EDITORIAL – HSBC and Hillary: When the scales of justice are uneven

We’ve written before in this space that in the Cayman Islands, there should be only one set of laws — applied to everyone, fairly and equally.

In Monday’s editorial on unlicensed beach vending, we wrote, “When it comes to enforcing a clearly written law, a term that our officials should never be using is ‘compromise’.”

It’s a significant problem — and one not limited to Cayman.

Consider Wednesday’s front page story on the HSBC money laundering scandal. We featured it so prominently because of the “local connection.” In brief, HSBC’s Mexican subsidiary had a branch set up in Cayman. Investigators from a U.S. Senate subcommittee found HSBC had “major anti-money laundering weaknesses” and revealed the existence of thousands of “high risk” Cayman accounts dealing with hundreds of millions of dollars.

Those Cayman accounts, a bank compliance officer said, enabled the “massive misuse by organized crime.”

In total, investigators said at least $881 million in drug trafficking proceeds from Mexican and Colombian cartels were laundered and reached the U.S. banking system as a result of HSBC’s anti-money laundering failures. On top of that, the bank also broke U.S. laws by conducting transactions for customers based in countries such as Cuba, Iran, Libya, Sudan and Burma, contrary to U.S. sanctions.

Think: Drug money, blood money, terror money.

And yet, despite the magnitude of the alleged offenses — or perhaps, because of the magnitude — the U.S. Department of Justice refused to prosecute HSBC in 2012, at the behest of … guess who? … British authorities.

It’s a classic example of behind-the-scenes machinations by powerful people, and it has only come to light after a separate investigation from a U.S. Congressional committee.

The players in this drama included some of the biggest names in American and British government, including U.S. Attorney General Eric Holder (who overruled Justice Department staffers’ advice in his decision not to prosecute HSBC), U.K. Chancellor of the Exchequer George Osborne (who intervened on HSBC’s behalf in the form of a written letter to U.S. officials), as well as U.S. Federal Reserve Chairman Ben Bernanke and Treasury Secretary Timothy Geithner (who received Minister Osborne’s letter).

In his missive, Minister Osborne warned that a criminal conviction for HSBC, and ensuing loss of its U.S. banking license, might destabilize the global economy. (“Too big to jail?”)

In addition to Minister Osborne’s lobbying effort, the U.S. Congressional report claims that the U.K. Financial Services Authority (Britain’s financial regulator) “apparently hampered” investigations into HSBC and influenced the Americans’ decision not to prosecute.

Ultimately, HSBC “settled the matter” in exchange for paying $1.92 billion in penalties.

As we said, much of the HSBC saga played out behind closed doors. For an example of a very public drama that evidences a multi-tiered justice system, however, consider the recent announcement by FBI director James Comey that — after delineating a preponderance of evidence of culpability — he recommended against prosecuting Democratic presidential candidate Hillary Clinton for mishandling classified material while she was U.S. secretary of state (the “email controversy”).

Eminent political commentator Charles Krauthammer theorized in a syndicated column we published Monday, “[Mr. Comey] did not want the FBI director to end up as the arbiter of the 2016 presidential election. If Clinton were not a presumptive presidential nominee but simply a retired secretary of state, he might well have made a different recommendation.

“Prosecuting under current circumstances would have upended and redirected an already year-long presidential selection process. In my view, Comey didn’t want to be remembered as the man who irreversibly altered the course of American political history.”

In our opinion, whether it’s a relatively small matter such as beach vending, a tremendous financial matter such as the HSBC scandal, or a politically significant development such as Ms. Clinton’s email troubles, the principle is the same: Being afraid to alter the course of an election, economy or history is no excuse for altering the course of justice.



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