Dec 192012
 

For years U.S. authorities have been lecturing our Mexican neighbors on how to crack down on their murderous drug cartels, which seem to operate freely any without fear of law enforcement.

What an embarrassment for the U.S. that it had the drug cartel’s biggest money launderer in its clutches but, incredibly, declined to prosecute, even though the money launderer had the blood of the Sinaloa gang on its hands.

And for what greater good did the U.S. give up the moral high ground in the war on drugs?

To protect a “too big to fail” bank and its top officials.

The U.S. declined to prosecute because the money launderer was a giant global bank, and to seek criminal sanctions might undermine the world financial system.

While it was engaged in massive illegal money laundering, HSBC was also the recipient of a backdoor bailout worth $3.5 in 2008, conveyed to the bank through insurance giant AIG.

According to a report issued earlier this year from the Permanent Senate Subcommittee on Investigations, HSBC “exposed the U.S. financial system to a wide array of money laundering, drug trafficking, and terrorist financing risks due to poor anti-money laundering controls.”

In 2007 and 2008, the Senate committee found, HSBC moved $7 billion in bulk cash from Mexican to its U.S. operations, even though authorities warned that the money was proceeds from drug sales. According to the New York Time, HSBC’s Sinaloa associates gross about about $3 billion a year, which puts the cartel in the saome league as Netflix and Facebook..

HSBC was doing a thriving business with cash exchanges used by the drug cartels known as casas de cambio, despite repeated warnings that they were nothing more than fronts for the drug cartels. Years after other banks had cut them off, HSBC continued to do business with the casas de cambio.

The report stated that Middle East bankers with links to Al Queda also banked with HSBC.

What a terrible example the U.S. is setting for how to enforce the rule of law.

U.S.  authorities claimed prosecuting the bank or individuals responsible for the money-laundering activities might threaten the stability of the world economy. Prosecutors  tried to obscure the vile preposterousness of this cop-out beneath an avalanche of public relations puffery.

Authorities touted the $1.9 billion fine levied against HSBC as the largest of its kind, though it’s more like the U.S. taking it’s unseemly cut of the bank’s billions in money-laundering proceeds. But the PR campaign couldn’t cover the foul odor rising from the deal.

As part of the deal, bank officials officials apologized and promised never to misbehave again. But the notion that prosecutors couldn’t figure out how to hold the individuals responsible for years of lawlessness while reaping profits from the drug trade makes a mockery of law enforcement’s tough drug war rhetoric.

I wonder how other targets of the U.S. government’s harsh drug war tactics view prosecutors’ soft-pedaling on HSBC. Take for example Russ Caswell, who owns a cheap motel outside Boston where rooms rent for $57 a night. Authorities have made some drug busts at the motel, and they don’t think Caswell is doing enough to root out the lawbreakers at his motel. So prosecutors are moving to take the entire motel away from him. Not just the portion of his profits he allegedly made from drug dealers, but the entire motel, which is worth about $1.3 million.

HSBC buying its way out of accountability for its lawless behavior while Russ Caswell fights for his motel highlights one of the ugliest and most corrosive aspects of the country’s growing income inequality.

If you’re big and powerful enough, you can break the law with impunity.

We shouldn’t allow this shameful deal to stand. We should demand that the Senate Judiciary Committee hold public hearings on it and soon – before the stench spreads to all of us and we can’t get it off. Here are the members of the Judiciary committee. Call them and remind them we’re supposed to be setting the example for Mexico, not adopting their corrupt ways.

About Martin Berg

Martin Berg, WheresOurMoney.org editor, is a veteran journalist.

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