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Nicholas Wilson and the HSBC Blues
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I have a piece in CounterPunch magazine about the constellation of whistleblowers surrounding HSBC Bank, HSBC and the Five Whistleblowers. Buy it!

HSBC has yet to be brought to book in any serious way for a litany of transgressions in multiple jurisdictions.

When I say “not in a serious way” while cognizant of the fact that HSBC got dinged with a $1.9 billion fine by the US government in 2012, it’s clear that I consider HSBC to be a dirty bank of impressive scope.

Again, my opinion, I think HSBC USA should have been shut down for the money laundering, sanctions avoiding, and garden variety fraud disclosed in the 2010 Levin report and by the contributions of at least two US whistleblowers.

It’s a pleasure to see my conclusions shared by the working level grunts in the Department of Justice. The Republican side of the House Financial Services Committee issued a damning report on the handling of the HSBC case by Eric Holder, who overruled his prosecutors on the major legal sanctions they proposed and gave HSBC its pretty sweet deal instead.

David Dayen ran the story at The Intercept. Good for him! Haven’t seen anybody else pick it up.

The smoking gun, reproduced in the committee report, was a Dear Ben (Bernanke) letter written by the UK Treasury Secretary, George Osborne. Osborne’s declaration that hammering HSBC might cause global financial collapse was the justification for the decision to go easy on HSBC.

Funny thing is, couple years later, the US government pounded BNP-Paribas with an $8.9 billion fine and cut them off from US dollar transactions for a year. The bank–and the world–survived.

So you have to wonder if shutting down HSBC’s US operation (which I characterized in my piece as a “dumpster fire of a bank” built on the less than heroic foundations of the acquisition of Marine Midland Bank ) would really have brought the world to its knees.

More likely, the UK just begged the US to do it a solid as America’s bestie ally, and the US obliged.

It was also alleged but not confirmed that David Cameron flew to Washington and personally lobbied Barack Obama to go easy on HSBC when it looked like some serious, serious penalties were being bruited about.

HSBC is clearly a big, resourceful outfit that fights back when it’s threatened by regulators. In addition to lawyering up, HSBC is allegedly not shy about wielding political influence.

The most detailed record of HSBC’s alleged employment of influence to block unfavorable coverage and inconvenient investigations is provided by the English whistleblower in my piece, Nicholas Wilson.

Wilson is that most rare and precious of whistleblowers: the insider who did the right thing from the git-go, went through channels, and can’t be accused of having a personal stake either in avoiding prosecution or garnering a financial award.

Which means, apparently, that he must be determinedly ignored and, when necessary, dismissed as a crank.

The fiddle that Wilson objected to and attempted to bring to the attention of the authorities relates to HSBC’s disastrous foray into the downmarket world of consumer finance. During the pre Great Recession go-go years, HSBC bought the U.S. Household Finance Corp. (which was down on its financial and regulatory luck thanks to extensive predatory lending litigation) and looked to fix it up to become a player in the profitable world of lending money to poor people at high interest in the UK as well as North America.

The adventure ended in disaster, but its consequences live on.

One wrinkle HSBC brought to the business in the UK was, when it came time to collect from tardy borrowers, having the solicitors handling the work add a 16.4% charge to the outstanding amount and deduct their expenses from the recovery. This contingency arrangement is not supposed to be done, since it creates an improper incentive for the solicitors to get aggressive and cut corners to get their money. The client—HSBC—is supposed to pay the solicitor for its services whether or not recovery happens.

Wilson, one of the lawyers involved, advised his firm and HSBC that the arrangement was illegal in 2003. As a result, he became a pariah (his web handle, “Mr. Ethical”, was a term of mockery employed by one of his colleagues) and exited his firm in 2006 for a life of frustration and severely straitened circumstances as a whistleblower. Thirteen years after the original incident, Mr. Wilson is near the end of a long and rather frayed rope.

HSBC’s solicitors continued to impose the contingency fees until 2010 when the UK government’s Office of Fair Trading confirmed Wilson’s original finding against HSBC that the charges were improper.

Redress for customers and vindication for Mr. Wilson have not been forthcoming.

The finding that the charges were improper simply instructed HSBC and its solicitors to cease applying them. The ruling did not address the fact that HSBC, thanks to Mr. Wilson, had been aware of the illegality of the charges seven years prior, and provided no mandate for HSBC to clear up its past mess—or, indeed its ongoing mess.

Needless to say, refund of previously collected charges was not on the agenda.

Wilson tried to change that, bringing the case before a multitude of government agencies.

It appears the bank is not interested in opening this can of worms, which would involve refunds of payments and interest to injured customers of up to £1 billion by Wilson’s estimate. It is helped by the rather Swiss-cheesy/loophole ridden nature of the British laws relating to business conduct, and the fact that the British regulatory and criminal authorities evidently have no interest in pursuing this case.

The determined, perhaps even malicious buckpassing between the Serious Fraud Office, Financial Conduct Authority, and City of London Police (City of London, not Metropolitan London; the City of London is the bankers’ own little corner of heaven and has its own police force) as to who should pursue Wilson’s allegations (answer: not me; somebody else) are darkly amusing, if you don’t happen to be Nicholas Wilson. If you are Nicholas Wilson, it’s an excruciating hegira of frustration and futility


“Regulatory capture” i.e. the enthusiasm of government departments for doing the bidding of the corporations they are expected to watchdog, is an old story in the United States, as is the immense policy influence wielded by the executives of the “Too Big To Fail” banks.

Same in the UK, apparently.

In one documented instance the British government responded to an inquiry concerning Wilson’s allegations by cut-and-pasting HSBC’s own Public Relations Department boilerplate into its email reply.

Mr. Wilson’s as yet unsuccessful efforts to bring HSBC to book has made him a close observer of what is apparently an unprecedented symbiosis between David Cameron’s government and HSBC, one that ensures that HSBC receives VIP treatment both from government agencies and the British media.

The intimate relationship between HSBC and the Tory government is pretty well documented by the elevation of HSBC’s chairman, Stephen Green to a Lordship and Cabinet post by Cameron, and by the HSBC taking on Jonathan Evans, the head of MI5, as a director when he left his government job.

The most irregular HSBC-related move by the Cameron administration involves the appointment of Rona Fairhead as Chair of the BBC Trust. Fairhead was a HSBC US director at the time of the $1.9 billion unpleasantness. Subsequently, she was parachuted into the job of Chair of the BBC Trust by some high-level jiggery-pokery (it’s a civil service post with a mandated open search; Fairhead was never shortlisted for the job but somehow got it).

This appears to be an exercise in elite charity. Well, maybe a coverup. Fairhead, as the HSBC director who had headed HSBC’s audit and risks committees, had to take the fall for the massive tax evasion scheme run (apparently without the inconvenience of an audit) out of HSBC Switzerland and revealed by yet another whistleblower, Herve Falciani.

One can imagine that it was a matter of some interest that Fairhead a) leave quietly and b) end up in a comfortable berth, thereby sidestepping the imputation that she was being purged for culpable involvement in a catastrophic, systemic shareholder-suit-worthy failure originating not only at the very top of the enterprise but in the directorate charged with protecting the interests of the stock-owning punters.

The continuation of her directorship (and its £334,000 in compensation) while she did her BBC job (her official departure from the HSBC board finally occurred at the 2016 annual meeting) no doubt contributed to her sense of satisfaction with HSBC’s treatment. As did the additional £110,000 per annum she received for working a three-day week at the Beeb while winding down her career at HSBC.

According to Wilson’s observation, negative coverage of HSBC has essentially vanished from the BBC since Fairhead came on board.

As he points out, one fallout of the American unpleasantness was a lawsuit by survivors of victims slaughtered by the Mexican narcos who were laundering money through HSBC (the favored branch, by the way, installed special enlarged teller windows to accommodate the standard-sized boxes of cash delivered by the gangs for deposit).

Everybody else reported it. Everybody but the BBC, that is, judging by Google.

It pays to be a close observer to document the atrocities. For the Internet impaired, BBC Radio 4 describes the front pages of the various British papers on its nightly radio show. On July 25, 2015 it told listeners that The Sun was leading with an exciting story on how British shops might be allowed to stay open 24/7, “the biggest High Street shakeup in a generation”.

According to Wilson, the actual front page was this:


Not just the BBC. Coverage of Wilson’s allegations are virtually non-existent in the UK, not necessarily for lack of interest. According to Wilson, both Private Eye and the Sunday Times completed investigatory projects that never saw the light of day.

One possible upside to the Brexit cataclysm is that, maybe, in a few months the UK, or what’s left of it, will have a Labour government under Jeremy Corbyn, and regulators interested in using their powers to investigate the dealings of HSBC.

That’s a hearing that Nicholas Wilson and the victims of the HSBC scheme, who’ve been waiting—and paying—for over a decade, deserve.

It also would provide another window onto the dark world of HSBC, one that I think the world could use.

You can view Wilson’s extensive dossier on his case at his website, Mr. Ethical. And you can support his work with a contribution.

(Republished from China Matters by permission of author or representative)
• Category: Foreign Policy • Tags: George Osborne, HSBC, Nicholas Wilson 
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  1. Anonymous • Disclaimer says:

    One possible upside to the Brexit cataclysm is that, maybe, in a few months the UK, or what’s left of it, will have a Labour government under Jeremy Corbyn, and regulators interested in using their powers to investigate the dealings of HSBC.

    But Corbyn is under heavy attack, for not really clear reasons… or are they clear?

  2. “Funny thing is, couple years later, the US government pounded BNP-Paribas with an $8.9 billion fine and cut them off from US dollar transactions for a year. The bank–and the world–survived.”

    I suppose it was just a coincidence that after the fining a US practise Hellfire missile being sent back to the US found its way in Paris onto a flight to Cuba. Funny how these things happen.

  3. @Anonymous

    If Labour gets any more leaders like Blair, there will be no Labour to represent. They should be grateful for Mr. Corbyn.

  4. anonymous • Disclaimer says:

    Stuart Levey

    Acting Treasury Secretary[edit]
    On January 15, 2009 President-elect Barack Obama designated Levey to serve as Acting Treasury Secretary until Obama nominee Timothy Geithner was confirmed to the post.[3] Geithner was confirmed on January 26.[4]

    Under Secretary for Terrorism and Financial Intelligence

    As the first Under Secretary of the Treasury for Terrorism and Financial Intelligence, from July 2004, Levey was responsible for creating a new office to lead the Treasury Department’s revitalized post-9/11 national security mission. Levey is credited with developing and executing financial strategies to counter threats to U.S. national security and protect the integrity of the international financial system. [snark disabled]

    He has also been recognized for his efforts in leading the U.S. government’s efforts to disrupt financial networks supporting terrorist organizations; developing and implementing financial measures against proliferators of weapons of mass destruction; and playing a central role in U.S. strategies to pressure the regimes in North Korea, Iran and elsewhere. He is credited, in particular, with designing the financial strategy that resulted in tremendous pressure on Iran’s economy and its isolation from the international financial system.

    One of Levey’s innovations was harnessing the private sector to enhance the effectiveness of governmental measures. He “led an effort to convince foreign banks to cease conducting business with Iran until that country agreed to comply with international banking standards. By showing companies and banks that doing business in Iran has financial and diplomatic repercussions, he has convinced corporations to cut off business with Iran.” TFI’s efforts received support from both Republicans and Democrats. Levey, a Bush appointee, was asked to remain in his position by the Obama Administration.

    TFI, through its economic sanctions, put pressure on countries such as North Korea, Iran,[16][17] and Libya TFI was responsible for leading the government’s efforts to cut off financing to terrorist organizations such as al Qaeda, Hamas and Hezbollah. In pursuing that effort against al Qaeda, Levey focused attention on wealthy Gulf-based donors, particularly from Saudi Arabia.[19] He was once quoted as saying,”If I could somehow snap my fingers and cut off the funding from one country, it would be Saudi Arabia.” No one identified by the United States and the United Nations as a terror financier has been prosecuted by the Saudis, he elaborated.[20] He later acknowledged significant improvement in the partnership between the U.S. and Saudi Arabia in targeting al Qaeda financing. . . .

    Chief Legal Officer, HSBC Holdings

    Since January 2012, Levey has served as the Chief Legal Officer of HSBC Holdings plc, a global bank with 257,000 employees across 67 jurisdictions and $81 billion in operating income in 2014.[26] He manages a legal department made up of more than 800 lawyers in more than 50 countries. He is also a Group Managing Director of the firm.
    . . .

  5. Mr Lee is obviously in some fantasy land. Brexit has revealed that both Corbyn and most of his opponents have lost the support of the white working class, particularly in the North of England. Without this last group there can be no Labour Party, merely a coalition of warring fringes.
    UKIP is already second to Labour in 150 constituencies in the y North and will wipe Labour out at the next general election.
    And why should a Labour government, whether run by Corbyn or anyone else, be interested in proper regulation of HSBC. Labour is in favour of mass immigration, particularly from the Third World, and cheap labour, the policies of the financiers and oligarchs. In fact, Labour acts as a tool of these individuals.
    The events of the last few months have shown white working people that Labour does not act in their interests but against them.

    • Replies: @Kiza
  6. unit472 says:

    That HSBC was threatening to move its HQ out of the UK must have put a lot of pressure on the government. Imagine if J.P. Morgan threatened to decamp to London! Yes, there is an odor about HSBC that resembles that of BCCI only HSBC gets away with it.

    Bank big wigs like Barclay’s Bob Diamond or RBS’s Fred Godwin might have to ‘walk the plank’ but HSBC is immune to that sort of thing.

  7. Was HBSC one of the banks bailed out in 2008?

    What exactly are they guilty of that all of the other big banks aren’t?

    My problem with the banks is that they play their bogus money games, then expect to be bailed out by the tax payers when they loose. As long as they are willing to cover their own losses and never bailed out by the tax payers, I couldn’t care less what the banks do.

  8. Kiza says:

    I believe that you are describing the Blairite war criminals within the UK Labour Party, not Corbyn’s labour. What we are seeing right now is “a rebellion”, an attempt to return the Labour Party to the control of the Blairites which almost ran it into the ground by exactly the policies you describe (war and anti-labour). If Corbyn fails, I do not think that the UK Labour Party will survive much longer, Corbyn is their last chance for revival.

    BTW, this is similar to the imperial war party of the German Greens. So many of the so called “populist parties” in the West have nothing to do with the people except for the lip-service they pay to the popular interests to get elected.

    • Replies: @Verymuchalive
  9. Kiza says:

    What a nice exposé of the system corruption in the Anglo-world by Peter. I never regret reading Peter’s articles, even though he promotes the leftie Counterpunch Magazine (lol). Peter’s breadth of issues covered is simply amazing, from South China Sea to anything under the sky. Peter is a one-man-news-agency (Lees to replace Reuters), one of the most knowledgeable individuals I have ever encountered online, just like Mike Whitney. Thanks very much Peter.

  10. @Kiza

    Corbyn, his supporters, and nearly all his Labour opponents, are in favour of massive Third World immigration and cheap labour. This is the policy of the financiers, the oligarchs and the rest of the 1% and their clients. It is not in the interests of the indigenous population generally and not in the interests of the indigenous working class in particular.
    Some foreign policy issues aside, there is little difference between Corbyn and Blair. For the most part they are 2 sides of the same coin.
    Increasingly, the white working class have grasped this, even if dunces like you don’t.

  11. @Anonymous

    Mr Corbyn is under heavy attack for not being uncritically supportive of Israel and for sharing a platform with speakers from Hamas. No one who counted in “the Labour movement” cared about him meeting top Sinn Fein/IRA people at a time when the IRA were killing British MPs and citizens, but Hamas is just beyond the pale.

    The gentleman currently funding a legal challenge to Mr Corbyn in the interminable leadership contest is IIRC the same person who shouted at Corbyn because he didn’t use the word “Israel” in a speech to British Jews.

    One idea about HSBC – a while ago there was a lot of media chat that they might up sticks and re-domicile in Hong Kong, taking their tax payments with them. A year or so later it was announced with great fanfare that they would remain in the UK. I wonder if that decision was connected with Osborne and Cameron’s little favour?

    (@Abelard – HSBC were among the few UK banks that needed no bailout that I know of)

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