HSBC – FU

HSBC’s old headquarters in Shanghai

If death and taxes are inevitable so too is the corruption of banks. What a surprise. A bank that is as crooked as a bent penny. And we are to believe the HSBC has altered its ways, joined the principled, the upright, and the true.

Dear old BBC and some newspapers would have us believe it’s a Scottish bank. ‘It has betrayed its Presbyterian principles.’ Pardon? Founded it was by a Scotsman in 1865 but not in Scotland. The BBC was founded by a Scotsman and we all know how pure-as-driven-snow is that institution. The man who presided over the HSBC corruption is an Anglican priest, Lord Stephen Green.

God versus Mammon

Green, born in 1948 and Oxford educated, is not slow to praise banking ethics: he has written books on ethics in finance. In one, called Good Value: Reflections On Money, Morality And An Uncertain World, Green wrote: “We need to be able to look ourselves in the mirror and ask two questions about our role in the global bazaar: how is what I am doing contributing to human welfare? And why am I specifically doing it?”

Sure, HSBC began life as the epitome of parsimonious rectitude, but like the BBC, it got a taste for grossly inflated salaries and massive bonuses that inflate egos.

The acronym HSBC hides its origins, the Hong Kong and Shanghai Banking Corporation. Hong Kong, England’s former colony where money is king, profit everything. When China retook possession of Hong Kong it was signifying to the world it too is happy to deal for the back pocket. Ask yourself, how did HSBC manage to stay unaffected by China’s takeover?

I have stayed in Hong Kong. Everything, absolutely everything has a price. Even an involuntary sneeze has monetary value if the guy next to you can extract a dollar for the hankerchief he is holding in front of your face.

Shanghai has almost readied a gem of Chinese historic culture for its population to admire and participate, a Disneyland complex at almost $4 billion. Shanghai and Hong Kong best pals with Swiss banks – the same who kept secret art treasures looted by the Nazis from their Jewish victims. Swiss banks have the HSBC in trouble again.

Did the banks first approach the HSBC, or did the HSBC first approach the Swiss banks with a deal to hide tax identified earnings from its wealthy clients?

The excuse

HSBC’s response to the Swiss corruption is wearily familiar. It is almost a carbon copy of the line the bank took after its operations in Mexico and Colombia were accused of being wide open to money laundering. We were told then that HSBC’s ‘federated corporate’ structure was partly to blame. It prevented group management getting to grips with tricky local details, such as spotting those customers running multi-billion-dollar drug cartels. I repeat, they missed multi-billion schemes going through their books. The mea not culpa used to be along the lines of, the problem arises from a troublesome provincial renegade working on his own. Now it’s the entire store.

Federated structures do not arise out of thin air. Boards of directors choose to organise their business that way. Why do that and leave their bank ‘open’ to corruption? I think I can answer that. Far from being founded on Presbyterian principles, (in the way SAAB cars boasted about being  built on aircraft principles) it was run as if a colonial empire. Senior officials were posted anywhere in the world to create business ‘the HSBC way.’

Edinburgh calling

Incidentally, HSBC opened a branch in Edinburgh, in Hanover Street. It closed a few years later and moved to smaller premises. Were there not enough crooks and criminals to make the venture profitable? You can find customer reports on the internet praising its nice girls at the till. Here is one significant comment:

“One of the most common concerns of the newly arrived traveller to Edinburgh, or indeed any foreign city, is finding an address, getting proof of that address, finding a job, and sorting out a bank account. HSBC are onto that, and have a ‘passport’ account that uses your native country bank account as proof of who you are and where you come from.”

Toxicity

HSBC was toxic with sub-prime effluent. In 2003 it bought an American mortgage lending company. Household Finance was a US sub-prime lender that had been in newspapers a long time accused of predatory practices. It had debts that would mount to over $11 billion by 2007. HSBC’s intention was that a rock-solid balance sheet would transform Household’s cost of funding and the operation could be adapted to HSBC’s banking model. At least, that’s what was said publicly, and supported by Green.

HSBC had little experience in the US and none in its sub-prime lending industry. The cultural shock was embodied in the form of Household boss, William Aldinger III, whose first salary was humongous, and who was soon given the chance to earn $57m over three years. He became the highest paid director of a UK company. Again, parallels with the exponential rise of salary scales and fall of the BBC are remarkable, once Michael Grade took over the BBC.

Talent to steal

Well, if we want talented thieves to run our companies we must be prepared to pay them their market value. A billion here, a billion there, very soon we will be talking about real money. Welfare claimants guilty by dint of being on welfare. A jerk with a billion pounds in a Swiss bank to avoid tax is not guilty of anything.

Aldinger installed, HSBC destroyed its reputation for parsimony. To emphasis the negative, it was revealed in the takeover documents that Aldinger was in the habit of spending $100,000 a year on personal use of corporate jets. He set the employee standard.

The accountancy company, Arthur Anderson once sponsored a major production I produced and directed. As I left their considerable-sized offices in Glasgow I asked my colleagues a rhetorical question. “I don’t understand,” I said, “They’re a company that audits and signs off on company accounts. How did they manage to acquire such massive headquarters? What fees do they charge just to heat it?”

I said almost the same thing when the Royal Bank of Scotland built its financial headquarters on hitherto sacrosanct green belt on the edge of Edinburgh. (Did money or favours change hands with the council?) I asked, “If they (a bank) are charged with looking after people’s savings, where do they get the money to build marble clad atriums?”

In the latest scandal no one has been charged with theft. Why should they be charged? On taking office, George Osborne, self-style scourge of corrupt banks, gave them fifteen years to ‘clean up their act’ voluntarily. Fifteen long untroubled years.  Why yes, I stole a million pounds, officer. Give me a year and I’ll secrete it away in a safe place, and be off to the Bahamas out of everybody’s sight and mind. Job done.

Lord Stephen Green, former chairman of HSBC

Green as a banknote

Notice how the then chief executive of HSBC, Lord Stephen Green, refuses to answer reporter’s questions about the manner in which the HSBC did business under his watch? Green has so far declined to comment on the affair: “As a matter of principle, I will not comment on the business of HSBC, past or present.”

Remember, removing money that should belong to the public purse is not criminal. It’s ‘misconduct.’ Encouraging criminals to hide that money is … what, exactly?

Last time, in 2012, the USA fined HSBC $1.9 billion but reserved criminal prosecution. This time around the USA Department of Justice might not be so generous.

Anyhow, refusing accountability and dodging reporters worked for Leon Brittan when confronted about his alleged paedophilia, and loss of files that reported child abuse by members of parliament. The inquiry managed to delay the start of investigation until he died. Lord Green is now a member of the House of Lords.

Green is the man who could provide a first-hand account of why HSBC failed to reform its Swiss private bank, and why the internal group audit functions – described as “centrally controlled” – allowed clients to walk out of branches with wads of foreign currency. In his terse  expression of regret following HSBC’s disgrace in Mexico and Colombia, Lord Green spoke coyly in 2012 of “failures of implementation” but carefully avoided questioning.

Once more we see how the law does not apply to the rich and powerful. We see how our society is organised to benefit and protect capital.

As Margaret Hodge says, chairperson of the public accounts committee, “Banks were “aggressive protagonists”, advising wealthy clients how to avoid and evade paying tax.”

We are in jeopardy of ignoring these events so regular are their occurrence. HSBC says that is all in the past. A whistle-blower has said that tax evasion continues to this day.

A confederacy of thieves.

The files – obtained through an international collaboration of news outlets, including the Guardian, the French newspaper Le Monde, BBC’s Panorama, and the Washington-based International Consortium of Investigative Journalists – reveal that HSBC’s Swiss private bank did the following

• Routinely allowed clients to withdraw bricks of cash, often in foreign currencies of little use in Switzerland. Aggressively marketed schemes likely to enable wealthy clients to avoid European taxes.
• Colluded with some clients to conceal undeclared “black” accounts from their domestic tax authorities.
• Provided accounts to international criminals, corrupt businessmen and other high-risk individuals.

Wrongdoers

HSBC, the world’s second largest bank, now admits wrongdoing by its Swiss subsidiary. “We acknowledge and are accountable for past compliance and control failures.”

So far, HSBC has been caught up in FX market rigging, Libor fixing, the misselling of investment products, money laundering, and financing drug cartels and terrorism. And it still calls itself a bank. What next?

The odour

It stinks. It stinks to high heaven. Our banks are corrupt. And Westminster will not do a damn thing to bring them to heel, reorganise them, or throw the guilty in the clink.

Accountancy giant Arthur Anderson prided itself on its high auditing standards. The colossal scandal that was Enron brought it down. Then it was discovered the company was loose and free with lots of flaky client accounts it managed, not only Enron’s. It was taken to court, Arthur Anderson LLP v the USA. It did not survive the humiliation. Though it is neither dissolved nor bankrupt, it barely exists as a small one-office training company.

HSBC exists to this day and still trades.

Scotland had an opportunity to rid itself of the gangrene in our society last September. How did you vote? And while you reflect on that, HSBC is a British bank, about a Scottish as a Polish sausage.

HSBC boasts it never knocked on the door of the Treasury for help when it got into trouble. Well, no. It had ‘other’ means of  support. Nevertheless, it helped steal billions from the public purse same as other banks. HSBC FU.

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