A US report claims that the UK’s Financial Services Authority “hampered” an official investigation into money laundering allegations against banking giant HSBC and that George Osborne sought to influence the inquiry.
The British chancellor intervened to influence a US investigation into HSBC, after the bank admitted laundering money for drug cartels and terrorists, by warning prosecution could throw the global financial system into turmoil.
According to the report, HSBC was not prosecuted over the allegations in the US because officials were concerned it would cause a global financial disaster.
A US House of Representatives committee report found the British Chancellor and Financial Services Authority (FSA) intervened in a US Department of Justice (DOJ) investigation into illegal activities by the banking giant.
According to the report, prepared by Republicans, the DOJ considered criminal charges in addition to a £1.2 billion (US$1.6 billion) fine it levied in December 2012, but came under pressure from Osborne to drop prosecution.
The report, ‘Too big to jail: Inside the Obama Justice Department’s decision not to hold Wall Street accountable’, said Osborne sent a letter in September 2012 to Ben Bernanke, then-chairman of the Federal Reserve.
‘What’s Osborne doing about HSBC having more offshore companies than any other bank’ McDonnell at Treasury Questionshttps://t.co/v7lDnKp3VY
— RT UK (@RTUKnews) April 19, 2016
“Chancellor Osborne insinuated in his letter of September 10 that the US was unfairly targeting UK banks by seeking settlements that were significantly higher than ‘comparable’ settlements with US banks,” the report claimed.
In the letter, Osborne wrote that questions over HSBC’s continued ability to clear US dollars “would risk destabilising the bank globally, with very serious implications for financial and economic stability, particularly in Europe and Asia.”
— RT UK (@RTUKnews) April 5, 2016
In addition to Osborne, the then-UK banking regulator, the FSA, also “weighed in very strongly” against a criminal prosecution, according to an email from a senior Treasury Department official.
The committee report also found that intervention from the FSA “appears to have hampered the US government’s investigations and influenced DOJ’s decision not to prosecute HSBC.”
If DOJ had gone ahead with a criminal prosecution, and HSBC had been found guilty, the US government would have had to review and possibly revoke the bank’s license to do business in the country.
Then-Attorney General Eric Holder subsequently overruled the advice of his own prosecutors, who were pushing for criminal charges to be levied.
In March 2013, Holder told the US Congress that some banks were “too large” to prosecute.
“I am concerned that the size of some of these institutions becomes so large that it does become difficult for us to prosecute them when we are hit with indications that if you do prosecute, if you do bring a criminal charge, it will have a negative impact on the national economy, perhaps even the world economy,” he said.