 |
|
| 17/07/2012 - FINANCE |
HSBC executive quits amid money laundering scandal |
HSBC executive David Bagley, head of group compliance since 2002, resigned on Tuesday after a US Senate report accused HSBC of having a “pervasively polluted” culture that allowed billions of dollars to be laundered through the bank. |
REUTERS - HSBC Holdings Plc put itself at the mercy of the U.S. Senate on Tuesday, HSBC hid billions in Iran transactions, US says The HSBC banking giant and its US affiliate HBUS concealed more than $16 billion in transactions to Iran between 2001 and 2007, a Senate investigative panel said on Tuesday (July 17). (Source: AFP) It also comes as international banks' reputations have taken a fresh blow due to allegations of a manipulation of a key global benchmark rate. Senator Carl Levin, who chairs the Senate's Permanent Subcommittee on Investigations, kicked off the hearing on Tuesday with an extensive explanation of how HSBC's lapses have been a threat to financial markets around the world. A Reuters investigation has found persistent lapses in the bank's anti-money laundering compliance since 2010, despite its assertions that it has cleaned up its act. "Accountability for past conduct is essential. That's what's been missing here," Levin said, adding that the bank's charter could be at risk if it did not do better. Not consistent The hearing started with officials from the U.S. Treasury and Department of Homeland Security, but the fireworks began when HSBC executives came to testify. Bagley, HSBC's head of group compliance since 2002, told the hearing he had been hamstrung by the bank's structure, and that while changes had been made it was time for him to go. "I recommended to the group that now is the appropriate time for me and for the bank, for someone new to serve as the head of group compliance. I have agreed to work with the bank's senior management towards an orderly transition," he said. The harshest spotlight will be on Stuart Levey, who joined the bank in January as chief legal officer. He had been the Treasury Department's top official on terrorism finance from 2004 to 2011 -- during which time he was involved in cracking down on HSBC for Iran-related transgressions. In prepared testimony released at the start of the hearing, Levey placed much of the blame on HSBC's rapid expansion, which left in place a decentralized management structure that did not implement consistent standards across the bank and viewed compliance only as an advisory job. HSBC shares fell 1.9 percent in late London trade. Analysts warned that the bank faced huge financial penalties -- but perhaps worse, found itself in the crosshairs during an election year. Senator Carl Levin (Democrat) Failed to meet standards In a statement to British regulators early Tuesday, the bank began its mea culpa. "We will acknowledge that, in the past, we have sometimes failed to meet the standards that regulators and customers expect," it said. "We will apologise, acknowledge these mistakes, answer for our actions and give our absolute commitment to fixing what went wrong." The Senate report released on Monday detailed how between 2007 and 2008, HSBC's Mexican operations moved $7 billion into the bank's U.S. operations. According to the report, both Mexican and U.S. authorities warned HSBC that the amount of money could only have reached such a level if it was tied to illegal narcotics proceeds. It also examined banking HSBC did in Saudi Arabia with Al Rajhi Bank, which the report said has links to financing terrorism. HSBC will have company in the Senate's harsh spotlight -- the report was also highly critical of the Office of the Comptroller of the Currency, a major U.S. bank regulator. In prepared testimony, the OCC acknowledged the need for changes in its oversight of anti-money laundering operations, as called for in the Senate report. The OCC will also testify on the extent of the failings it found in HSBC's money laundering controls, and the orders it issued to the bank to correct them. New clues on probe The exhibits for the hearing also provide new clues about how the Justice Department and regulators developed their probes of HSBC and Mexican drug trafficking. A July 2009 email from an OCC official to the bank relates a call received from the U.S. Attorney's office in Brooklyn. The OCC official said that an assistant U.S. attorney "said that his office is in the early stages of investigating possible money laundering through the repatriation of U.S. currency through accounts at the banknotes division of HSBC-N.Y." The author of the email, Daniel Stipano, is an OCC lawyer scheduled to testify on Tuesday. Later that day, Stipano told his peers at the OCC, "From what I can tell, this has the makings of potentially being a major criminal case--we need to be all over it." According to the Senate report, the OCC didn't take strong action against the bank until the fall of 2010, after the agency had learned of U.S. law enforcement probes. |
OTHER HEADLINES
| TECHNOLOGY | |
| Yahoo! set to acquire Tumblr in $1.1 billion deal |  |
| FRANCE | |
| Grandes écoles: The making of France’s ruling elite | |
| FRANCE | |
| French economy falls back into recession | |
| GREECE | |
| Boost for Greece as Fitch upgrades its credit grade | |
| FRANCE | |
| French culture minister backs tablet tax plan | |
| PALESTINIAN TERRITORIES | |
| Google recognises Palestine on homepage | |
| US ECONOMY | |
| US jobless rate falls to 7.5 percent in April | |
| FRANCE | |
| EU forecasts 2013 French slide into recession | |
| PORTUGAL | |
| Portugal austerity budget raises pension age, cuts jobs | |
| BANKING - FRANCE | |
| BNP Paribas sees profits slump 45% in first quarter | |
| EUROZONE | |
| ECB cuts key interest rate to record low of 0.5% | |
| FRANCE | |
| French minister under fire for saying ‘Non’ to Yahoo! | |
| EUROZONE | |
| Eurozone unemployment reaches record 12.1 percent | |
| FRANCE | |
| Hollande unveils new measures to woo entrepreneurs | |
| FRANCE | |
| Record 3.22 million jobseekers in France | |
| SPAIN | |
| Spain jobless rate hits record 27.2% | |