HSBC, "Dope, Inc.'s Central Bank," in the Docket
July 18, 2012 • 9:43AM

From 1978 to 1980, the LaRouche movement's U.S. Labor Party, New York State Banking Superintendant Muriel Siebert, and the Independent Bankers Association of N.Y. led a hard-fought battle to stop the notorious Hong Kong and Shanghai Bank from grabbing a strategic position in the U.S. banking system, through the purchase of a majority stake in the nation's 13th largest bank, NY's Marine Midland. The LaRouche movement issued a dossier, based on its explosive best-seller, Dope, Inc., which documented that Hong Shang, today known as HSBC, had been founded as the "Central Bank" of the British Empire's opium trade, and was deploying in as the front-end of a British move to remake the U.S. banking system under British control.

With enemy aid by then-Federal Reserve Chairman Paul Volker, that specific battle was finally lost in 1980.

A picture of just how ugly were the ensuing consequences of that defeat, and the systematic takedown of U.S. sovereign control over its banking system culminating in the 1999 repeal of Glass-Steagall which followed, was laid before the American people this Tuesday in the hearing held by the Senate Permanent Subcommittee on Investigations (SPSI) on "U.S. Vulnerabilities to Money Laundering, Drugs and Terrorist Financing: HSBC Case History."

Top officials of HSBC bank were grilled for hours by SPSI co-chairs Senators Carl Levin (D-MI) and Tom Coburn (R-OK), on documentation assembled by the committee of how HSBC had knowingly subverted U.S. laws to launder billions, minimally, of drug cartel and terrorist monies through the U.S. banking system, in the period of the last decade. The bank which ran the 19th- Century opium trade, controls 60% of money laundering for the drug trade coming through Mexico into the U.S., a former HSBC officer told higher-ups. And 80% of narcotics entering the United States today enters through Mexico. From mid-2006 until mid-2009, HSBC's U.S. affiliate, HBUS, cooperated with HSBC's Mexican affiliate, HBMX, in $15 billion in bulk cash transfers — that is, transporting physical dollar bills across the border. At its peak, HBMX, which operated freely with HBUS, operated 50,000 accounts holding up to $2.1 billion in its "so-called" Cayman Islands branch; "so-called," Sen. Levin pointed out, because this was a non-existent shell company, with no office nor employees in the Caymans at all, as everything was done from the Mexican branch.

That is only a small sampling of the evidence laid out in the hearing and the 335-page report SPIS released there, of how HSBC has been facilitating drugs and terrorism financing through the U.S. banking system. The five HSBC officials hauled before the committee "apologized" for what they deemed inexplicable lapses in professionalism, acknowledged "by hindsight" that things sure looked bad, and promised that personnel, practices, and the bank's "culture" have totally changed. Even HBMX's remaining 20,000 accounts in the Cayman Islands are going to be closed, just as soon as they can, they announced.

But the underlying issue raised at the hearing extends beyond HSBC's brazen criminality, to the global banking system itself, in which HSBC's crimes typify "business as usual." In his opening statement, Sen. Levin made the point that HSBC is not the only "global bank" which has established a U.S. affiliate to gain access to our banking system, and then play "fast and loose" with U.S. rules, "aiding and abetting" drug cartels and terrorists.

He returned to that more sharply, after former U.S. Treasury Undersecretary for Terrorism and Financial Intelligence (under both George W. Bush and Barack Obama), Stuart Levey, who was reincarnated six months ago as HSBC's Chief Legal Officer, testified that the "reformed" HSBC is fully committed to providing U.S. law enforcement agencies with all information that HSBC is "legally permitted" to provide.

Sen. Levin jumped: "Legally permitted?" By the likes of the Cayman Islands? The international banks have established a system which moves transactions across the globe, across jurisdictional lines, in seconds, but when they are asked for information for law enforcement reasons, it grinds to a halt, and banks point to jurisdictional rules and local laws, Levin stated.

Another exchange, this one between Levin and the former head of HSBC's Bank Notes division, the mafiosi-like Christopher Lok, over a prior e-mail from Lok to another bank official included in the Exhibits, captured the outlook of these bank thugs. Lok derided an official who had suggested HSBC should not cooperate with a specific bank where corruption "could be rampant," with the argument: How can malfeasance not be expected at such a large bank?