by Anton Chaitkin

A 2012 U.S. Senate investigation documented that the British bank HSBC laundered billions for the Mexican cartel whose narcotics cripple the United States; laundered hundreds of millions for mobsters looting Russia; provided cash flows to terrorists including 9-11 hijackers; and robbed American customers, investors and dying elderly persons.

The U.S. Senate exposure and call for legal action against HSBC was echoed by the Russian government crackdown on the bank’s Moscow subsidiary – the largest looter of Russia. The manager of HSBC’s Moscow unit, William Browder, activated U.S. Congress allies to push through legislation starting sanctions against Russia for prosecuting the bank the Senate was exposing. The “Magnitsky Act” was introduced three days after the Senate’s earth-shaking report[1] was issued.  

Later in 2012, the Barack Obama administration decided to protect HSBC with minimal penalties; and three days after that, Obama signed the Magnitsky Act into law, initiating economic warfare against Russia.

This was the start of a heightened offensive of the new Cold War, that has since spiraled into a deadly danger to humanity. And the HSBC case had made it clear that in this conflict, the “West” was not promoting actual Western values, but openly criminal globalism.

---

HSBC – originally the Hongkong and Shanghai Bank – was established in 1865 in Hong Kong, the colonial coastal enclave the British empire had taken from China in the 1839-1842 Opium War. The British bank was notorious as the leading institution in the opium trafficking that continued into the 20^th century.

            In the 21^st century, HSBC again became infamous for many crimes, especially for managing covert cash flows for narcotics cartels.

The Money-Laundering Infrastructure

HSBC’s leaders pulled together crucial pieces of the apparatus used in this later criminal phase by purchasing other institutions from 1999 to 2002.

            In May 1999, HSBC announced it would acquire the offshore-vectored interests of billionaire Edmond Safra — the Republic National Bank of New York, and the Swiss bank, Safra Republic Holdings — for $10.3 billion. Safra’s banks concentrated on placing the money of his wealthy clients beyond the reach of tax authorities, and of law enforcers inquiring into the money’s sources.

Safra also specialized in Russian operations. When the Soviet Union collapsed, U.K. Prime Minister Margaret Thatcher and U.S. President George H.S. Bush had helped open up Russia to raw-materials looting and other gangsterism. Safra’s Republic National Bank of New York bought new $100 bills from the New York Federal Reserve Bank and shipped as much as a ton or more of them every night on a flight to Moscow.

Investigative reporter Robert I. Friedman wrote,

“Russian banks…have purchased the $100 bills on behalf of clients, who typically pay for the cash with wire transfers from London bank accounts…. Federal authorities estimate more than $40 billion–all in uncirculated $100 bills…was shipped to Russia [from January 1994 to January, 1996] that far exceeds the total value of all the Russian rubles in circulation….” The cash “is used to finance the Russian mob’s vast and growing international crime syndicate…. The hundreds are also being used to fuel the Russian mob’s flourishing dollar based global drug trade, as well as to buy the requisite villas in Monaco and Cannes…. More than a dozen Russian bankers have been killed since 1994 — one for simply refusing a loan.”[2]

Safra’s $25 million seed money had established the Hermitage Capital Management company. It was to run complex financial investments in Moscow, under the direction of William Browder, grandson of the former head of the U.S. Communist Party, Earl Browder. Safra’s firm, through Browder, took billions out of Russia via offshore conduits.

In this period, the post-Soviet economy collapsed under Anglo-American-imposed austerity, and by the financial crimes of looters such as Safra. As a result, Russians suffered a sharp population decline.

The 1999 HSBC acquisition deal was put on hold as Republic National Bank of New York was investigated for bilking Japanese investors through complex offshore instruments and accounting tricks. Edmond Safra agreed to take a $450 million smaller personal share in HSBC’s buyout, to cover potential payments to regulators and ruined Japanese investors.[3]

Death in Monaco, Chaos in Moscow

Edmond Safra was murdered in his fortified Monaco dwelling on December 3, 1999, the day after New York state regulators approved HSBC’s acquisition of Safra’s banks. His dozen machine-gun-armed former Mossad bodyguards had not protected him. Initially, police and media reported that two hooded intruders, suspected to be Russian mafia hit men, had set the arson fire that killed him. The story was later changed to blame Safra’s male nurse, and to paint Safra as a whistleblower.[4]

The Federal Reserve approved HSBC’s acquisition of Safra’s banks on December 6, 1999, three days after his murder.[5]

The deal doubled HSBC’s private banking business to about 55,000 international private banking clients with $120 billion of funds under management.[6]

            Through HSBC’s offshore units on Guernsey and the Cayman Islands, HSBC now controlled Hermitage Capital Management. Their Hermitage subsidiary was managed by its Moscow-based founder, William Browder, who was born in the U.S. but became a British citizen (the UK doesn’t tax offshore profits).

Hermitage became by far the largest foreign-owned investment fund in Russia, with (officially) $4 billion under management. Through it, HSBC siphoned more billions out of that bleeding country.[7]

HSBC had also taken over Republic National Bank’s client relationship with the Al Rajhi bank of Saudi Arabia. Al Rajhi was a central part of the support structure for Osama bin Laden and the al Qaeda terror network, whose 9/11 terror attacks were then a year and a half in the future (see details in Part 2 of this story – the next post).

Another part of the deal was the Republic National Bank of New York’s unit in Mexico, which would give HSBC the beginning of a connection to the underground economy in that country.[8]

Opium War Against the USA — Preliminaries in Mexico

HSBC moved swiftly to gain a dominant position in Mexico, and the British government acted as its enforcer, just as Lord Palmerston had done with his two opium wars in China. In August 2001, Prime Minister Tony Blair visited Mexico as an advance party for HSBC. Blair and President Vicente Fox discussed promising investment possibilities and Mexico’s new role in the world.[9]

Under pressure applied through the Mexican government, the bank Grupo Financiero Bital sold itself to HSBC Holdings a year later. The HSBC deal and earlier transactions by Citigroup and two Spanish banks put essentially the entire Mexican banking system under foreign control.[10]

            It should be noted that, like the old East India Company, HSBC is no mere private corporation. UK government bank regulators and watchdogs over terror financing served simultaneously as HSBC officers.[11]

According to the U.S. Senate’s subsequent investigation, HSBC’s leaders checked beforehand to make sure they could readily use Bital for large-scale criminal money-laundering:

“HSBC purchased a Mexican bank known as Bital in 2002. A pre-purchase review disclosed that the bank had no functioning [anti-money-laundering] compliance program, despite operating in a country confronting both drug trafficking and money laundering.”[12]

One week after this ominous acquisition, Denise Holt presented her credentials as the new UK ambassador to Mexico.[13] She later served (2011-2021) as a director of HSBC Bank PLC (UK), and as chairman of the HSBC subsidiary, M & S Bank.[14]

Through Bital and its six million depositors, HSBC now controlled the nerve centers of Mexico’s financial system and its underground economy.[15]

With these arrangements in place, hyper-violent Mexican narcotics cartels would use

“Mexican and U.S. financial institutions to launder as much as $39 billion each year.”[16]

HSBC would be the leading bank in this crime, through its New York offices and its Mexican branches (including Bital’s shell company in the Cayman Islands).

How Blood Pumped Up the Bubble

In November 2002, HSBC agreed to pay $16 billion to acquire predatory subprime mortgage lender Household International, the largest U.S. company specializing in bleeding borrowers with poor credit history.[17]

 Just one month before HSBC bought it, Household had agreed to refund $484 million to hundreds of thousands of its victims to settle charges that it deceived borrowers into paying mortgages at up to twice the promised interest rates.[18]

            Crime has been central to HSBC’s existence. The bank’s overall profits for the first half of 2003 increased by $651 million due to revenue through its new predatory lending unit, Household International, and by $272 million from its new money-laundering unit in Mexico. It was a total profit increase of 25% over the previous period, instead of less than 5% without these two acquisitions.[19]

            Through this pivotal acquisition, HSBC gave its blessing to the securitization of subprime mortgages in the USA. This type of mortgage scam took off to the stratosphere after the HSBC buy-in, helping inflate the speculative bubble that crashed the world economy five years later.[20]

The Great Game in Russia, Played Offshore

In November 2005, Russian authorities revoked HSBC’s Moscow manager William Browder’s visa, sent him back to London and denied him future entry in the interest of “ensuring the security of the State, public order or public health.”

 In the first 18 months after Edmond Safra started up Hermitage Capital Management, the fund had grown 800% to $1 billion. Its value collapsed in the late 1990s with Russia’s general economic disaster. But under HSBC’s offshore management, the fund ballooned so that someone putting in $10 million in 1996 would have $230 million by the time Browder was kicked out of Russia. The firm was charged with tax evasion.[21]

Stephen Green, HSBC’s chief executive since 2003, and Jack Straw, Tony Blair’s Foreign Secretary, lobbied Russia’s government to restore Browder’s lofty status, to no avail.[22] Green was promoted to chairman of HSBC in 2006, and would lead the bank through four more years of criminal money-laundering and management of the covert funds of the world’s wealthy. So, UK Prime Minister David Cameron ennobled him as Baron Green of Hurstpierpoint, and appointed him as UK Minister of State for Trade and Investment.[23]

The U.S. Department of Justice began (September 2008) an investigation of HSBC’s Swiss private banking unit for helping wealthy Americans evade U.S. taxes — hiding $10 billion in offshore accounts undeclared to the Internal Revenue Service.[24]

Robbing Customers, Investors, the Government and the Elderly

In the two years before the Senate Report came out, HSBC was

• fined for knowingly selling $1 billion in worthless securities to their unsophisticated customers;[25]
• sued (for $9 billion) for pumping billions through offshore funnels into Bernard Madoff’s looting scheme;[26]
• slapped with a restraining order to stop arranging customers’ tax-evading offshore transactions,[27] and compelled to turn over the names of those they did it for;[28] and
• fined and ordered to compensate the survivors after selling unwary residents of nursing homes securities that were calculated to pay off only after they died.[29]Upgrade to paid

---

[1] The United States Senate Permanent Subcommittee on Investigations of the Committee on Homeland Security and Governmental Affairs, Carl Levin, Chairman, “U.S. Vulnerabilities to Money Laundering, Drugs, and Terrorist Financing: HSBC Case History,” (hereafter cited as “Levin Report”) https://www.hsgac.senate.gov/wp-content/uploads/imo/media/doc/PSI%20REPORT-HSBC%20CASE%20HISTORY%20(9.6).pdf

[2] Robert I. Friedman, “The Money Plane,” New York magazine, January 22, 1996.https://books.google.com/books?id=0OICAAAAMBAJ&pg=PA24&lpg=PA24&dq=safra+%22new+york+fed%22+friedman&source=bl&ots=ZBLe0ejwli&sig=gq4QvzOZfkjLcmulVrvCNgv1_U&hl=en&sa=X&ved=0ahUKEwie86uK85HOAhWDGD4KHVGzAnEQ6AEIMDAD#v=onepage&q&f=false

[3] Jathon Sapsford, “Safra Accepts Less Cash to Finish Republic Deal,” Wall Street Journal, November 10, 1999

[4] John Lichfield, “Billionaire who blew whistle on Russian cash scandal is killed in Monte Carlo,” Independent, December 3, 1999. Andrew Anthony, “The strange case of Edmond Safra,” Guardian, October 29. 2000. Dominick Dunne, “Death in Monaco,” Vanity Fair, December 1, 2000

[5] “Fed approves Republic New York, HSBC merger,” CBSMarketWatch.com, December 6, 1999.

[6] “HSBC Completes the Acquisition of Republic New York Corporation and Safra Republic Holdings,”

https://www.sec.gov/Archives/edgar/data/83246/0000903423-00-000003.txt

[7] For HSBC ownership of Hermitage and asset volume:

https://www.ft.com/content/13e35c46-9637-11e2-9ab2-00144feabdc0

[8] Levin Report, pp. 157, 203

[9] “Blair Begins His Mexico Visit,” Deutsche Presse-Agentur, August 3, 2001.

For Vicente Fox’s slavish relationship to Blair and City of London financiers, see Vicente Fox autobiography, Revolution of Hope (Viking, 2007).

[10] David Luhnow, “Mexican Bank Bital Is for Sale as Regulatory Pressure Grows,” Wall Street Journal, July 15, 2002. Elisabeth Malkin, “HSBC Buying Fifth-Largest Bank in Mexico for $1.1 Billion,” New York Times, August 21, 2002.

[11] HSBC’s Chief Executive Officer, Keith Whitson, had been appointed in 1998 a director of the Financial Services Authority, the Blair-created sham bank regulating agency, and was on the FSA board until 2003, while carrying out both the Safra and the Bital takeovers. “Financial Services Authority Board Appointments,” HM Treasury statement, Nov. 28, 2001. http://www.wired-gov.net/wg/wg-news-

Meanwhile Sir Brian Moffat, an HSBC director and its Deputy Chairman, was simultaneously a Director of the Bank of England (2000 to 2006). See Bank of England Annual Report for 2006.

https://www.bankofengland.co.uk/-/media/boe/files/annual-report/2006/boe-2006while HSBC’s main criminal infrastructure was being assembled and put into action.

Lord Butler of Brockwell, an HSBC director from 1998 to 2008, was useful as the master of official deceit. Lord Butler ran the cover-up for the Thatcher-Saudi al Yamamah arms-for terror deal, and the “Butler Review” paper-over of Tony Blair’s Iraq war lies after the fiasco of the Hutton Inquiry.

[12] Levin Report, p. 35.

[13] Mexico, Office of the President, “President Fox receives letters credential from seven new ambassadors,” August 29, 2002. http://fox.presidencia.gob.mx/en/activities/pressreleases/?contenido=3602&pagina=20

[14] HSBC annual report, 2021. See also https://wallmine.com/otc/ibdry/officer/2029035/denise-holt

[15] Visiting Mexico in 2007, Lord Mayor of London John Stuttard commented, “HSBC kindly arranged a dinner for us at their stunning new national headquarters and amazed us at the size of their operations, with 25,000 staff and 1,500 branches…” John Stuttard, Whittington to World Financial Centre: The City of London & Its Lord Mayor; 2008, London, Phillimore & Co, p. 245.

[16] Levin Report, p. 40.

[17] Erik Portanger, Joseph T. Hallinan and Patrick Barta, “HSBC Sets $16 Billion Deal for Household International,” Wall Street Journal, November 15, 2002.

[18] E. Scott Reckard, “Lender to Refund Up to $484 Million in Settlement,” Los Angeles Times, October 12, 2002.

[19] Heather Timmons, “Household International Deal Lifted HSBC’s First Half Profit,” New York Times, August 5, 2003. See also http://www.nytimes.com/2003/08/05/business/household-international-deal-lifted-hsbc-s-first-half-profit.html

[20] Floyd Norris, “The Deal That Fueled Subprime,” New York Times, March 5, 2009]

[[http://www.nytimes.com/2009/03/06/business/economy/06norris.html

[21] Wikileaks obtained a 2009 “private briefing document” spinning the affair as HSBC and Hermitage being victims of fraud by the Russian government. It was produced on behalf of two HSBC units on the island of Guernsey and HSBC “Global Private Banking.” The “joint venture between HSBC and Hermitage Capital Management” invested in Russia on behalf of institutional and individual investors from Saudi Arabia, Israel, Oman, UAE, Lebanon, Hong Kong, South Africa, the U.S. Europe and South America. The document presents Hermitage as the largest portfolio investor in Russia from 1996 to 2005, more than twice the size of the next biggest fund. See the Wikileaks release at Wikilwikileaks.org/gifiles/attach/172/172317_Hermitage%20Presentation.pdf

[22] Nick Kochan, “Russia’s Unorthodox Exile,” Guardian, March 25, 2006.

Heather Timmons and Andrew E. Kramer, “The Bull of Russian Investment Finds Himself in Forced Hibernation,” New York Times, April 25, 2006.

[23] Baron Green later chaired the Advisory Council to TheCityUK – the combined City of London/government elite policy group — until HSBC’s Swiss tax evasion scandal finally forced Green to step down.

Green is an ordained priest of the Church of England. He was known to compose sermons during his world business travels. https://www.referenceforbusiness.com/biography/F-L/Green-Stephen-K-1948.html

[24] Lynnley Browning, “U.S. Is Said to Expand Tax Inquiry,” New York Times, December 1, 2008.

[25] In April, 2010: HSBC agreed to a fine of $1.5 million from the Financial Industry Regulatory Authority (FINRA), a self-regulatory agency of Wall Street, over abuses of customers in sales of worthless “auction-rate securities.” FINRA press release 22 April 2010. And FINRA fined HSBC $375,000 for unsuitable sales of “collateralized mortgage obligations.” FINRA press release, August 19, 2010.

[26] HSBC settled the suit for $62.5 million in 2011 (https://www.theguardian.com/business/2011/jun/07/hsbc-madoff-case-settlement), but after years of litigation HSBC got the settlement overturned.

[27] Federal Reserve order issued October 4, 2010. http://www.federalreserve.gov/newsevents/press/enforcement/enf20101007c1.pdf

[28] HSBC solicited clients through offices in New York and California, and counseled them on avoiding taxes by concealing funds in the British Virgin Islands, India, Singapore and Shanghai. In January 2011, Federal Judge Phyllis J. Hamilton (following the lead of Department of Justice probers) ordered HSBC to turn over the names of its clients who were suspected of tax evasion through HSBC operations in India.

Lynnley Browning, “HSBC Is Said to Be the Focus of a Tax-Evasion Investigation,”

New York Times, January 26, 2011. Lynnley Browning, “HSBC Told to Disclose Records of Possible Tax Cheats,” New York Times, April 9, 2011.

[29] In December 2011, the U.K. Financial Services Authority fined HSBC £10.5 million for selling unsuitable, inappropriate financial products to elderly customers in nursing homes. HSBC agreed to pay £29.3 million in compensation to survivors in addition to the fine. “FSA fines HSBC £10.5million for mis-selling products to elderly customers,” FSA press release Dec. 5, 2011.

---

A note from the author:

If you enjoy my writing, please consider supporting my work by subscribing to my substack.