The UK-based British multinational bank HSBC, was investigated by a number of federal authorities over a number of years in the United States. HSBC executives were found guilty of money laundering for Mexican and Colombian drug cartels, and breaking a range of banking laws in the US and elsewhere. HSBC has been ordered to pay a fine of $1.9 billion dollars, and agreed to a deferred prosecution arrangement, whereby the bank agrees to an internal audit and clean up its internal practices over the next twelve months, and the Department of Justice agrees to withhold pressing charges. The fine sounds like a gigantic pile of money, but it does represent five weeks income for the HSBC bank. These kinds of deferred prosecution arrangements are not uncommon, and let the principal culprits of financial fraud off the hook.
HSBC was the place to launder money for the financial elite, and clearly its own anti-money laundering provisions failed to identify and stop fraudulent practices. Relying on the internal auditing procedures of the HSBC to detect and remove corruption is like putting the fox in charge of the hen-house. But what is even more galling about this deal is that the Department of Justice announced it will not prosecuting any of the HSBC executives involved in such widespread embezzlement and corruption. The reason given by Assistant Attorney General Lanny Breuer is that HSBC is too big to indict. Back in 2008, at the beginning of the capitalist economic crisis, we were informed that the large financial institutions like Lehman Brothers, Citigroup and others were ‘too big to fail’ and thus required the measures collectively known as quantitative easing – meaning pumping billions of taxpayer dollars to prop up the failing banks and financial companies. Now, four years later, when evidence of brazen criminality by the financial elite is uncovered, no-one is to be prosecuted because the bank in question is ‘too big to indict’.
The New York Times article that explored the HSBC scandal explained it this way:
“State and federal authorities decided against indicting HSBC in a money-laundering case over concerns that criminal charges could jeopardize one of the world’s largest banks and ultimately destabilize the global financial system.”
You can find the quote here. So the message is quite clear; there is one set of laws for the poor and downtrodden who are to be prosecuted to the fullest extent of the law, and there is another law for the financial mafia at the apex of the social pyramid, whose crimes are too large to prosecute. The Obama administration has consistently shielded top executives and bankers guilty of criminal practices from prosecution. HSBC made money by laundering the profits from the narcotics industry, while the very cartels whose money was laundered are targeted by a ‘war on drugs’. In the United States, a person in possession of illegal drugs can be arrested and prosecuted, and their assets confiscated. However, the largest banks are involved in laundering money from the drug syndicates that are profiting from this illegal and socially destructive trade.
Matt Taibbi explains in his article how the poorest segments of US society are bearing the brunt of the ‘war on drugs’, and they are routinely prosecuted to the fullest extent provided by the American legal system. One such person, Cameron Douglas, arrested for possession, received a sentence of five years gaol. Taibbi goes on to elaborate:
“His jailers kept him in solitary for 23 hours a day for 11 months and denied him visits with family and friends. Although your typical non-violent drug inmate isn’t the white child of a celebrity, he’s usually a minority user who gets far stiffer sentences than rich white kids would for committing the same crimes….”
The message from this sordid episode is quite clear; prosecuting the rich and powerful is too disruptive to the entire financial system, so it is better to let them get away with their crimes. However, those too poor to protect themselves will be subject to the full force of the law. In a capitalist system, we are witnessing a two-tiered system of justice, where in the pursuit of profits, the financial mafia that dominates the capitalist system can reap enormous rewards, even from an industry as lethal and destructive as the narcotics trade. The democratic principle – equality before the law – is only applicable when the culprits are too weak or powerless to subvert the course of justice. The financial robber barons, whose brazen criminality is laid bare, can afford to escape prosecution. HSBC is not the only bank to engage in such fraudulent practices – Citigroup, Bank of America, JP Morgan Chase and others all participate in widespread money-laundering. Politicians that pose as ‘law and order’ candidates would do well to learn from this episode – the capitalist barons are a law unto themselves.
This criminal behaviour by the financial barons also raises another disturbing question – why did the financial regulators fail to perform their jobs? Why did not the Federal Reserve, the Securities and Exchange Commission (SEC) and the Office of the Comptroller of the Currency investigate these cases of malfeasance and prosecute the individuals responsible? After all, the definition of the Office of the Comptroller of the Currency is “a US federal agency that serves to charter, regulate and supervise the national banks and the federal branches and agencies of foreign banks.” Is it because there exists a nepotistic and incestuous relationship between the big financial institutions and banking regulatory authorities? Back in August this year, the US Justice Department announced that it would stop investigating and not prosecute any employee of Goldman Sachs despite its financially criminal practices during the height of the 2008 global financial crisis. Just to make sure that everyone knew where it stood, the Obama administration backed up the announcement by stating it had cleared Goldman Sachs of any wrongdoing.
Obama’s consistent protection of banker barons that plunder, deceive and evade responsibility has earned him the title the ‘black Rockefeller’, in the words of Professor Cornel West, a long-term African-American activist and philosopher. Professor West was alluding to the Rockefeller clan, an industrial and banking family that made its fortune in the oil industry, and is currently associated with the banking group of JP Morgan Chase.
In the ancient Roman Empire, an elite class, the aristocracy, composed not only the wealthiest segment of society, but also occupied the most important political positions of the Roman body politic. The patricians, as they came to be known, dominated the electoral process with their considerable financial power, influenced the political decision-making process to pass laws enabling them to make and perpetuate their wealth, removing any obstacles to their ability to plunder and reap privilege. This cesspit of corruption and crime was obvious to the tribunes of the people, and many attempts were made to reform this system, notably by the Gracchi. Tiberius and Gaius Gracchus were brothers and tribunes who confronted the financial aristocracy in their attempts to reform the Roman system, and alleviate the burdens on the lower classes.
The current Augean stable of American finance capitalism is a cesspit of corruption and criminality reminiscent of the Roman empire’s plundering aristocracy. It is time for the vice-like grip of the financial elite on the economic and political system to be broken, by the mass uprising and mobilisation by working class, a continuing indignado movement that holds the minority elite accountable.