In the world of anti-bribery/anti-corruption and anti-money laundering enforcement, just as is true in about any other domain between the heavens and hades you can think of, it certainly is good to have friends at the top. That well-known maxim was demonstrated yet again recently when it was revealed that the U.K. Chancellor of the Exchequer George Osborne had intervened directly with the U.S. government during the investigation of money laundering violations by the U.K. bank HSBC. Rather amazingly or, perhaps simply through coincidence, this intervention obtained the result it sought to achieve.
How all this came about was initially noted in a U.S. House of Representatives report issued last week about the decision by the Justice Department not to bring criminal charges against the bank for its money laundering violations. Apparently the Justice Department had been considering criminal charges against the bank for the bank’s laundering of cash for drug lords and terrorists as well as being a conduit for countries under U.S. economic sanctions such as Iran (at the time).
Osburne intervened because of the effect such a negative business impact any criminal charge(s) might have on the bank. He went so far as to write both (then) Federal Reserve Chairman Ben Bernanke and Treasury Secretary Timothy Geithner saying, in part that such an indictment “would risk destabilizing the bank globally, with very serious implications for financial and economic stability.” The House report also noted that the U.K. banking regulator, the Financial Services Authority, urged the Justice Department not to bring criminal charges.
What part these actions played in (then) Attorney General Eric Holder’s decision not to bring criminal charges against the bank, in contra to the advice of Justice Department prosecutors, is not known. However HSBC received a Deferred Prosecution Agreement, agreed to a penalty of $1.26bn to the Justice Department, with another $665MM payable to other U.S. regulatory agencies.
Holder may well be known going forward as the ‘too big to jail” attorney general, most particularly for his lack of prosecution of any individuals for the 2008 financial meltdown. Now it appears that he may well have been susceptible to such arguments by those from overseas. It is certainly good to have friends at the top.
Continue the conversation at Compliance Week Europe: 7-8 November at the Crowne Plaza Brussels. Join us as we look at changes in global anti-corruption regulations, slave labour risks in your supply chain, and how to detect fraud, to name just a few topics. Learn more