HSBC exposed: Drug money banking, terror dealings, money laundering!

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HSBC hid '$16bn,' says a US senate
HSBC concealed more than $US16 billion in sensitive transactions to Iran, a US Senate panel says.
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The HSBC Private Bank in Geneva Source: AFP 

SHAMED HSBC Bank executives have admitted to allowing Iran, terrorists and drug dealers to launder billions of dollars.

With the international banking sector already under fire for manipulating interest rates and reckless trading, HSBC said more should have been done to prevent years of abuse amounting to tens of billions of dollars of illicit transactions.

US politicians grilled HSBC executives and US Treasury officials for failing to guard against money laundering they said benefited Mexican drug lords and terrorist networks, and for their bypassing of sanctions on Iran.

"It's pretty shocking stuff," subcommittee chairman Senator Carl Levin said.

Among the findings was the revelation that HSBC and its US affiliate concealed more than $15.67 billion in sensitive transactions to Iran, violating US transparency rules over a six-year period.

The chief compliance officer of HSBC says he is stepping down from that position after the investigation.

But David Bagley, the head of compliance for London-based HSBC Holdings, told a Senate investigations panel that he will remain at HSBC.

Bagley and other current and former executives of the bank apologised for lapses but said they weren't fully aware of illicit transactions flowing through the bank.

Senators expressed scepticism that they didn't know about problems that persisted for seven years.

"I recognise that there have been some significant areas of failure," David Bagley said at a hearing of the Senate Homeland Security Subcommittee on Investigations.

"HSBC has fallen short of our own expectations and the expectations of our regulators," he said.

While Bagley said the bank has "learned a number of valuable lessons" he acknowledged that this "clearly took far too long to resolve."

In its 330-page report, the Senate found the lender allowed affiliates in countries such as Mexico, Saudi Arabia and Bangladesh to move billions of dollars in suspect funds into the United States without adequate controls.

Bagley has been the head of compliance since 2002, during the period in which the Senate investigation found that HSBC's lack of oversight allowed the bank to be used by drug traffickers and possible financiers of terrorist groups, and for other illicit purposes around the globe.

Bagley said he lacked full authority over the bank's far-flung affiliates, which each had their own compliance officer.

HSBC executives were aware of the "concealed Iranian transactions" - which stripped all identifying Iranian information from documentation - as early as 2001 but allowed thousands of transactions to continue until 2007.

A review of HSBC's use of so-called U-turn transactions, in which funds are sent into and then out of the United States through non-Iranian foreign banks, showed the bank conducted almost $US25,000 transactions with Iran.

"The vast majority of the Iranian transactions, ranging from 75 to 90 per cent over the years, were sent through HBUS and other US dollar accounts without disclosing any connection to Iran," according to the report.

The US prohibits doing business with nations it regards as enemies such as Iran and North Korea, and its Office of Foreign Assets Control (OPAC) imposes tight filters to halt potentially prohibited transactions.

Levin said the bank willfully circumvented the OFAC filters.

The senator said senior HSBC officials in London "knew what was going on, but allowed the deceptive conduct to continue."

Under the slogan The World's Local Bank, the network that began life as the Hong Kong and Shanghai Banking Corporation provides US dollars to HSBC banks in many countries under a procedure known as "correspondent banking."

But its compliance failures clearly spun out of control.

The report said HSBC's Mexican affiliate "transported $7 billion in physical US dollars to HBUS from 2007 to 2008 ... raising red flags that the volume of dollars included proceeds from illegal drug sales in the United States."

And it said HBUS "provided US dollars and banking services to some banks in Saudi Arabia and Bangladesh despite links to terrorist financing."

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A show of peace and harmony

CERITALAH By KARIM RASLAN

In London, the British Museum puts on an exhibition on the haj and all aspects of the pilgrimage through the ages. Nearby, artifacts of Buddhist and Hindu kingdoms are on show. It is a place that unites people of diverse faiths and backgrounds.

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MECCA is a city of surprises. The landscape may be bleak, but everything changes once you’re within the city as the extraordinarily rich texture of the Muslim world unfolds around you, from the sleek magnificence of the Masjid al-Haram to the liveliness of the street markets and souks.

Ten years ago, when I first visited the Holy Land for an umrah swiftly followed by the full haj a few months later, I remember being enthralled by the amazing diversity of my fellow pilgrims: their weather-worn faces were redolent of history, romance and drama.

There were dignified-looking Persian clerics in their long flowing black gowns, ebullient West African traders who were tall, big-boned and wearing white robes, deeply tanned Tajiks and tens of thousands of Bangladeshi villagers.

Regal Sudanese rubbed shoulders with Baluch and Pathan tribesmen, haughty-looking Cairo housewives, Levantine shopkeepers, Javanese and the occasional European or American.

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There was a moment when I felt as if the entire world was alongside me as I circumambulated the Kaaba.

Even back then, the city was undergoing tremendous change as increased prosperity in the Muslim world fuelled the number of pilgrims.



Roads and tunnels were being blasted into existence; buildings were being torn down or hastily constructed — a mishmash of styles that left me wondering what the originals looked like.

All of this came back to me as I walked around the British Museum’s very elegant exhibition titled Hajj: journey to the Heart of Islam (open until mid-April).

For anyone interested in understanding the haj, the exquisitely-curated show (in partnership with Saudi Arabia’s King Abdulaziz Public Library and sponsored by HSBC Amanah) is a superb eye-opener.

The haj is one of the Five Pillars of Islam, something every Muslim must do at least once in his or her lifetime if possible.

For many Muslims, it is one of the most important events in their lives, a journey to save and sacrifice for.

Last November, it’s estimated that more than three million Muslims converged on Mecca for the five-day ritual, one of the largest annual human assemblies in the world.

The British Museum’s exhibition is thorough and thought-provoking. Located inside the museum’s iconic Atrium, the exhibition focuses on all aspects of the pilgrimage through the ages.

The displays ranged from the haj’s origins and rituals, down to the long (and often perilous) journeys that the pilgrims were forced to take.

Indeed, much of the exhibition is devoted to the great distances and dangers that the pilgrims were forced to brave – crossing the Sahara and Gobi deserts or traversing the Indian Ocean.

Despite the diversity, there remains an underlying unity, an inexplicable oneness of sorts.

Of course, the ihram (white pilgrims’ robes) and the starkness of the landscape reinforce a sense of purity and simplicity of purpose.

But then again, maybe it’s also present in the determination and resolute faith of those undertaking the haj – a fixity of purpose that unites pilgrims whether they’re from Mali, Azerbaijan or China, not to mention the rich and the poor.

Having had my fill of the exhibition, I wandered out of the Atrium and onto the Asia exhibits in the gorgeously laid-out Hotung Gallery.

Artefacts imbued with faith were also on display here: Thai and Khmer sculptures of the Buddha stood next to bronze statues from Hindu temples in southern India.

And yet for some reason, I, as a Muslim from South-East Asia also felt very much at ease as I strolled past these historic items.

Could it have been because they were also part of my heritage and my past?

I also found it profound that the haj and Islam – a faith of complete submission to Allah – should be so celebrated in a museum, the product of the humanistic enlightenment with its opposing and single-minded focus on mankind.

Another thought struck me: the majority of the visitors to the exhibition were clearly non-Muslims, people of many different faiths who were eager and sufficiently open to want to learn more about Islam.

It occurred to me that I would have to wait a very long time to see a similar exhibition on, say, Easter or Hindu rituals at a major museum in a majority-Muslim city such as Cairo, Karachi or even Kuala Lumpur and this thought saddened me.

So, in a corner of London not far from the traffic of Oxford Street and the echoing courtyards of the Inns of Court, I came across an exhibition that united peoples of diverse faiths and backgrounds – uniting them all momentarily in a quest for knowledge, as a museum became a haven of harmony and peace.

Is the U.S. Worsening as a Place to Start a Business?

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By Scott Shane, Contributor from Forbes

While the United States remains a great place to do business, it’s been slipping as a place to start a business, according to the World Bank’s annual “Doing Business” publication.

In 2012, the U.S. was the fourth best country in the world to do business in, coming in behind Singapore, Hong Kong and New Zealand.  That’s only slightly worse than we were five years ago before the Great Recession hit.

As a place to start a business, things aren’t as good.  It now costs twice as much to start a company as five years ago – 1.4 percent of per capita income versus 0.7 percent.

We are also slipping in how easy it is to start a business as compared to other nations.  As the chart below shows, we were fourth in this category in 2007.  This year we were number 13.

Source: Created from Data from the World Bank’s “Doing Business” reports, various



The World Bank measures 184 countries, so we don’t need to get out the worry beads yet.  Scoring worse than Macedonia, Georgia, Rwanda, Belarus, Saudi Arabia and Armenia might be embarrassing, but few entrepreneurs will choose those countries over the United States. And few American entrepreneurs are moving elsewhere to start companies.

But remaining behind New Zealand, Australia, and Canada year after year should cause those in Washington to take notice.  Policies to bring more foreign entrepreneurs to the United States won’t work very well if those entrepreneurs find it easier and cheaper to start their businesses in countries like Australia and Canada.

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A new world order emerging

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CERITALAH By KARIM RASLAN newsdesk@thestar.com.my

Indonesia and Turkey – two great countries on the far reaches of the Islamic world – are benefiting from the freedom their people enjoy, boosting their international reputations.

WE HAVE seen how the Sept 11 attacks and Washing­ton’s subsequent missteps have led to a diminution of Ame­rican power and influence just as China was beginning its dramatic rise. Ten years on, the US is weighed down by debt and its failed dreams of global dominance.

Changes have also been taking place within the Muslim world. Indeed, in the aftermath of Sept 11, as well the more recent Arab Spring, the balance of power in and between these countries has shifted fundamentally.

In the past, Arab nations were considered pre-eminent. The revolutions in Algeria, Tunisia, Egypt, Bahrain and Libya have shattered the prestige of the Middle East’s autocratic rulers. The image of former Egyptian strongman Hosni Mubarak on trial has transfixed the world.

We now find ourselves asking the unimaginable – which Arab nation or kingdom will be next? Which redoubt of injustice, corruption and mismanagement will fall at the hands of its people?

As the Arab world – propelled by dramatic developments on the Internet, communications and social media – enters a period of turmoil and transition, other Muslim countries are emerging from the margins of history.

Most notable are Indonesia and Turkey, two great countries on the far reaches of the Islamic world. As fully-functioning democracies, neither need fear a repeat of the Arab Spring within their borders.

Indeed, their economies are benefiting from the freedom their people enjoy. This is boosting their international reputations while anti-reform Arab leaders appear morally bankrupt.



Indonesia has traditionally de­­ferred to Saudi Arabia, the birthplace of Islam, whose King is also the Custodian of the Two Holy Mosques. The relationship is also economic: some 1.5 million Indo­nesians work in Saudi Arabia as maids and construction workers. Indonesia is also a big importer of Saudi oil and gas.

Still, controversies over the ex­­ploitation and abuse of Indonesian migrant workers in the kingdom have soured their relationship.

The NGO Migrant Care reports that some 1,105 Indonesian workers died in Saudi Arabia from 2006 till last year. Under Saudi law, however, there’s little chance for aggrieved foreigners to seek redress.

Indonesian anger was further stoked by the execution of Ruyati Sapubi, a 54-year-old West Java­nese maid. She was convicted of murdering her Saudi employer, who she claimed was abusing her.

The mounting Indonesian anger culminated in protests in August by local activists and academics when the University of Indonesia conferred an honorary doctorate on Saudi Arabia’s King Abdullah.

The protesters complained that the award was inappropriate, given recent events and Saudi Arabia’s poor human rights record.

As Anis Hidayah, executive director of Migrant Care wrote in Kompas: “The conferral of an honorary doctorate on Abdullah is an insult to the nation, especially to the Indonesian migrant workers who have contributed to the country with their sweat and blood, often in the face of death.

“Indeed, they are more dignified and respectable than academics who have willingly sold out their integrity.”

Indonesia has thus suspended all migrant labour to Saudi Arabia until it signs an agreement on worker protection. The republic’s growing prosperity means that these shows of independence, and its determination to protect its citizens, will increase.

Meanwhile, on the far western flank of the Islamic world, Turkey is positioning itself as a regional power. Blocked in its attempts to join the European Union, Turkey has turned eastwards with great effect.

With its booming economy and dynamic society, Turkey is poised to seize a prominent role in Middle Eastern affairs – especially in the aftermath of the Arab Spring.

Ankara, for example, has demanded an apology and compensation from Israel for last year’s raid on the Gaza flotilla. With neither forthcoming, Turkey has frozen ties with the Israeli military and expelled Tel Aviv’s ambassador.

Turkish Prime Minister Recep Erdogan has also maintained an independent stance on both Libya and Syria. He insisted on joining Nato’s Libyan intervention but demanded special terms – principally that the enforcement of the no-fly zone be led by the alliance itself and not France.

The Turks are charting their own diplomatic course. They are no longer content to remain mere allies of the West, or a silent, acquiescent Middle Eastern neighbour.

Indeed, Indonesia and Turkey are bidding for leadership, not only of their respective regions but also of the Muslim world at large. As members of the G-20 Summit, they demonstrate how democratisation and liberalisation can strengthen nations.

Malaysia, for its part, is now at the crossroads. Can we embark on the more difficult, but ultimately far more rewarding, path of reform?

Whatever we choose, democracy – even in the Muslim world – is on the move everywhere. We must ask ourselves: are we to become the victims of history or its victors?

Al-Qaeda names Zawahiri to succeed Osama

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Egyptian surgeon Ayman al-Zawahiri has been named by al-Qaeda to succeed slain leader Osama bin Laden and vowed no let-up in its deadly "jihad" against arch-foes the United States and Israel.

"The general command of al-Qaeda announces, after consultations, the appointment of Sheikh Ayman al-Zawahiri as head of the group," the jihadist network said in a statement posted on an Islamist website on Thursday.

Zawahiri, the group's long-time number two, succeeds bin Laden who was killed by US commandos in a May 2 raid in Pakistan.



The statement said that under Zawahiri's leadership al-Qaeda would relentlessly pursue its "jihad" (holy war) against the United States and Israel.

"We seek with the aid of God to call for the religion of truth and incite our nation to fight ... by carrying out jihad against the apostate invaders ... with their head being crusader America and its servant Israel, and whoever supports them," said the statement.

The fight would continue "until all invading armies leave the land of Islam."

The extremist network affirmed that it would not "recognise any legitimacy of the so-called state of Israel."

"We will not accept or adhere to any agreement or accord that recognises it (Israel) or that robs a mile from Palestine, whether it is the United Nations controlled by top criminals or any other organisation."

Al-Qaeda also voiced its "support (to) the uprisings of our oppressed Muslim people against the corrupt and tyrant leaders who have made our nation suffer in Egypt, Tunisia, Libya Yemen, Syria and Morocco."

A wave of revolts that have rocked the Middle East and North Africa since December have succeeded in toppling autocrats in Egypt and Tunisia while others, such as Libya's Moamar Gaddafi and Syria's Bashar al-Assad are still battling uprisings in their countries.

Al-Qaeda urged those involved in the uprisings to continue their "struggle until the fall of all corrupt regimes that the West has forced onto our countries."

The extremist Sunni group made no mention of the Shi'ite-led uprising in the Gulf kingdom of Bahrain, crushed in mid-March by the ruling Western-allied Sunni minority which was backed by joint Gulf Arab forces.

In the last part of the statement however, the network reminds that "our religion has forbidden oppression, against Muslims and non-Muslims, against friend and foe."

"Therefore, we assure every oppressed human in this world - most of whom are the victims of Western and American crimes - that our religion is that of justice and equality," it said.

Like his slain Saudi-born co-conspirator, the 59-year-old Zawahiri has been in hiding since the United States declared its war on terror after the September 11, 2001 attacks.

Zawahiri, now Washington's most wanted man, was jailed for three years in Egypt for militancy and was implicated in the assassination of Egyptian president Anwar Sadat in 1981, and a 1997 massacre of tourists in Luxor.

Facing a death sentence, he left Egypt in the mid-1980s initially for Saudi Arabia, but soon headed for Pakistan's northwestern city of Peshawar where the resistance to the Soviet occupation of Afghanistan was based, and then to Afghanistan, where he joined forces with bin Laden.

Zawahiri, gifted with brains but bereft of bin Laden's potent charisma, has long been seen as the mastermind behind the global terror franchise.

From hiding, he has issued video missives calling for war on the West. The most recent was a filmed eulogy to bin Laden, vowing to pursue jihad in a tape reported by the SITE Intelligence Group on June 8.

It was a message of loyalty to bin Laden, whom analysts believe alone had the charisma capable of uniting an increasingly disparate group divided between Egyptians and non-Egyptian Arabs.

The eulogy came nearly a month after a Saudi newspaper reported on May 5 that as the struggle for power simmered within the network, Zawahiri led US troops to bin Laden through his courier.

Al-Watan newspaper, quoting an unnamed "regional source," had said the top two al-Qaeda men had differences and that the courier was a Pakistani national who knew he was being followed by the US military but disguised the fact.

With the return of an Egyptian figure in al-Qaeda, Saif al-Adel, last autumn from Iran, the Egyptian faction had hatched a plan to dispose of Saudi-born bin Laden, according to Al-Watan.

It said Zawahiri's faction had persuaded bin Laden to leave tribal areas along the Afghan-Pakistan border and take shelter instead in Abbottabad near Islamabad where he was finally unearthed and shot dead by elite US Navy SEALs.

US-Pakistani relations have soured following the raid amid mounting allegations that bin Laden evaded capture for years thanks to the complicity or incompetence of Pakistan's authorities.

But Pakistan's civilian government has angrily dismissed the allegations and its powerful military has warned of unspecified reprisals if another unilateral US raid were to occur.

© 2011 AFP
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