Monday, December 31, 2012

Why the major global banks have become the enemy of the State and should be treated in the same way as Organised Crime or Financial Terrorists!


The most influential book I have ever read, which first alerted me to the incredible complexities of global criminal financing is called 'Hot Money and the Politics of Debt'. It was published in 1987, written by a Canadian professor of economics called R.'Tom' Naylor. It is a textbook on global economics, but it reads like a thriller. It fascinated and appalled me in equal measure, and no book I have ever read, before or since, has influenced and informed me as much as this book has done. I re-read it periodically to renew my faith in the legitimacy of my views, and I owe Tom, who is now a good friend, a great debt of gratitude for sharing his insights with me.

It was Tom Naylor who first alerted me to the existence of the vast ball of hot and homeless money which roams around the world looking for a temporary home before moving on to find another refuge which offers a better rate or a better political climate; and how the world '...of high finance, governmental and corporate, became hostage to its existence, and the price the rest of the world will continue to have to pay until those hostages can be released from its vice-like grip...'

Talking about the redirection of global banks' financial ambitions, Naylor says this;

"...Since the late 1970s, the world has also seen a dramatic rise in the organisational skills of white-collar criminals - specifically their ability to control illegal markets, to render the operation of legal markets illegal and to debauch the political systems that are supposed to keep their power in check. The financial counterpart of the growing power and scope of white-collar crime is the increasing use of the instruments of peekaboo finance and a parallel expansion of its machinery..."

The financial crisis which has caused such damage to the economies of a wide group of Western economies, arose directly from the criminal activities of banks who had long since stopped seeking to provide conventional banking services to their customers, and who, through the use of Naylor's peekaboo financing, were looking instead for ways in which to continue to manipulate the world's sources of capital flows, with the view of enhancing their own profitability.

The world's major banks have ceased to have any conventional function as the providers of banking services to ordinary men and women. They are now profit centres in their own right, generating profits to satisfy the exponentially-growing demands of their shareholders, who have come to rely on the dividends paid to them by their bankers in return for maintaining their shareholdings.

These banks have no 'normal' social purpose at all, in fact, if they could get rid of small clients like you and me, from whom they make no money if we stay in credit (which is why they underwrite the student loan system because it guarantees a generation of young people permanently indebted to them), they would jettison us tomorrow.

They have been trying to marginalise small retail clients for years, because we are no use to them. They exist to create value through debt which they then sell to each other and some clients in the form of securitised investment possibilities, relying on the 'greater fool' theory to ensure they don't end up with the toxic parcel at the end.

Their real role is to facilitate the safe handling and onward transmission of Naylor's  vast ball of hot, criminal money which rolls around the financial world, seeking temporary accommodation.

They each take it in turn to earn a profit from their actions before helping the money to move on again to the next facilitator. That's what the major financial institutions in the UK exist to do and have done for many years, and vast fortunes have been built on this facilitation of such criminal activity. These banks (now on a global basis) exist to facilitate the ambitions of international organised crime, because they have the available capital which needs storing, housing, a safe haven, and onward transmission in a disguised form. These institutions are merely an extension of the criminal facilitation process, because the money which they seek to manage and attract is no longer the proceeds and profits of ordinary commercial businesses, but the proceeds of white-collar criminals, organised crime gangs, drug traffickers, and foreign dictators.

They are an integral part of the criminal money flow function, and they rely on  their relationships with the major banks to be allowed to 'wet their beak' in the pool of money which the major banks are handling.

The modern problem for the global financial sector is that the world's major banks now exist for the purpose of supporting the financial interests of a relatively limited number of major shareholders, Insurers, pension funds, other banks, (lots of other banks), investment funds and trusts etc. These institutions exist, like them, to handle and facilitate the through-put of the staggering volume of criminal and dirty money which daily flows through the financial sector, because the profits there from are just so incredibly valuable.

The biggest problem for these banks is that by far the greatest amount of this money is illegal to handle under international money laundering laws. All banking institutions are now effectively subject to international laws which prohibit the handling or the facilitation of criminally-acquired money from whatever source, and that money includes the proceeds of drug trafficking, all other criminal activities (including tax evasion), and the proceeds of terrorism. Added to that are the criminal proceeds generated through the various exercises associated with sanctions busting, so when taken as a whole, there is a vast reservoir of black money which is legally denied to them, but which they desire very much indeed.

The answer for them is how to find ways of handling that criminal money without being too easily identified and interdicted. Money laundering methods have become ever more sophisticated as the financial institutions have sought for ever more sophisticated ways of handling the money without getting caught too often.

One of the ways in which they send this message is to persuade their home Governments and financial regulators that they are financial geniuses, who alone know how to continue to maintain the throughput of capital upon which so much of the well-being of the contemporary economy depends.  

This is a particularly subtle but cynical method for protecting their hegemony. They spread the message that those who are employed within the banking sector are financial geniuses without whom, the whole edifice would fail to function profitably. They reinforce this message by paying their staffs salaries and bonuses which outweigh anything normally dreamt of within the conventional meaning of the realms of avarice, they engage in wholesale and widespread tax-planning and aggressive fiscal avoidance schemes, and they encourage wholesale acts of internal criminal fraud against their retail clients.

This exercise in wholesale client gouging is predicated by a number of stimuli. First, retail clients are considered to be fair game for being ripped off, because it is so easy, and can generate such huge profits.

A recent meeting with a former HSBC employee confirmed to me the ease with which PPI fraud was perpetrated against the client base of the bank he worked in. He described how, as a young bank employee he was routinely required to meet financial sales targets of such vast proportions that the only way to achieve the monthly numbers was to engage in PPI fraudulent sales in volumes which caused him to be physically sick through shame at the end of a day's work.

He described how the monthly targets were regularly increased as each financial target was achieved, and how sales managers would regularly visit branches distributing new 'objection' sheets which he and his colleagues had to use to overcome client's sales resistance. He described knowing that these sales were completely fraudulent, and that none of the clients would ever be able to exercise the policies if they needed to use them at any stage in the future.

The outcome of this massive generation of criminal proceeds, estimated at about a figure of £40 billion, nationwide, was used by the banks as a means of co-mingling with large sums of dirty and criminal money from illegal sources, but which enabled the profits to be disguised.

The actions of creating these fantasy finances were facilitated in no small way by the criminally-complicit actions of the major firms of Chartered Accountants who were routinely used to draw up and audit the annual returns. When coupled  with the emergence of off-balance-sheet accounting methods, offshore companies being used to shelter vast sums of cash and other instruments, much of which were disguised by complex derivative contracts; and the development of debt treatments which enabled profits to be minimised for accounting purposes, and within a few years, the bank balance sheets bore about as much resemblance to reality as puss in boots!

Once these facilities were all in place, money laundering laws were routinely flouted, while in-house MLROs were treated like mushrooms and expected to behave accordingly. Within a very short space of time, banks had not only become too big to fail, they had become too big to jail. 

The money they were moving was so huge and Governments so scared and gullible that the banks would indeed relocate to other jurisdictions, as the majors would routinely threaten if public criticism became too vociferous, that it became very easy to persuade Governments to turn a blind eye, while regulators were encouraged to look the other way, when the banks began engaging in a series of wholesale criminal activities.

The risk of going to jail for managing the enormous sums from the illicit drug trade is small, when governments are beholding for their contrived power to the banking cabals which control the apparatus of fiat money.

It took the US authorities to uncover these criminals and place them before the court of world opinion. The British did nothing until the Americans took issue with them.

If there was any lingering doubt about the supremacy of the internationalist banker over the canons of law, the latest HSBC exemption from criminal charges proves that the real masters of the planet are the criminal banksters. If this settlement was an abnormality and not the rule, one might argue the expediency for pragmatism, while deployable, is necessary. Unfortunately, for the financial elites, the facts tell a very different story.

“...In court papers filed in federal court in Brooklyn, the federal government said the case against HSBC is related to the laundering of proceeds from narcotics trafficking via the Black Market Peso Exchange, a method by which money launderers convert cash narcotics dollars into Colombian pesos by buying and re-selling wholesale consumer goods. “The lack of an effective anti-money laundering program at HSBC Mexico and HSBC Bank USA, N.A. contributed to the conduct charged” in the money-laundering case against narcotics traffickers, Justice Department prosecutors said in court papers.”

“A year-long investigation by a Senate committee uncovered that HSBC acted as a conduit for drug money, disguised the sources of funds to evade U.S. sanctions against Iran, and included among its clients businesses with alleged ties to terrorism. HSBC’s internal culture has been “pervasively polluted for a long time,” said Carl Levin, a senator from Michigan, who helped lead the investigation.”

In the seminal study by John Hoefle coming out of the Executive Intelligence Research,HSBC: Flagship Bank of Britain's Dope, Inc, the historic composition of dishonest business dealings that transcend even shady banking is documented.

“It should come as no surprise that British banking giant HSBC was  caught laundering money for drug cartels and terrorist groups. HSBC, as we shall show, is the kingpin bank of the global drug trade, a bank which, since its founding in 1865, has been devoted to financing drug crops and laundering the proceeds. HSBC is, in fact, one of the key controlling institutions of the global illicit drug cartel we call Dope, Inc.

If you think that is an outlandish claim, consider the fact that Executive Intelligence Review, through its book Dope, Inc., and in its affiliated War on Drugs magazine, published in the early 1980s by the National Anti-Drug Coalition, have made this charge for over 30 years, and have never been sued or challenged by the bank.”

So, what is the proposal for banks like HSBC and others who engage in criminal enterprises?
Thanks mostly to its thriving dope business, HSBC has become one the biggest banks in the world. Among its leading acquisitions internationally, it took over the Mercantile Bank of India, London, and China, and the British Bank of the Middle East in 1959; and in 1992, it completed a slow takeover of England’s Midland Bank. In 1981, it made a bid for the flagship of the Inter-Alpha Group, the Royal Bank of Scotland, which was blocked by the British Monopolies and Mergers Commission.

In 1997, it made a major expansion into Ibero - America, buying parts or all of banks in Mexico, Argentina, Peru, and Chile, and founding a new bank in Brazil.

From the Far East to the Middle East to Ibero-America, everywhere the drug trade is flourishing, you will find HSBC. It may not handle the dope, but it does handle the money, making sure that the “citizens above suspicion” who run Dope, Inc. from places such as the City of London get their cut of the proceeds.

Now HSBC has been caught red-handed laundering money in the U.S. It’s time we set an example and revoke its charter to do business here. This is a bank which has abused us, assaulted our people, and violated the law with abandon. Revoke its charter and shut it down. Now..."

I have tried to show just how little these institutions really do to help and provide support for the struggling British economy. They truly are major criminal enterprises and they don't give a damn for their country of operation. They operate solely on a zero-sum game, they will go to where the regulation is least and the profits can be maximised to the greatest potential. That is why they will never leave the UK.

These banks perform no useful social purpose, and they deserve no sympathy or support. They exist only to facilitate an international cadre of global white collar criminals and drug traffickers. They have no interest in their retail customers who they routinely despise, how else can you explain the level of institutionalised fraud they have perpetrated against them and their interests;  they don't want to fund business, or underwrite social investment, you only have to consider the current minimalist level of funding being provided to businesses which are starved of investment capital to see the truth of this assertion, yet they expect the British tax-payer to bail them out when they are failing; they don't want to pay tax, consider their aggressive tax avoidance structures which they routinely seek to foist on the Revenue,  they don't want to contribute in any way to the restructuring of the mess they have caused and in which they have dumped the British people, and frankly, we would hardly notice their passing if we took them down, one by one, and broke up their empires.

Yes it would mean a lot of unemployment for bankers, but who is going to shed one tear for these useless, worthless parasites who contribute nothing to the common weal? Let them taste a period of unemployment or redundancy for a few years and see if and how they manage to survive. The immediate net effect would be to begin to bring down housing prices in London and the South East of England, and begin to start to re-balance the current disparity in earnings and wages between people who perform useful social functions and those wanker-bankers who add nothing to society except to force commodity prices upwards through the power of their ludicrous bonuses and their inflated salaries.

11 comments:

Philip Duval said...

Great piece, Rowan.

You really should meet the author of this blog:

http://www.golemxiv.co.uk/2012/08/a-word-about-banks-and-the-laundering-of-drug-money/

simoncz said...

The CIA lists London as a money laundering centre on its website.
Couldn't we sue the CIA to either retract the allegation or provide the evidence to substantiate the claim?

AbogadoNZ said...

Another great piece Rowan. Now what to do? Whilst the rebel in me suggests something terrible - pragmatism rules. Therefore I suggest (again) that a website is set up that names all the directors of HSBC and its subsidiaries who are ordinarily resident in UK. Alongside their names add home addresses, telephone numbers and email addresses. Then list the crimes the bank has already been found guilty of and invite suggestions. The site should say that no one should take any criminal act against any of them but boycotts and personal harrassment are another matter. When these cretins can no longer get petrol for their cars, go shopping, eat in a restaurant or be seen in public, things might change. We have to make them 'prisoners' of society. it will take a bit of organising but it can't be that hard, can it?

cringing2 said...

Banking, even without the criminal aspects, is a cost to the productive economy.

There really should be no private credit creation in a civilised society. It serves only to transfer wealth and power from the many to the few.

furzy said...

Thank you for your excellent work, Rowan. I had the dubious fortune of being a stock and commodities broker on Wall St. until my retirement a few years ago...and saw first hand the kleptocracy going on. Left several positions because I refused to lie and steal! So, never made the millions, but I can sleep at night. I have been telling friends and associates for years that there is this "hot ball" of dough seeking quick profits, which at least in part accounts for the apparent anomaly of a rising stock market amid our ongoing world-wide economic collapse, as well as what I view as massive speculation by deep pockets here in SE Asia, constructing endless resorts for their fellow one-perceters.

Antifascist said...

An excellent piece Rowan. However, you're certainly aware that US DOJ prosecutors have done absolutely nothing to bring criminal charges against senior officers at HSBC. In fact, their "deferred prosecution agreement" actually precludes criminal charges ever being laid against these disreputable cretins. Although a $1.9 billion fine sounds hefty, it is a small fraction of their 2011 profits. In other words, it is a shell game and a monumental fraud which dupes the public into believing that the government is taking steps to "rein in" criminal banks. I've explored these issue on my blog, Antifascist Calling http://antifascist-calling.blogspot.com/. The HSBC DPA template fully conforms to the model which DOJ used with UBS in 2009, Wachovia in 2010 and will undoubtedly employ if and when charges are laid against JPMorgan Chase and BofA for similar criminal conduct. I wouldn't put much stock in the "integrity" of the US Department of Justice, especially from a regime committed to "looking forward, not backward"!

Ilse Koch Lindholm said...

I agree

Ilse Koch Lindholm said...

Banks are thieves.....

Judith said...

The linkage between organized crime and government is neglected. The Salinas brothers ruled Mexico as their Narco-fiefdom, and the CIA has been a major dope trader for many years.


CIA Drug Trafficking - Deep Black Lies
www.deepblacklies.co.uk/cia_drug_trafficking.htmThe CIA's involvement in the drug trade was to generate funds to pay for the ... its predecessor, the Office of Strategic Service (OSS) already had grimy hands.
CIA Involvement in Drug Smuggling Part 1 « Dark Politics
darkpolitics.wordpress.com/cia-involvement-in-drug-smuggling-part...EARLY COMPLICITY IN DRUG TRAFFICKING. THE OSS: FORERUNNER TO THE CIA. The “multinational” business of drug trafficking can be traced back to the ...
A History of CIA Complicity in Drug International Trafficking
ciadrugs.homestead.com/files/congress-cia-drug-history-doc.htmlA Tangled Web: A History of CIA Complicity in Drug International Trafficking: WORLD WAR II. The Office of Strategic Services (OSS) and the Office of Naval ...
The Corbett Report | The CIA and the Drug Trade (Eyeopener ...
www.corbettreport.com/the-cia-and-the-drug-trade-eyeopener-previe...Oct 16, 2011 – The CIA and the Drug Trade (Eyeopener Preview) ... Skull and Bones and the American intelligence establishment from the OSS to the CIA is ...
History 101: The CIA & Drugs | Mother Jones
www.motherjones.com/politics/1998/06/history-101-cia-drugsA Tangled Web: A History of CIA Complicity in Drug International Trafficking. WORLD WAR II. The Office of Strategic Services (OSS) and the Office of Naval ...

Mike Howard said...

Good article - but from our experience you just find that the bank hide behind their tame solicitors and keep telling you "you don't know what you are talking about".

In our case the bank lied about the value and state of our future home during the mortgage application process, leading us to buy a property that was not fit for mortgage and is now worth less than half of what we paid for it.

The worst of it is the statement by Hb*S customer services is "well it is only your opinion that we lied"!

AllanW said...

Unless you’ve already happened across him, you might consider reading some of Bill Black’s articles on systemic fraud and criminogenic environments. He’s also very good at skewering the inaccuracies of neo-conservative rhetoric.

http://www.nakedcapitalism.com/2013/01/bill-black-why-neo-liberals-need-to-dismiss-latin-americans-as-idiots.html

http://www.nakedcapitalism.com/2012/05/bill-black-career-limiting-gestures-clg-trying-to-speak-truth-to-congress.html

http://www.nakedcapitalism.com/2012/04/bill-black-green-slime-drives-our-financial-crises.html

http://www.nakedcapitalism.com/2011/04/william-black-why-arent-the-honest-bankers-demanding-prosecutions-of-their-dishonest-rivals.html

http://www.nakedcapitalism.com/2011/04/bill-black-fiat-justitia-ruat-caelum-let-justice-be-done-though-the-heavens-fall.html

I’m sure you can search for many more of his articles and copies of his book; the best way to rob a bank is to own one.

http://www.amazon.com/Best-Way-Rob-Bank-Own/dp/0292706383