Matt Taibbi writes: Three years ago, then-U.S. Attorney of the Eastern District of New York Loretta Lynch crafted a soft-touch deferred proscution deal for Europe’s largest bank, HSBC, which had only been caught in the largest drug-money-laundering case in history.
Today, as Lynch awaits approval for the Attorney General job, HSBC is in the news again. This time, the global mega-bank is being exposed in a massive scheme to help wealthy clients avoid taxes.
This story traces back to a leak of files apparently stolen by a former HSBC IT employee named Herve Falciani in Switzerland in 2007.
Taken out of Switzerland, the files were then shared with authorities in France, Spain, the United States and Britain. The monster cache of info about wealthy tax avoiders came to be referred to as the “Lagarde List,” after Christine Lagarde, who was the French Finance minister at the time the information first began to be circulated.
What HSBC’s Swiss unit was doing went far beyond passive bank secrecy. The bank was actively helping its wealthiest clients avoid paying taxes in their home countries, sometimes using highly creative methods – a sort of criminal advice service, if you will.
Countless similar examples are appearing the in the press. The numbers being thrown out are incredible. The Swiss arm of the bank at its height apparently hid as much as $120 billion.
This HSBC story is an incredibly explosive one when one takes into account the recent regulatory history of this company.
Both cases involved historically enormous schemes to profit from illegal banking activities.
In the money-laundering case, HSBC paid a $1.9 billion fine – about five weeks of profit – for its role in an amazing scandal in which the bank admitted laundering up to $850 million for a pair of Central and South America drug cartels, including the infamous Sinaloa gang.
In neither case did the penalties do much to dent the bank’s bottom line.
Everything being reported in the last few days (including a 60 Minutes report and a “Panorama” documentary) indicates the United States knew about an apparent systematic tax evasion scheme as far back as 2010.
This raises a huge question about the deal Lynch’s office gave to HSBC back in 2012.
What does a bank have to do to get shut down by regulators in this day and age? Be small?
