say that you won’t be prosecuted for espionage. The sweetheart deal that was given former CIA director and retired General David Petraeus is a prime example, not a day in jail and he is still in good graces with the White House. I guess when you know where all the bodies are buried you can get away with anything. But that doesn’t excuse the Obama administrations fervor for prosecution the whistleblowers who outed crimes and constitutional violations.
Obama’s war on whistleblowers leaves administration insiders unscathed
By Spencer Ackerman and Ed Pilkington, The Guardian
Five key political players enjoy ‘virtual impunity’ – while four lower-level figures are in prison or facing time
Since Barack Obama entered the White House in 2009, his government has waged a war against whistleblowers and official leakers. On his watch, there have been eight prosecutions under the 1917 Espionage Act – more than double those under all previous presidents combined.
And yet other apparent leaks have gone entirely unpunished or have been treated, as in the case of General David Petraeus, as misdemeanors. As Abbe Lowell, lawyer for one of the Espionage Act eight, Stephen Kim, has argued in a letter to the Department of Justice, low-level officials who lack the political connections to fight back have had the book thrown at them, while high-level figures have been allowed to leak with “virtual impunity”.
Lawyers for CIA Leaker Cite Selective Prosecution After Petraeus Plea Deal
By Peter Maas, The Intercept
Lawyers for Jeffrey Sterling, a former CIA official convicted earlier this year of leaking classified information to a New York Times reporter, have requested a reconsideration of his conviction because two former generals, David Petraeus and James Cartwright, have received far more lenient treatment for what they call similar offenses. [..]
In January, Sterling was convicted by a jury on nine criminal counts, including violations of the Espionage Act, for leaking classified information to Times reporter James Risen about a CIA effort to undermine Iran’s nuclear program. Sterling is to be sentenced in April and faces a maximum sentence of decades in jail. In a statement after the verdict was announced, Attorney General Eric Holder called the guilty verdict a “just and appropriate outcome.”
But the government is coming under increasing criticism for its uneven prosecution of leakers.
Earlier this month, Petraeus, who led U.S. forces in Iraq and Afghanistan and was the director of the CIA, reached an agreement with prosecutors in which he pleaded guilty to a single misdemeanor charge of mishandling classified information when he gave his lover and authorized biographer, Paula Broadwell, eight notebooks filled with highly-classified information about military plans and secret programs, covert agent names, and confidential discussions he had with senior officials including President Obama. Petraeus, who resigned from the CIA when his affair with Broadwell was revealed, also admitted to lying to the FBI, but he was not charged for that. The plea agreement calls for two years probation and a $40,000 fine but no jail time.
No charges have been filed against Cartwright even though it has been reported that federal prosecutors believe he leaked highly classified information to Times reporter David Sanger about a joint effort by the U.S. and Israel to cripple Iran’s nuclear centrifuges through a cyber-attack with a computer worm called Stuxnet. According to The Washington Post, the FBI has interviewed Cartwright on at least two occasions but has stopped short of indicting him.
National Security & Human Rights director Jesselyn Radack, who is also the lawyer for whistleblowers Edward Snowden, Thomas Drake and John Kiriakou, spoke with Democracy Now!‘s Amy Goodman and Aaron Maté about the White House’s double standard.
The full transcript can be read here
It’s OK if you’re a white general and know where all the bodies are.
Mar 06 2015
Former Director of the CIA and four star general David H, Patraeus has reached a plea deal with the Department of Justice for passing classified information to his mistress in exchange for sexual favors. He will plea to one misdemeanor count of unauthorized removal and retention of classified material and a $40,000 fine. No jail time.
This is what he handed his girlfriend:
The Justice Department and Federal Bureau of Investigation alleged back in 2012 that Petraeus gave secret information to Paula Broadwell, but the seriousness of the information wasn’t clear until now.
While he was commander of coalition forces in Afghanistan, Petraeus “maintained bound, five-by-eight inch notebooks that contained his daily schedule and classified and unclassified notes he took during official meetings, conferences and briefings,” the U.S. Attorney’s Office for the Western District of North Carolina writes in a statement of fact regarding the case.
The notebooks had black covers with Petraeus’s business card taped on the front of each of them.
All eight books “collectively contained classified information regarding the identifies of covert officers, war strategy, intelligence capabilities and mechanisms, diplomatic discussions, quotes and deliberative discussions from high-level National Security Council meetings… and discussions with the president of the United States.”
The books also contained “national defense information, including top secret/SCI and code word information,” according to the court papers. In other words: These weren’t just ordinary secrets. This was highly, highly classified material.
Besides lying to the FBI twice, this man compromised lives of undercover operatives, the troops operating in the field and national security and all he gets is a slap on the wrist. Pater Maas, writing at The Intercept, says that this deal reveals a two tiered justice system for leaks. He cites the penalties handed down to other defendants who did far less than the general:
For instance, last year, after a five-year standoff with federal prosecutors, Stephen Kim, a former State Department official, pleaded guilty to one count of violating the Espionage Act when he discussed a classified report about North Korea with Fox News reporter James Rosen in 2009. Kim did not hand over a copy of the report – he just discussed it, and nothing else – and the report was subsequently described in court documents as a “nothing burger” in terms of its sensitivity. Kim is currently in prison on a 13-month sentence. [..]
In 2013, former CIA agent John Kiriakou pleaded guilty to violating the Intelligence Identities Protection Act by disclosing the name of a covert CIA officer to a freelance reporter; he was sentenced to 30 months in jail. Kiriakou’s felony conviction and considerable jail sentence – for leaking one name that was not published – stands in contrast to Petraeus pleading guilty to a misdemeanor without jail time for leaking multiple names as well as a range of other highly-sensitive information. [..]
In 2013, Army Private Chelsea Manning, formerly known as Bradley Manning, pleaded guilty to violating the Espionage Act by leaking thousands of documents to Wikileaks, and she was sentenced to 35 years in prison. Manning received a harsh sentence even though then-Defense Secretary Robert Gates said in 2010 that the leaks had only “modest” consequences.
In an interview at The Guardian, Pentagon Papers leaker, Daniel Ellsberg commented on Edward Snowden and former CIA analyst Jeffery Sterling:
The factual charges against [Edward Snowden] are not more serious, as violations of the classification regulations and non-disclosure agreements, than those Petraeus has admitted to, which are actually quite spectacular. [..]
Jeffrey Sterling, a former CIA officer, was also just convicted of leaking classified information to New York Times journalist James Risen last month, “having first revealed it to Congress, as I did”, according to Ellsberg. Sterling was convicted of felony counts under the Espionage Act, and faces sentencing at the end of April. Ellsberg says Sterling’s “violations of security regulations were in no way more serious than what Petraeus has now admitted to”, and that, while it’s too late to do anything about his conviction, the judge should take the Petraeus plea bargain into account at his sentencing.
“If disclosing the identities of covert agents to an unauthorized person and storing them in several unauthorized locations deserves a charge with a maximum sentence of one year,” Ellsberg said, “then Edward Snowden should face not more than that same one count.”
As in the past when those in power violate the law and lie to congress and the FBI there are little to no consequences. So much for the Obama administration’s respect for the rule of law.
Feb 10 2015
It seems that since 2010, the US Department of Justice has known that one of the largest banks in Europe has been sheltering money for dictators and arms dealers, among others:
Banking Giant HSBC Sheltered Murky Cash Linked to Dictators and Arms Dealers
By Gerard Ryle, Will Fitzgibbon, Mar Cabra, Rigoberto Carvajal, Marina Walker Guevara, Martha M. Hamilton and Tom Stites, February 8, 2015, The International Consortium of Investigative Jouranlists
Team of journalists from 45 countries unearths secret bank accounts maintained for criminals, traffickers, tax dodgers, politicians and celebrities
Secret documents reveal that global banking giant HSBC profited from doing business with arms dealers who channeled mortar bombs to child soldiers in Africa, bag men for Third World dictators, traffickers in blood diamonds and other international outlaws.
The leaked files, based on the inner workings of HSBC’s Swiss private banking arm, relate to accounts holding more than $100 billion. They provide a rare glimpse inside the super-secret Swiss banking system – one the public has never seen before. [..]
These disclosures shine a light on the intersection of international crime and legitimate business, and they dramatically expand what’s known about potentially illegal or unethical behavior in recent years at HSBC, one of the world’s largest banks.
The leaked account records show some clients making trips to Geneva to withdraw large wads of cash, sometimes in used notes. The files also document huge sums of money controlled by dealers in diamonds who are known to have operated in war zones and sold gemstones to finance insurgencies that caused untold deaths.
These are some of the key findings the journalists found:
HSBC Private Bank (Suisse) continued to offer services to clients who had been unfavorably named by the United Nations, in court documents and in the media as connected to arms trafficking, blood diamonds and bribery.
HSBC served those close to discredited regimes such as that of former Egyptian president Hosni Mubarak, former Tunisian president Ben Ali and current Syrian ruler Bashar al-Assad.
Clients who held HSBC bank accounts in Switzerland include former and current politicians from Britain, Russia, Ukraine, Georgia, Kenya, Romania, India, Liechtenstein, Mexico, Lebanon, Tunisia, the Democratic Republic of the Congo, Zimbabwe, Rwanda, Paraguay, Djibouti, Senegal, Philippines and Algeria.
The bank repeatedly reassured clients that it would not disclose details of accounts to national authorities, even if evidence suggested that the accounts were undeclared to tax authorities in the client’s home country. Bank employees also discussed with clients a range of measures that would ultimately allow clients to avoid paying taxes in their home countries. This included holding accounts in the name of offshore companies to avoid the European Savings Directive, a 2005 Europe-wide rule aimed at tackling tax evasion through the exchange of bank information.
If this seems all too familiar, that’s because it is. HSBC was fined $1.6 billion in June of 2013 after it reached an agreement with the US Department of Justice which resolved charges it enabled Latin American drug cartels to launder billions of dollars
HSBC was accused of failing to monitor more than $670 billion in wire transfers and more than $9.4 billion in purchases of U.S. currency from HSBC Mexico, allowing for money laundering, prosecutors said. The bank also violated U.S. economic sanctions against Iran, Libya, Sudan, Burma and Cuba, according to a criminal information filed in the case. [..]
Under a deferred prosecution agreement, the U.S. allows a target to avoid charges by meeting certain conditions — including the payment of fines or penalties — and by committing to specific reforms.
So just what was the Department of Justice and the IRS doing with this information about the bank and its clients? Apparently not much.
Confronted by the Guardian’s evidence, HSBC admitted wrongdoing by its Geneva-based subsidiary. “We acknowledge and are accountable for past compliance and control failures,” the bank said in a statement. The Swiss arm, the statement said, had not been fully integrated into HSBC after its purchase in 1999, allowing “significantly lower” standards of compliance and due diligence to persist. [..]
The 2012 settlement was overseen by Loretta Lynch, who was then US Attorney for the Eastern District of New York. Lynch is currently Barack Obama’s current nominee for attorney general.
At the time, the HSBC settlement was heavily criticised by both Republicans and Democrats for allowing the bank to escape criminal indictments and keep the charter which enables it to operate in the US. Lynch and other senior DoJ officials defended the deal, pointing out it committed HSBC to a five-year plan to stamp out money laundering and other illicit practices, an ongoing process that is being overseen by an independent, court-appointed monitor. [..]
The DoJ was under pressure to go beyond financial penalties – to bring criminal charges against HSBC or its bankers – in July 2012, after the Senate’s permanent subcommittee on investigations published its crushing 330-page report documenting how the bank’s lax anti-money laundering controls had been exploited by drug traffickers. [..]
The settlement proved controversial because it stopped short of criminally indicting the bank or its executives; lawmakers from both parties complained it revealed some Wall Street institutions were considered “too big to jail”. [..]
HSBC is now just over two years into its reform plan, and has been deemed to be complying with the terms of the settlement. However the court-appointed monitor, Michael Cherkasky, who oversees a team of banking investigators who review HSBC’s changes, has expressed some concern over the pace of reform. Cherkasky’s most recent assessment of HSBC’s ongoing efforts to clean up its act has once again concluded it could do better, according a recent report in the Wall Street Journal which cited people familiar with its findings.
CBS’s “60 Minutes” aired The Swiss Leaks a report by Bill Whitaker that examined “HSBC’s business dealings with a collection of international outlaws.”
Transcript can be read here
The sickening part of this is the US Justice Department was well aware of this when they settled the HSBC’s drug laundering case in 2013. Also. HSBC is one of the institutions that is refusing to handle the money of legitimate marijuana businesses.
Nice going, Eric.