Top U.S. officials rejected push to prosecute HSBC: lawmakers' report

Mon Jul 11, 2016 4:44pm EDT
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By Mica Rosenberg

NEW YORK (Reuters) - Senior U.S. Department of Justice officials overruled internal recommendations to prosecute global bank HSBC Holdings Plc (HSBA.L: Quote) for money-laundering violations because of concerns about the stability of the financial system, according to a congressional report released on Monday.

In 2013, the Financial Services Committee of the U.S. House of Representatives, led by Jeb Hensarling, a Republican of Texas, began investigating the Justice Department's November 2012 decision to enter into a $1.92 billion settlement agreement with HSBC.

The report, which relies on internal records from the Department of the Treasury, said the U.S. attorney general at the time, Eric Holder, "misled" Congress about the Justice Department's reasoning for declining to prosecute.

Holder and other top officials decided against criminal charges for London-based HSBC over the recommendations of prosecutors because they had concerns about financial stability, the report said.

Politicians and others have criticized the Justice Department for not sufficiently cracking down on big banks following the 2008 financial crisis. The report said it sought to shed light on the department's decision-making and did not outline specific recommendations.

The 2012 settlement detailed how Mexico's Sinaloa drug cartel and Colombia's Norte del Valle cartel laundered $881 million through HSBC and a Mexican unit and how the bank violated U.S. sanctions laws by doing business with customers in Iran, Libya, Sudan, Burma and Cuba.

No HSBC executives or employees were prosecuted for the violations, the report said.

HSBC declined to comment on the report. The Treasury Department also declined to comment.   Continued...

The HSBC building in Canary Wharf in London October 8, 2008.    REUTERS/Kevin Coombs/File Photo