HSBC money laundering scandal draws in British Trade Minister

The Guardian reports that  Lord Green, former CEO and chair of HSBC, warned he has ‘serious questions’ Lord Green, AKA Stephen Green who is currently Britain’s trade minister.

Green was chief executive of HSBC between 2003 and 2006 and was its chairman until 2010 when he resigned to take up a position of trade minister in the coalition government.

An example of an email reproduced in the report appears to show that Green was warned by HSBC’s head of compliance David Bagley – who dramatically resigned during Tuesday’s appearance before Senators – to alert him to a potential breach to the rules in relation to sanctions in trading with Burma. Bagley wrote there is a “significant risk of financial penalty” as there is “little doubt that it is a breach” of the sanctions (which were lifted in May this year). The report found that a new internal policy was introduced afterwards, but that transactions continued to occur.

Chris Leslie, Labour’s shadow financial secretary to the Treasury, said on Wednesday: “The US Senate sub-committee’s report, which suggests that HSBC allowed money laundering by drug cartels and possibly even terrorists, is so serious that the bank’s head of compliance has already resigned. Stephen Green, who was executive chairman of the bank when this took place and is now a trade minister in David Cameron’s government, now has serious questions to answer about what he knew and when.”

Green is also an advisor to the government on banks and has been cited as potential candidate to be the next governor of the Bank of England. He  was also chairman of the British Bankers’ Association during the time of the Libor-rigging scandal that led to the £290m fine on Barclays.

Danny Alexander, chief secretary to the Treasury, told the Today programme that the issues stemmed from the past: “This is a reminder of the huge difficulties our banking system got into in the run-up to the banking crisis, the culture that existed then that led to all sorts of appalling and irresponsible behaviour from which this country is still suffering under the weight of the consequences from those mistakes,” Alexander said.

Others who could end up on the hot seat include Sir John Bond, a 45 year veteran of HSBC, who was chairman of HSBC until May 2006. Bond has been chairman of Xstrata since May 2011 and was chairman of Vodafone until July 2011.

Another is Michael Geoghegan who took over from Green as chief executive in May 2006, one of many assignments he had since joining the bank in 1973. He left in 2010 when Green’s departure caused a boardroom tussle. Another long-standing HSBC executive Sandy Flockhart ran the Mexican operations from 2002 to 2006 but after a 37 year career his retirement from the bank was announced earlier this month to fight cancer. The current chairman Douglas Flint was finance director during the period.

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