Tuesday, November 06, 2012

The silence of the hyenas!

I think we are rapidly approaching the time when we will soon be inhabiting a parallel universe from the major high street banks. They are clearly living in another paradigm from the rest of us, where they have been encouraged to take leave of all sense of reality, a concerted retreat from sanity which allows them to pretend that their criminal actions in money laundering, PPI fraud, or LIBOR manipulations are really perfectly normal and in the normal course of doing business, and the real fault lies with the regulators and the politicians who insist on passing laws which as far as the banks are concerned, merely get in the way of their doing as much criminal business as they wish.

They have been behaving in this organised criminal fashion for so long, and in the process, making so much money, that they now believe that they are truly above the law which applies to mere mortals. They honestly have come to believe that they are the Masters of the Universe, the financial Jedi, and that ordinary laws passed by democratic processes do not impact upon them. How else can you explain the rash of shoddy articles suddenly appearing in all good Tory and City apologist papers, bemoaning and bewailing the unreasonable way in which the poor British banks are being treated.

Suddenly, the fact that they are openly and cynically breaking international laws, implemented through the exercise of the democratic function, is of no account. Engaging in a level of organised criminality which would have made Lucky Luciano proud, is what has come to be expected of them, it's what they do; an exercise in wholesale law breaking for which they express no sense of remorse, they refuse to be drawn on the admission of any sign that they regret their excesses, and instead, they call to their aid the PR men, the word-weasels, the petty scribblers and the traditional lickspittles and poltroons who champion their cause, to downplay their wrong-doings. When we might expect them to speak out and express contrition, all we get is corporate silence, the silence of the hyenas!

Recent stories in the Daily Telegraph point to the support of my thesis. Take the title from the edition of 6th November, "...America's self-aggrandising regulators are biggest risk to HSBC..."

Of course, silly me, why didn't I realise that it was not HSBC's criminality or greed that had dumped them in the shit, but some jumped-up, puffed-up American regulator, keen to put another notch on his gun!

I should have seen through the Americans' little game. These fines were not being levied against HSBC because they were operating like a rogue operation, moving ziga-gillions of dollars of drug money for the Mexican cartels, in complete disregard for every fucking anti-money laundering law and regulation in the world. No, they were imposed because in the words of one writer on the Daily Torygraph, "...myriad US regulators have now found a wonderfully self-aggrandising business model - namely targeting foreign banks and using the fines levied to launch fresh enquiries, ad infinitum..."

I wonder how this man manages to keep his lunch down sometimes! But wait on, there's more about these perfidious Americans. When talking about the criminal investigations which HSBC has been subject to, he complains;

"...But the chances of something amiss turning up tends to increase when you have four US federal agencies – the Department of Justice, the Federal Reserve, the Office of the Comptroller of the Currency and the Department of Treasury Financial Crimes Enforcement Network – all poking their noses in and ruminating on how big a fine they should levy. And that’s before a similar clutch of regulators at New York state level get involved assessing separate penalties for HSBC’s alleged failure to screen a Saudi Arabian bank, possibly linked to terrorists..."

I mean, what could be more unreasonable than an American law enforcement agency should bother to do the job they are created to do? That's what's so wrong with this world, you see, instead of behaving like decent British regulators and sticking their heads in the sand and ignoring the facts and pretending that nothing criminal has happened, because it has been carried out by the suits, and anyway you can always tell the public that there are no criminal offences which apply, no, the Americans actually have the temerity to do their job properly! I mean, is this unsporting of them, or what?

And it's not just HSBC the writer seems to have a crush on either. He wants to apologise for Standard Chartered, another bank which after years of wrangling about how many crimes it was going to admit to, finally wound up with a nasty reminder of the Americans' powers when it comes to hitting rogue banks where it hurts. 

"...But, as rival Standard Chartered has also shown, the biggest risks do not come with banking in far-flung places – but in dealing with US regulators alert to any consequent money-flows through banks’ American subsidiaries..."

You see, those damned regulators again, sticking their noses in where Standard Chartered would have preferred them not to go! Let us remind ourselves that Standard Chartered were not investigated for banking in far-flung places. They were investigated and fined for routinely ignoring and flouting US rules on sanctions and in particular with Iran, and thus laundering vast sums of money through the US banking system. 

I keep on telling banks, laundering money through the New York Bank Clearing system will get you in deep shit with the US authorities. If you don't want to run this risk, don't do business in dollars and don't flout US sanctions! It's their jurisdiction, it's their currency, it's their rules, it's their game, so don't fuck about with them! 

When discussing how apparently easy it is to fine banks in America, the writer says of HSBC's new business line in Mexico of 26 million new potential clients, described by HSBC as a 'demographic bonus', he says;


"...That should go down well with the American authorities. HSBC has just made another $800m (£500m) of provisions on top of the $700m in the previous quarter – largely for the bank's failure to spot how many of its exciting sombrero-clad clients had links to Tijuana’s money-laundering fraternity. For the regulators, it looks like easy pickings..."



Spot the satirical irony here. Oh poor HSBC, regardless of the global legal requirement to 'Know Your Customer' and apply enhanced due diligence in High Risk countries, their '...exciting sombrero-clad clients...' insisted on bamboozling them into dealing for money launderers. Here's a world leading bank with experience in over 70 countries, but they want us to believe that they could get turned over by a bunch of peons in big hats! You couldn't make this crap up! Does anyone in HSBC work in the risk management practice?


Actually, that's what always makes me laugh about banks like HSBC, Barclays, Lloyds, Standard Chartered, et al, how they make such a big issue about their ability to 'manage risk'. 

When I used to work at a major IT provider in the late 1990s, we were always being told how efficient the big banks were at managing risk, and how they spent serious sums of money on hiring those people who could bring new designs of risk management tools and solutions to their stable. Well, they obviously weren't that good!

Another writer for the Telegraph in a piece entitled "...We're a British Bank, get us out of here..."  points out a very interesting side-light on the scandals around bank crimes. Apparently the British regulators have been upset by the scale of the financial penalties imposed on major UK banks and have privately expressed their fury at the way the US authorities seem to have singled out this country's lenders for punishment.

It's not as if they were concerned about the fact that British banks were breaking US laws, or flouting international standards, or riding roughshod over global conventions to which the UK is a signatory. They too apparently subscribed to the view that this was some kind of commercial attack on UK interests as opposed to the reality that the size of these fines and the way in which the investigations were moving at pace just made the UK regulators look silly and amateurish in the way they deal with the problems, and in comparison to their US counterparts?

However, even the anger at their US counterparts, it appears is tempered by a sense of disbelief at the way several major high street banks naively wandered into the American market and operated their businesses in such a way as to leave them facing such large fines. As managers in other industries have learnt to their cost, you ignore the highly politicised nature of American corporate justice at your peril.

Excuse me, Mr British banker, why on earth go to New York and take such chances, when you could have stayed here in Britain and got away with murder. You've been getting away with it here for years so why try and change the model now? Were you so naive, so arrogant, that you thought the Americans would let you get away with the kind of criminality you have traditionally been excused in the UK?

This is fascinating stuff. Let me make sure I understand this. The British regulators, the FSA (and presumably at this time the Bank of England) have been exercised by the way British banks have sought to commit the sort of crimes in America for which they have been disciplined and hugely fined, but which had they been committed in the UK, would have probably been called by some benignly misleading name such as 'mis-selling', or even better, probably ignored for as long as possible. The commentator continues;

"...For executives at British banks the post-millennial scramble into the US market has been replaced by a headlong charge for the exit. HSBC has rapidly pared back its operations in the country and is on course to completely exit the US retail business. RBS is facing increasing pressure to sell up, too, though its managers are reluctant to crystallise the loss any sale is likely to require..." 

Not surprising really, can't be much fun trying to run your bank on the British High Street model where the customers are led as lambs to the ritual slaughter for every new wheeze, scam, fiddle, and fraud the banks can dream up as new products, when you have a regulatory atmosphere that wants to throw the book at you every time they find you on the take?

The Daily Telegraph continues its anti-US rhetoric; "...It will be understandable if the current attack on British banks by the US authorities continue their rapid retrenchment..." 

For the life of me I cannot understand why simply because they want to do the jobs they are paid to do, the Americans should be subject to this kind of pillorying by a national newspaper which should know it is giving tacit support to every organised criminal act of which the British Banking sector is capable. Perhaps they don't care anymore, perhaps they never really cared, perhaps they were always prepared to turn a blind eye as long as their monied friends in the suits were making money of whatever kind or colour?

As I said, this was all about the management of risk, for which the British banking sector has always believed it has a genius (to paraphrase Professor Jim Gower!) The debate on risk management used to be loud and long, but no-one ever thought to incorporate regulatory risk into the model!

I used to try and make a contribution to this debate by seeking to devise a software product and procedures which would help these banks identify specific US-centric risks which could be of real danger to them. As a lawyer, I was only too well aware of the issues of US extraterritoriality, and how the US justice authorities conducted their investigations and prosecuted the crimes they discovered.

I was aware also of the plea-bargaining mechanisms they adopted to encourage recalcitrant criminals to agree to plead guilty. I tried, vainly to encourage the big banks to see US market regulatory standards and procedures as a primary risk issue which needed to be managed, and I tried to get them to understand how to implement systems and controls to minimise those risks. All they did was laugh at me and say it wasn't an issue for them! 

So, now I sit back and watch all these cases and think how much they could have saved themselves if they hadn't been so arrogant. Pay up boys and look good about it and stop whingeing, 'cos you had your opportunity and you blew it!


















14 comments:

AbogadoNZ said...

This is now going beyond a joke; - once the so-called independent media starts accepting banksters' spin then it's "Houston we have a problem". Perhaps we need to start thinking France 1789 and deal to the bastards. Great post Rowan but we need to develop a strategy to sort this mess out. May be another great fire would do it.....

Jason said...

@AbogadoNZ Agree strongly on need for strategy.

People will start talking about France 1789. I wouldn't defend the French Aristos, but after 1789 what did the people get? The Terror, followed by Napoleon, followed by more Aristos.

Question for Rowan: if you record audio at Chatham House and then broadcast it on Dispatches with disguised vox and no identification of the speakers, are you breaking Chatham House Rules?

This issue is still waiting for its Milly Dowler hack moment.

Rowan Bosworth-Davies said...

Yes, you are breaking the spirit if not the literal wording of the rule.

Jason said...

I just wonder if you or someone you know may be in a position to get evidence that would be a game-changer.

Nick Davies broke the Dowler hack story on the 4th of July -- Leveson was announced on the 6th. It was close to being cause and effect. Davies has spoken at length of how that one story forced the government to part company with Murdoch, with whom they'd done nothing but stick up to that point.

It mobilised the already-existing public anger and started a process that (you never know) has the chance of insisting on real legislative teeth.

How do we produce such a moment for the banks?

Rowan Bosworth-Davies said...

The Dowler hack story was something that plumbed the uttermost depths of human depravity and not to be willing to expose its adherents would have been to commit political suicide. The criminal activities of the banks are what is keeping the British banking industry afloat and is preventing, for the time being, a total collapse of the bankrupt system. To seek to do anything to further undermine that state of affairs would be to commit political suicide. Not much of a choice really!

Jason said...

To seek to do anything to further undermine that state of affairs would be to commit political suicide. Not much of a choice really!

True... but you see where that leaves us. The only alternative that gets results is a non-establishment politician who whips up the mob.

That's how Hitler did it after all.

I was sort of hoping that you and what you represent could make a difference short of that exigency. :)

The Fatsnacker said...

Just gets funnier by the day...NOT

http://www.taxresearch.org.uk/Blog/2012/11/07/the-government-outsources-the-process-of-stopping-private-sector-tax-abuse-to-the-private-sector/

The Fatsnacker said...

Just gets funnier by the day...NOT

http://www.taxresearch.org.uk/Blog/2012/11/07/the-government-outsources-the-process-of-stopping-private-sector-tax-abuse-to-the-private-sector/

Rowan Bosworth-Davies said...

Jason, I am very honoured that you might think that I could make a difference. Let me try and describe how the banking Establishment muzzles people like me. I was recently invited to speak on money laundering to an audience of senior, Group-level money laundering compliance directors at a dinner in the City. Within seconds of my starting to debate the topic on the agenda, it was made very clear to me that the delegates were not intending to hear me, and they used the time filibustering, and talking over and around me about how awful it is that members of the public defraud banks. That's all they wanted to discuss, and they made it clear that they were not listening to me. At the end of the evening, one delegate who had remained silent, a man from the Bank of England came up to me and apologised and said he was shocked at how rude the audience had been and asked me to get in touch with him as he wanted to discuss a number of matters I had tried to raise, with him privately at the B of E. After various phone calls e fixed a date to meet last Friday at the B of E at 9.00. He even had a room fixed. Last week I published a blog entitled 'Jobs for the boys and girls at the FSA'. In the middle of the week I received an email from one of his assistants in which she told me "...Mr X sends his apologies but this is not the right time for your meeting with him. He has asked me to cancel..." I asked in return, "...Is this time inconvenient because something else has intervened, and may we therefore re-book the meeting for another time, please, or are other considerations involved..."? His answer when it came was; "...Let's aim to pick up in a month or so. Timing should be better then..." He has not told me why meeting me now is inconvenient, but my guess is that I have had the black Spot put on me by the FSA because I had the temerity to point out that the FSA was employing people with no experience to deal with financial crime. I have tried to get another date but my calls go unanswered. When the Establishment wants to marginalise you, they ignore you. I would have loved to have had the opportunity to talk to the BofE about the regulatory failures, but as you can see, I am not being given the opportunity. I am used to this kind of treatment, don't worry, but this is the way it is. Unless I can get support from someone with real influence who cannot be leant on, then I shall continue to be ignored. At least the blog is reaching inspired people like you, and you can help more than you know by spreading it among your friends and re-sending it to your contacts. For this support I am very grateful. Keep the faith!

Jason said...

Yes I did read your many earlier posts about this too Rowan. (That was why I asked about Chatham House).

But this is why I ask about the possibility of something that will shock the public via the media...

Hawkeye said...

Hi Rowan

Interesting story about the BofE delegate.

I'd like to try and further the point that Jason makes and to tie it in to the two key issues that your blog raises:

1) Past & present conduct by the banks IS fraud (your recent posts explaining this have been excellent!)

2) There is a deliberate cover-up / clamp-down on investigations

Not only did the hacking story reveal the wide-scale crime in the first place, but it clearly showed that the Murdoch empire WAS aware of it, and tried to quash / cover it up. (Not only that but the Met appears complicit in leaking personal details and turning a blind eye too!).

The recent Savile affair is similar in nature, in that not only is the original crime abhorrent, but there are sweeping suspicions of an internal cover-up by the BBC (i.e. the 2011 Newsnight piece getting pulled).

Therefore, can we assemble a watertight case for the 2nd point?

At the moment it just seems like circumstantial evidence and hearsay. What evidence could we collect to demonstrate this cover-up conclusively?

Jason said...

@Hawkeye good points.

And I would come back very strongly to what Rowan said concerning "the uttermost depths of human depravity" -- I agree with him most strongly that this is what made the story so powerful.

It's not a nice subject, but those tabloid hacks lost their humanity from daily living in an environment where they were encouraged to do so.

I'm betting precisely the same thing is true of the bankers. As Rowan says, "a parallel universe".

What I think I meant by a "Dowler hack moment" is a moment which truly lays bare the inhumanity of these people and their parallel universe. If that happened, once again, the will of the people would have a definite focus.

Already what Rowan is saying about the bankers fillbustering, complaining and being victims, in other words not giving a flying fiddle-de-f**k about the people they are defrauding (and these are not victimless crimes) has me wondering if there isn't a way to catch this inhumanity in a way that stirs action -- at the same time as making Hawkeye's point about coverup of course.

That inhumanity, in other words, may be our best lever. The Savile case, as Hawkeye says, is no different.

It makes me wonder what would happen if Rowan were somehow to collaborate with Nick Davies himself -- a great guy in my opinion, who exposed the press way before Leveson, and exposes all sorts of other things people want covered up, including knowing how to play a long game.

Salford Lad said...


What we got with the bankers ,politicians and mainstream media is a 'controlled' game.
The controllers dig the dirt or collude in manufacturing it, record the evidence and use it to influence decisions, be they political, judicial,false news etc.
That is why the Savile case and Care homes abuse is the wedge that may open up this depraved web.
But watch as they dissemble,distort ,obfuscate,distract to cover their tracks.
The BBC and Entwhistle cases are a perfect example how they have sidelined the real issue of Paedophilia in the upper reaches of the Establishment.

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