Editorial note: If you have not yet read our mission statement above, please do so in order that you can put our blogs in context.
11 December 2012
It’s becoming embarrassing. Hardly a day passes without some giant of world capitalism eating humble pie and confessing that it has driven a horse-and-coaches through the light-touch regulations that purport to keep the free market on the right side of criminality.
Opponents of the free market, such as Antigone1984, ever on the look-out for evidence that exposes the hypocrisy of the business class, are having a field day.
Today it’s the turn of UK-based HSBC – formerly, Hongkong and Shanghai Banking Corporation and now Europe’s biggest bank by market capitalization – to hang its head in shame.
The bank has confessed that it is to pay the US authorities a fine of 1.9 billion dollars (1.2 billion pounds sterling) for money laundering (the offence of disguising the source of money obtained from criminal activity). This is said to be the largest penalty ever imposed in a case of this type.
The fine follows a US Senate investigation which said that HSBC had acted as a conduit for “drug kingpins and rogue nations”.
The Senate report suggested that HBSC accounts were used by Mexican drug barons to launder their ill-gotten gains. It also said that HSBC regularly circumvented restrictions on dealings with Iran, North Korea and other states subject to US sanctions on rogue states. In addition, the bank was alleged to have provided US dollars and banking services to banks in Saudi Arabia that were implicated in the financing of terrorism.
HSBC has admitted having poor money laundering controls.
“We accept responsibility for our past mistakes,” said HSBC group chief executive Stuart Gulliver. “We have said we are profoundly sorry for them.”
The bank said that it had spent 290 million dollars on improving systems to prevent money laundering in the future.
The settlement with the US authorities has not got HSBC completely off the hook. The UK’s own Financial Services Authority (FSA) is also likely to want its pound of flesh.
HSBC has said it expects to reach an agreement shortly with the FSA.
Oh dear! And such a respectable company, too – on the surface.
Unfortunately, it broke the one rule of capitalism that is unforgivable – it got caught!
Still, we mustn’t weep too many tears on HSBC’s account.
According to the BBC, it made pre-tax profits of 12.7 billion dollars in the first six months of 2012.
Quite enough to take care of that pesky 1.9 billion dollar fine – and still have some to spare!
Antigone1984 intends to continue highlighting developments that expose the glaring discrepancy between the operation of the free market in theory – as set out in economic textbooks – and its operation in practice.
Readers might like to check out some of our earlier posts in this connection. For instance, “How the market economy works”, “Capitalism in practice”, “Frothy tasteless milk” and “Coining it”.
You might perhaps care to view some of our earlier posts. For instance:
1. Why? or How? That is the question (3 Jan 2012)
2. Partitocracy v. Democracy (20 July 2012)
3. The shoddiest possible goods at the highest possible prices (2 Feb 2012)
4. Capitalism in practice (4 July 2012)
5.Ladder (21 June 2012)
6. A tale of two cities (1) (6 June 2012)
7. A tale of two cities (2) (7 June 2012)
8. Where’s the beef? Ontology and tinned meat (31 Jan 2012)
Every so often we shall change this sample of previously published posts.