HSBC

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HSBC, 8 Canada Square, Canary Wharf - next to KPMG and Barclays
HSBC.png
HSBC Group is one of the largest banking and financial services organisations in the world. It was rated the world's largest banking group in 2008 in terms of market value. It has around 9,500 offices in 85 countries, headquartered in London. It operates as HSBC Bank in the UK.


Conflicts and criticisms

Use of tax havens

Research by anti-poverty campaign group ActionAid in October 2011 revealed that HSBC was biggest financial sector user of tax havens in the FTSE 100, with a grand total of 556 subsidiaries based there. HSBC also has 156 companies in the US state of Delaware (another known tax haven), compared to 97 in the rest of the USA.[1]

A report by the TUC found that the UK's four largest banks – HSBC, Barclays, Lloyds and RBS – have some 1,200 subsidiaries in tax havens.[2]

HSBC US - Money laundering investigations

London-based HSBC Holding Plc's money laundering investigations started in April 2003, when the Federal Reserve Bank of New York and New York state bank regulators cracked the whip on its U.S. unit, ordering it to do a better job of policing itself for suspicious money flows. Their aim was to "ensure that the bank fully addresses all deficiencies in the bank's anti-money laundering policies and procedures."[3]

Confidential documents reviewed by Reuters allege that from 2005, the bank violated the Bank Secrecy Act and other anti-money laundering laws on a massive scale, by not adequately reviewing hundreds of billions of dollars in transactions for any that might have links to drug trafficking, terrorist financing and other criminal activity.[3]

The documents reviewed by Reuters depict apparent anti-money laundering lapses of extraordinary breadth. According to the documents:

  • The bank understaffed its anti-money laundering compliance division and hired "gullible, poorly trained, and otherwise incompetent personnel."
  • HSBC failed to review thousands of internal anti-money laundering alerts and generate legally required suspicious activity reports, or SARs, on transactions picked up by the bank's internal monitoring system.[4]
  • Hundreds of billions of dollars moved unchecked each year through various bank operations because of lax due diligence and monitoring of accounts with foreign correspondent banks, which are financial institutions that rely on U.S. banks for processing services. The bank maintained accounts with "high risk" affiliates widely suspected of laundering drug-trafficking proceeds.
  • In some instances, "management intentionally decided" not to review alerts of suspicious activity. An investigation summary also says, "There appear to be instances where Bank employees are misrepresenting" data sent to senior managers, and where management altered risk ratings on certain clients so that suspect transactions didn't set off alarms.

When the 2003 order came down from regulators, it hired Teresa Pesce from the high-profile U.S. Attorney's office in Manhattan, where she made a name for herself as a tough prosecutor overseeing money laundering prosecutions. Pesce "knew the ropes". One of her first initiatives was to order the installation of the Customer Account Monitoring Program, or CAMP, a technology system designed to filter suspicious retail transactions across HSBC's U.S. operations.[3]

In 2006, regulators lifted their 2003 order. Pesce left the bank in 2007 to run KPMG LLP's anti-money laundering consulting business.[3]

Tomas Benitez, a longtime private banker in South Florida who had worked at Republic Bank, filed a lawsuit against HSBC in 2010. Benitez alleged that HSBC fired him in January 2009 after he warned colleagues that clients had violated U.S. restrictions on trade with Iran and Cuba.[3]

It is claimed that the bank also continues to do business with so-called "casas de cambio" in Mexico, local currency exchanges used to send money abroad, without any of the proper systems for spotting suspicious transactions.[5]

According to Reuters, a successful case against HSBC could result in an onerous fine and represent one of the most significant money laundering cases ever brought against an international bank.[6]

In July 2012, US Senate released a report about industrial-scale money laundering at HSBC, whose Mexico division set up a subsidiary in the Cayman Islands that handled some 60,000 accounts. According to the report, HSBC's oversight was so neglectful that it knew nothing about who was behind 41% of the accounts,[7] and that the beneficiaries are Mexican drug barons, whose criminal proceeds are laundered in the tax haven.[8] According to the Observer, e-mails released as part of that investigation showed that Lord Green, the current Minister of State for Trade and Investment, and former Group Chairman of HSBC Holdings plc, was twice warned about compliance failures and allegations that huge sums were laundered by Mexican drug gangs through a subsidiary of HSBC.[9]

HSBC-owned Swiss bank - tax evasion

British clients of an HSBC-owned private Swiss bank HSBC Private Banking Holdings (Suisse) SA that is the focus of a major HM Revenue & Customs investigation are alleged to have evaded tax by an amount likely to exceed £200 million, the Observer reported. HMRC told the Bureau of Investigative Journalism "the early indications are that the amounts are significant". It has been suggested wealthy Britons have placed £120 billion in Swiss banks with £6 billion in HSBC Swiss branches. HSBC said it does not condone tax evasion and it is the responsibility of clients to ensure they pay appropriate tax rates.[9]

Trade minister Lord Green was chairman of HSBC's private banking division during the period the HMRC is investigating.[9]

Connections to Mubarak regime

In 2011, HSBC, the biggest western bank in Egypt, faced strong criticism for its connections to the Mubarak regime.

Research by the Bureau of Investigative Journalism, a not-for-profit body based at London's City University, has concluded that HSBC:

- raised more than £450m for two of Egypt's biggest and most controversial property developers;
- was the most active European investment bank in Egypt;
- had on its Egyptian board two directors who in 2004 went on to become ministers of state overseeing land sales and privatisations under Mubarak.[10]

The bank's involvement with controversial Egyptian tycoons has raised questions about the role played by its former chairman, Lord Green, who in January was appointed by David Cameron as government trade and investment minister. Green pursued business links with senior figures in the Egyptian regime. In 1998, he co-chaired the Egyptian British Business Council, a high-level group that reported to then British and Egyptian prime ministers Tony Blair and Kamal Ganzouri.[10]

Egypt's former investment minister, Mahmoud Mohieldin, responsible for privatisations for six years until 2010, was a director at HSBC Egypt before joining the government, as was Rachid Mohamed Rachid, a trade minister.[10]

Funding fracking

FrackWell.png This article is part of the Spinwatch Fracking Portal and project
  • HSBC is a shareholder in fracking firm Dart Energy, who it lent USD $100 million (approx £63 million).[11]
  • HSBC provides banking services to controversial fracking firm Cuadrilla [12]
  • helped BG Group raise €1 billion

EU lobbying

HSBC have five lobbyists working on European issues with two holding European Parliament passes, allowing the bearer almost unlimited access to the Parliament's buildings.[13]

Representation in the European Commission

John Everett, head of operational tax compliance at HSBC Holdings Plc represents the British Bankers Association on the European Commission's Expert Group on automatic exchange of financial account information. The aim of the group is to assist the EU member states on tax laws and collecting the full amount of tax owed to them.[14]

People

Board of directors

As of March 2015:

  • Douglas Flint, group chairman, HSBC Holdings plc
  • Stuart Gulliver, group chief executive. He is also Chairman of The Hongkong and Shanghai Banking Corporation Limited.
  • Iain Mackay, group finance director of HSBC Holdings plc in December 2010. A chartered accountant, Mackay joined HSBC in July 2007.
  • Phillip Ameen, independent non-executive director, member of the group audit committee. Ameen was appointed to the board on 1 January 2015.
  • Kathleen Casey, independent non-executive director, member of the group audit committee and the financial system vulnerabilities committee. Casey was appointed to the board on 1 March 2014.
  • Safra Catz, independent non-executive director. Catz was appointed to the board in 2008.
  • Laura Cha, independent non-executive director, chairman of the philanthropic and community investment oversight committee, and member of the nomination committee and the conduct & values committee. Cha was appointed to the board on 1 March 2011.
  • Lord Evans of Weardale, independent non-executive director, chairman of the financial system vulnerabilities committee, member of the conduct & values committee and philanthropic and community investment oversight committee. Evans was appointed to the board on 6 August 2013.
  • Joachim Faber, independent non-executive director, chairman of the group risk committee. Faber was appointed to the board on March 2012.
  • Rona Fairhead CBE, independent non-executive director, member of the financial system vulnerabilities committee and nomination committee. Fairhead joined the board in December 2004.
  • Sam Laidlaw, independent non-executive director, chairman of the group remuneration committee and the nomination committee. Laidlaw was appointed to the board in 2008.
  • John Lipsky, independent non-executive director, member of the group risk committee, the nomination committee and the group remuneration committee. Lipsky was appointed to the board in March 2012.
  • Rachel Lomax, independent non-executive director, chairman of the conduct & values committee, member of the group audit committee and the group risk committee. Lomax joined the HSBC board of directors in 2008.
  • Heidi Miller, independent non-executive director, member of the group risk committee and the conduct & values committee. Miller was appointed to the board in September 2014.
  • Marc Moses, executive director and group chief risk officer. Moses was appointed as an executive director of HSBC Holdings plc in January 2014.
  • Sir Simon Robertson, deputy chairman, senior independent non-executive director, member of the financial system vulnerabilities committee. Robertson joined the board in 2006.
  • Jonathan Symonds, CBE independent non-executive director, chairman of the group audit committee, member of the conduct & values committee. Symonds was appointed as an independent non-executive director of HSBC Holdings plc in April 2014.
  • Ben Mathews, group company secretary. Mathews was appointed group company secretary of HSBC Holdings plc on 1 July 2013.[15]

Former directors

Senior management

Former staff

  • Geoff Cook, ex-Head of Wealth Management for HSBC Bank, based in London, 'responsible for the delivery of Financial Planning Services to the 10 million HSBC customers in the UK'. Now Chief Executive at Jersey Finance.[18]
  • Paul Thurston, chief executive, retail banking and wealth management, HSBC Group until 2012 when he announced his retirement.[19]

PR and lobbying

Internal

External

  • Quiller Consultants. Public affairs The account which Quiller secured in 2009 is said to be worth well over £100,000, but was under review in June 2014. [22] The firm appears to have retained the account as of mid-February 2015.[23]
  • Burson-Marsteller. Public affairs work was led by Gavin Grant at B-M (circa 2008), and included “more strategic planning” and “active engagement”. B-M planned to stress how HSBC has “managed a different path to domestic UK banks”. B-M won the account from Bell Pottinger Public Affairs which held it for the previous 7 years. [24]
  • Cicero Consulting. Provided lobbying and public affairs monitoring to HSBC Group.[25]
  • Open Road. Provides public affairs advice to HSBC.[26]
  • Blue Rubicon, which merged with Open Road has provided public affairs advice from September 2014.[27]
  • Maitland. Providing financial PR.[28]

In-House and Individuals Register March to May 2014 - See more at: http://www.prca.org.uk/paregister#sthash.RKrndBwh.dpuf

Revolving door

  • Lord Stephen Green, former group chairman, now a British Conservative politician and former minister of state for Trade and Investment in both the Department for Business, Innovation and Skills and the Foreign and Commonwealth Office (appointed 11 January 2011 until 2014).
  • .K Life Peer Frederick Butler, Lord Butler of Brockwell, a former Treasury official and Cabinet Secretary was a non-executive director of HSBC Holdings plc from 1998 to 2008.[29]
  • UK Life Peer Lydia Dunn, Baroness Dunn of Hong Kong Island and Knightsbridge, was a Director of HSBC Holdings plc (previously Hong-Kong and Shanghai Banking Corporation) from 1981 to 2008.[30]
  • Paul Geradine, Director of Listings at the Financial Services Authority until 2001, subsequently joined HSBC as a director in its equity capital markets division.[31]
  • Rachel Lomax, an independent Non-executive director since December 2008, was Permanent Secretary at the UK Government Departments for Transport and Work and Pensions and the Welsh Office from 1996 to 2003. She was also was Deputy Governor, Monetary Stability, at the Bank of England and member of the Monetary Policy Committee until June 2008.[32]
  • Sir Roderic Lyne, former Ambassador to Moscow, was appointed an Advisor to HSBC in December 2004.[33]
  • U.K. Life Peer Robert May, Baron May of Oxford, is a paid member of HSBC Corporate Social Responsibility Board.[34]
  • HSBC employee Nick Stephens was seconded to the Department for Trade and Industry from 2001 to 2003 to work as an Export Promoter.[35]
  • Nicholas Stern, Lord Stern of Brentford, the former Head of Government Economic Service at HM Treasury and an advisor to the Cabinet Office, is an Advisor to the Chairman of HSBC Holdings plc on economic development and climate change.[36]
  • Mary Jo Jacobi - former White House aide, appointed to UK Advisory Committee on Business Appointments in 2012


Contacts

Address, head office London:
8 Canada Square,
London E14 5HQ
This article is part of the Finance Lobbying project of Spinwatch
Revolving Door.jpg This article is part of the Revolving Door project of Spinwatch.



Resources

Notes

  1. Action Aid, "Addicted to tax havens: The secret life of the FTSE 100," p.2 October 2011, accessed 08 October 2012.
  2. Guardian, "Bank secrecy masks a world of crime and destruction," 22 July 2012 The Observer, accessed 08 October 2012.
  3. 3.0 3.1 3.2 3.3 3.4 Mollenkamp, Carrick, Brett Wolf and Brian Grow, "Special Report: Documents allege HSBC money-laundering lapses," Reuters 03 May 2012, accessed 08 October 2012.
  4. SARs are important because they are sent to U.S. law enforcement and scrutinized for leads to criminal activity. In May 2010, the bank's backlog of alerts was nearly 50,000 and "growing exponentially each month," according to one of the documents.
  5. Foley, Stephen, "Drugs cartels used HSBC to launder cash," Independent, 04 May 2012, accessed 08 October 2012.
  6. Mollenkamp, Carrick, Brett Wolf and Brian Grow, "Special Report: Documents allege HSBC money-laundering lapses," Reuters 03 May 2012, accessed 08 October 2012.
  7. Guardian, "Bank secrecy masks a world of crime and destruction," 22 July 2012 The Observer, accessed 08 October 2012.
  8. Integrity Talking Points, "Banks funnel $21 trillion into tax havens," 24 July 2012, accessed 08 October 2012.
  9. 9.0 9.1 9.2 Mathiason, Nick, "'Britons evaded £200m in tax' using HSBC-owned Swiss bank," Guardian 29 July 2012, accessed 08 October 2012.
  10. 10.0 10.1 10.2 Mathiason, Nick, "HSBC under fire over leading role in land deals for Mubarak regime," Guardian 01 May 2011, accessed 08 October 2012.
  11. Dart Energy
  12. [http://www.cuadrillaresources.com/wp-content/themes/cuadrilla/pdf/Cuadrilla-Annual_Report_and_ Accounts_2013_Vo-Interactive.pdf Cuadrilla Annual Report and Accounts 2013] link broken, now available from Cuadrilla homepage to download as at March 2015
  13. Companies declaring the most lobbyists Lobby Facts, 26 January 2015, accessed 3 February 2015
  14. European Commission Commission Expert Group on automatic exchange of financial account information, accessed 4 May 2015.
  15. HSBC, Leadership - board of directors, accessed 11 March 2015
  16. HSBC, Board of Directors, accessed February 2009.
  17. HSBC Leadership - senior management, accessed 12 March 2015
  18. Jersey Finance, Geoff Cook, Chief Executive, accessed 08 October 2012.
  19. Sarah Miloudi HSBC wealth chief Thurston to retire City Wire, 3 December 2012, accessed 11 March 2015
  20. Public Affairs News, 'PEOPLE MOVES' - May 2011 edition," 12 May 2011, accessed 08 October 2012.
  21. Singleton, David, "HSBC puts Bell Pottinger account out to tender," 12 June 2008, PR Week, accessed 30 January 2011.
  22. HSBC reviews UK public affairs, Public Affairs News, 25 June 2014, acc 16 February 2014
  23. Register 1st September 2014 - 30th November 2014 APPC, accessed 16 Feb 2015
  24. ref and date needed here
  25. APPC, APPC Register Entry for 1 December 2009 to 28 February 2010, accessed 30 January 2011.
  26. APPC, APPC Register Entry for 1 December 2009 to 28 February 2010, accessed 30 January 2011.
  27. Register 1st September 2014 - 30th November 2014 APPC, accessed 28 January 2015
  28. PR Week UK, "Banking industry Insider's Guide: UK banks' Reputation Managers," 03 October 2008, accessed 30 January 2011.
  29. Who's Who 2009, BUTLER OF BROCKWELL, online edition, Oxford University Press, accessed 24 March 2009.
  30. Who's Who 2009, DUNN, online edition, Oxford University Press, accessed 24 March 2009.
  31. Independent, "FSA names listing chief," 10 May 2001.
  32. Peel, Lilly, "Business big shot: Rachel Lomax of HSBC," 22 November 2008, The Times, accessed 30 January 2011.
  33. Debrett's, The Rt Hon Sir Roderic Lyne, KBE, CMG, accessed 30 January 2011.
  34. UK Parliament, Register of Lords' Financial Interests, accessed 30 January 2011.
  35. CFOI, Individuals on Secondment to the Department of Trade & Industry, accessed 30 January 2011.
  36. HSBC, Biography - Sir Nicholas Stern, News Archive 2007, accessed 30 January 2011.