The inadmissible truth about corruption in the UK is that it's endemic. And not just money laundering; the very way governments (both Labour, Conservative, and Coalition) have pursued the business of privatization of state assets since 1979 is uniquely corrupt, on a massive scale.
Hint: corruption isn't just about simple bribery and envelopes full of banknotes passing hand. Ask yourself why so many cabinet ministers retire and end up on the boards of large conglomerates that specialise in bidding for government outsourcing contracts, or why so many long-term viable agencies of government (the Post Office, the Land Registry, the National Air Traffic Control System, the NHS ...) find themselves in need of privatization in the name of "efficiency". You can make any agency -- however potentially profitable -- fail if you run it into the ground through deliberate mismanagement, then show a rebound improvement when you sell it (or the service it provides) off to your golf-course cronies. And when you roll up to the banquet later, there's no evidential chain that can prove beyond reasonable doubt that what you did was grand theft.
>Hint: corruption isn't just about simple bribery and envelopes full of banknotes passing hand.
While I agree with you, I find the bare-faced cheek of publicly-advertised "donor clubs" that promise access to the Prime Minister for a mere £50k/year absolutely sickening:
Blimey, that's a fascinating link to be so public and explicit. They boast about not being funded by Trade Unions, and then invite big business to donate £50K so they can have lunch with the PM to "defeat the rise of socialism".
What's even more amazing, the text right under that header:
> Labour has said that they would turn their backs on our nuclear deterrent, abolish our armed forces and has openly sympathised with terrorist groups who seek to destroy our way of life. Their policies for the continued economic recovery of our great nation should make alarm bells ring.
> Labour are steadily building an army of far left-wing supporters and we should ignore this at our peril.
That page is truly bizarre - I hadn't managed to read all of it before (due to blood pressure issues) but now that I read the rest of it I'm actually quite amused.
Do you think they are planning a 70's style coup?
[NB I'm probably already on a watch list after paying for a book with a debit card (duh!) in a Sinn Féin shop in Belfast)]
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I was genuinely surprised that they use that phrase - what does socialism mean in that context? The NHS, opposition to zero hour contracts, basic human decency?
I think they're very much in favor of redistributing wealth. It's just the socialists' preferred direction of the redistribution that they don't agree with.
Honestly, they've been cutting government expenditure pretty heavily across the board (to the best of my knowledge) and military expenditure is way down.
Firstly, remember that "socialism" is a dirty word in US politics, but not in EU politics. The UK Labour party does claim[1] to be a socialist party. Their homepage[2] has a link to "affiliated socialist societies".
However in this case, the tories are just scaremongering.
[1] They're not really socialist anymore, since Tony Blair & New Labour back in the 90s at least.
So … it's okay for a union to shake down 1,000 members for £50 each and donate money to a politician in hopes that he will support an agenda favourable to unions, but it's not okay for anyone else to do the equivalent?
What are some examples of democratic countries where corruption is low?
Ask yourself why so many cabinet ministers retire and end up on the boards of large conglomerates that specialise in bidding for government outsourcing contracts, or why so many long-term viable agencies of government
Doesn't this happen elsewhere too? Example - revolving door in financial institutions
(Pressure for social change tends to come from the young, voters skew old, so in practice many direct democracies tend to be very slow to adapt to widespread grassroots social change.)
Unless you have some sort of constitutional provisions protecting people from each other, 51% of your fellow citizens will trod all over the other 49%.
And you may or may not have noticed, but most citizens don't seem to take the time to be up on the pros and cons for each and every provision of each and every piece of legislation that are debated today on the floor of parliamentary bodies.
In other words: it might solve what economists call the "principal-agent problem", but at a (potentially very high) cost.
A person who should not necessarily be considered a political system theorist once declared that freedom and democracy are incompatible. This may or may not be true, and for those pushing for democracy, maybe freedom is a non-issue from the start, but I think it needs to be at least considered whenever pushes for "moar democracy" come around.
Thats why I said "kind of". Real direct democracy should have those 3 fatures:
-mandatory referendum each year (question added to referendum once enough votes have been gathered) - anyone avoiding taking a vote is fined.
-3 answers under each question - Yes, No and Not Voting (so people wont just cast votes for subjects they are not interested in)
-2/3rds votes needed to pass the vote (to avoid 51% vs 49% - votes that count are only yes or no votes, "Not Voting" is not included)
-Then once the system matures proper democracy should have vote strength system - lets say 3 stages. 1st stage gets 1 vote, 3rd stage gets 3 votes. Higher stage = less taxes and more votes. You work + do some community voluntary work + have no issues with criminal law = you are 3rd stage.
Hmm. Interesting. Democracy, but with something like super-majority rules.
I'd like to see a feature that allowed cooler heads to prevail over time (like the US Senate was originally designed for). How would you keep the passions of the moment from being inflamed enough to blow by your almost super-majority rules?
In the US, you'd have problems getting your stage concept past "disparate impact" studies, but since we're speaking in hypotheticals anyway - this seems very Jeffersonian. How do you get something like this past the people who would cry (rightly or not) that your stage-3 continues to favor the historically privileged?
Any citizen of 18 years or older who works, do community work and avoid criminal charges would be stage 3. If someone cant pass those 3 rules, then what value he will bring to society anyways? His vote should be penalized. Dont get me wrong, its not to favorite good people, its to penalize people that cant do good to society. Vote strength should be based on your involvement in society and helping the community. Alcoholic bum should not have same amount of voting power as doctor. Yet, system would not discriminate poor people, since the rules are easy to follow. Rich people as part of their community work could speak at schools, drivers help people pass driving tests and unskilled workers clean woods from wild dumping places. Simple system that would allow lower taxes since the government would need less resources for public work done.
I would see many people avoiding doing the 40 hours of mandatory public work per year, so that would release them from being strong majority and their passion/patriotism would be graded this way.
Singapore is a oligarchic dictatorship and so corruption is somewhat irrelevant there. You have the most important institutions controlled by the Lee family, who's cult of personality remains unquestioned by those in outside Singapore, I mean did Lee Hsien Loong really deserve to be senior wrangler at Cambridge or is that just PR?
Yes, public sector competence is very high but that's not exactly difficult in an authoritarian and highly educated city state.
I'm sure there's a lot wrong with Singapore but the closest countries with comparable quality of government are Australia and Taiwan or Japan.
If the Lee family have a cult of personality it's invisible to tourists too. And Cambridge didn't even put the thumb on the scales to let in the current generation of the royal family, you really think they care about the Lees?
Of course a top University in the UK cares about the Lees. If you were like Lee Hsien Loong and nearly guaranteed to be a next generation political leader, any sane self-interested educational institution would give you preference.
Universities do this all the time, accepting children of foreign oligarchs who have CVs and test results padded with dubious measures. Why do you think the LSE brushed under the table Saif Gaddafi's ghostwritten doctorate? (a) because they didn't notice, or (b) the network effect of having the presumed (at that time) next dictator of Libya?
Cambridge never needed to put the thumbs on the scale for the current generation of the UK Royal Family because they never applied.
Lee Hsien Loong's story just seems like a propaganda story tailored for the perfect Singaporean technocrat (clever, driven, and can fit himself into any institution). While he's no idiot, his life could have been dreamed up by the North Koreans, a meteoric career in the army, receiving the title 'Chief Wrangler' at Cambridge. It sounds like propaganda.
Not that I disagree entirely however if Singapore is an oligarchic dictatorship then most democracies are. This includes UK & USA which we are discussing here.
Regardless Singapore has very low levels of corruption from what I have seen and experienced.
not at all true. Singapore is known for having draconian laws (such as no gum chewing) and it's government is high corrupted oligarchy. I've read about the previous leader Lee Kew that ruled with a iron first and died recently . He was the one that revitalized Singapore in the late 1970s to where it is today and its rampant corruption was an effect of his harsh rule and greed
You have read, I have experienced. Lee Kuan Yew was extremely anti-corruption and his actions back this up. When the CIA tried bribe him with $3.3m (about $25+m in todays cash) he turned it down. The guy was a master strategist and made it work for Singapore anyhow. You can read about it here: http://singapore.coconuts.co/2015/03/24/lee-kuan-yew-once-un...
...or if you are interested just google it and read about it somewhere else.
If Singapore were corrupt it would be more like Malaysia (it used to be a part of Malaysia). Instead Singapore is an economic miracle surrounded by hostile countries. The anti-corruption culture Lee Kuan Yew developed permeates every layer of society here. Try bribe a Singaporean cop and see how far you get. My brother-in-law works for the Land Transport Authority. He will not discuss the details of any up-coming projects with anyone, not even close family members, for fear that word will get out and speculators will take advantage.
Finally if you think the chewing gum law is draconian I can't really help you. It is completely inconsequential and I say that as someone who likes to chew gum. More worrying are the corporal punishment laws, lack of press freedom and civil rights violations (gays sex is still illegal for example) however 2 of 3 of these problems also exist in the USA today and 1 in the UK.
How so? Singapore has open and free elections. Anyone can run, it's just that the PAP, for all their flaws, do such a good job that there is no reason to vote them out. This is a reflection of the low corruption environment.
Or, lest we forget PRI, it is a sign of insanely high corruption. (Not saying it's the case in Singapore, just pointing out that a one party system doesn't necessarily point towards low corruption).
There's other possibilities (low press freedom, etc).
Exactly. Blair. Alistair Darling now on a major US bank.
The UK establishment have perfected the art of making the immoral legal. They are patient and wait for their reward.
Let's have another enquiry into it all! A "thorough" one that takes 5 years and costs millions only to find "systemic" issues with no individuals to blame.
There's nothing new about this, and nothing unique to the UK. Rich and powerful people tend to use their wealth and power to protect their wealth and power. And London has a lot of people with a lot of wealth and power.
The banking system is where most of the world's wealth resides, and since the London banking system dominates most of the global financial system, a lot of dodgy dealings happen in London. If you move it to the jungles of deepest darkest Peru, then the deepest darkest jungles of Peru will become corrupt.
I'm as disappointed as anyone about the cesspool of immorality that is modern finance, but David Cameron passing a few laws or conducting some kind of investigation is not going to change human nature. These are essentially the same problems that the Ancient Romans and Greeks complained about.
I dislike this kind of argument. Sometimes you see it trotted out regarding crime, and that it's impossible to e.g. stop people killing or burgling or thieving in general.
Except - we're doing a pretty good job of reducing such crimes.
It's easy to write off pretty much well any undesirable action as being "human nature" and I implore you to reconsider.
> David Cameron passing a few laws or conducting some kind of investigation is not going to change human nature
I agree that change is possible, but it's not going to come from the top. We the people need to push for that kind of change, but half the population is too busy repeating the establishment's line that "it's all the fault of immigrants".
I agree that it's nothing new in a general sense, but the reason this is catching people's attention is because there is this lingering perception that there is less corruption in the UK (and in western Europe, in general) than in other places.
The corruption is of a different nature. It's difficult to compare the corruption of, say, Kim Jong Un with that of David Cameron. In North Korea, the corruption is explicit and the proceeds benefit a small group of people. In the UK, it's systemic and hard to identify who's actually doing the corruption, and who benefits, and how.
It's even harder to identify how to fix it. In North Korea, we could just say "wipe out the leaders and it will fix the problem". In the rich world, the cronies don't belong to any one family, country, or business. It's an international aristocracy consisting of 1000s of people.
> or why so many long-term viable agencies of government (the Post Office, the Land Registry, the National Air Traffic Control System, the NHS ...) find themselves in need of privatization in the name of "efficiency"
A few articles in The Guardian recently on neoliberalism: First, from Goerge Monbiot's book, "Neoliberalism – the ideology at the root of all our problems"
Is that also evidence that companies hope they will be able to influence government by having an "insider" on their team? And they can show their investors that they have someone on the inside as well? Even if that individual is completely unable to in fact influence policy.
Every time i read news about corruption i check if Italy is being mentioned. This is how i found your comment. This is how i decided to reply that yeah in Italy corruption is a second state (voluntarily lowercase).
The UK is the second country with the most intermediaries (banks, accountants, lawyers…) listed in the Panama papers. The first one is Hong Kong, a former British colony.
"More than half of the companies listed in the leaked Mossack Fonseca documents are registered in the U.K. or its overseas territories [...] If we want to understand modern Britain, we first need to realize that our primary economic function in the world today is probably our network of tax havens."
So around the world, basically, the good honest career politicians from Argentina to Zambia are going around to profitable businesses saying "hey, nice business you have there! We'd like to take, say, 50% of your profits, if you don't mind, and spend it on our friends - government contractors, public-sector unions and the like. All the donations to our campaign afterward are purely incidental, I assure you, and none of the subsidies or handouts we'll use your money for are vote-buying schemes, none at all. Thanks for your cooperation."
... and the UK provides places where they don't do that, not on the top-line profit anyway. Sure. I can see how having that would be attractive to both legitimate and illegitimate operators. Its net impact on corruption, though, would be a little tricky to sort out.
(Postscript. As I'm being moderated down without comment, I assume that those doing so are those privileged enough to be in a nice low-corruption Western economy where we have a slightly better grade of politician than, say, Dilma Rousseff and her legislature. So I wish to note that despite cynicism about world governments I retain due respect for anti-corporate sentiment as well...)
I don't know about Zambia, but in Argentina most people don't care too much about campaign contributions. The perception is that most of the corruption there is through cronyism, and kickbacks from outrageously overpriced goods and services bought by the State. It is not politicians robbing businesses, but politicians and some businesses robbing the tax money of, mainly, the middle class.
The thing about campaign contributions is that it's all about the exchange: in return, the contributors get a say in government policy, enforcement, decisions. It undermines democracy. Is it better, or worse, than naked cronyism and kickbacks in the form of contracts, overpriced goods and services, etc.?
* Persons, actual or legal, with annual income/EBIDTA below $300k and/or net worth below $3MM, will not be deemed eligible for the IRS Section 708(c) conforming tax evasion schemes under the Trickle Down Economies Support Act.
You got it. If the world crushed The City working people everywhere would benefit. The City is a total cancer. As a Brit I'd love to see it removed, permanently.
Reported that the City's contribution UK's national income is about £45bn or 3%, while London accounts for £334bn or 22% of the UK's. But to what extent is that 22% dependent on the indirect effect of the City? Britain will certainly be poorer and poor people will likely be even poorer. You want to see it removed regardless of consequences?
Tax havens are the only defence against rapacious politicians who, unlike business people, do not suffer the ill effects of their policies. You can always get votes for promising bread and circuses! Do you think that's true or false? The enormous debt burdens we see across the world attest to that.
The London figure is always trotted out. All accounting is done through London. Also counting money like this doesn't count "wealth". A bunch of people creating new money as credit actually soaks up wealth as the rest of the UK is forced to exchange actual labour and products for fiat money against ever increasing land prices.
Tax havens aren't bastions of freedom. Load of rubbish. They are allowing massive inequalities and letting rogues plunder common wealth.
Did Abmramovich personally add billions in value? Or did he claim he, not the Russian people, "owned" much of Russia's oil and then washed a good part of it through London property?
If a trafficker uses a mule to carry opium across the mountains, then sells the drugs and then sells the mule, is the new owner of the mule responsible for drug trafficking? Abramovich is Russian and the responsibility of the people running Russia. Likewise if the Maffia recycles money into legitimate assets in Italy then trades those assets in London, it's pretty rich for an Italian to try to pin that on London.
The article also talks about British overseas territories as though their laws are written in Westminster. They aren't. All these places make their own tax laws without any reference to the British government. Is this mentioned anywhere in the article? No, instead it's spun as though it's all a Westminster plot. Suppose Westminster did start imposing laws on these territories, would the Independent be applauding this as an example of responsible action or condemning it as an illegal and unconstitutional abrogation of Britain's responsibility to protect the independence of these territories? I think we have a right to know their opinion on that.
Of course Britain has a responsibility to fight crime and work with other governments to crack down on abuses, but we can't singlehandedly be the policemen for the whole world.
> if the Maffia recycles money into legitimate assets in Italy then trades those assets in London, it's pretty rich for an Italian to try to pin that on London
It's not rich to criticise London if London is aware of or suspects that it's the Mafia they are dealing with and that the "legitimate" assets are simply laundered.
I also don't see why it's rich for an Italian to do the criticising. Perhaps you can explain that one.
If a bank has any reason to suspect that funds they are handling involve laundering they have very clear responsibilities to report them, and have strong incentives to do so as the watchdogs have real teeth.
It's rich because the police and banks in the UK can and do co-operate with the Italian authorities on criminal activities occurring in Italy, but at the end of the day the crime happened in Italy. Only someone with an axe to grind and predisposition against London would blame that on London.
So it's simply grinding an axe against London, and not that, according to the UK National Crime Agency, "hundreds of billions of US dollars of criminal money almost certainly continue to be laundered through UK banks, including their subsidiaries, each year”?
"Britain's responsibility to protect the independence of these territories"
Would this mean that the independence of "these territories" is dependent on Britain somehow? Quite an independence, heh? And now, Britain, the ultimate power that backs up the laws of the said territories can at the same claim to be absolved of whatever is happening under its protected domains? Astonishing, isn't it?
Er, no. Everyone needs their independence to be protected. Just ask Tibetans, or Kuwaitis, or most of Europe. The fact is these offshore havens being nominally under British protection doesn't make one iota of difference to their tax laws or whether or not the businesses registered there do business with Britain. In fact Britain loses tax revenue just as much as anyone else, and has been working hard for decades to get these havens to tighten up their rules. But unfortunately annoying things like facts don't match the narrative this article is trying to spin
The article (and the "Mafia Expert" it's about) are both idiotic. The premise is that because corruption involves money and money involves banks and London has lots of banks, transitively, London is very corrupt. It then tries to equate Mafia violence with financial firms refusing to hire 'whistleblowers', as if having your legs chopped off is in any way comparable to having a career issue.
By similar logic, I could claim that Washington DC is the most violent city in the world, because the illegal drug trade is very violent and drugs are illegal because of politicians and there are lots of politicians in Washington DC.
If you hold a position of trust (elected politician, policeman, bureaucrat, CEO, board member, employee representative, union boss), and you use the powers of that position to further some private interest rather than the interests of those you are set to serve, then you're corrupt. That's more or less Transparency International's definition, and I agree with it.
But banks' trustees aren't the public. It's their depositors, shareholders and customers. And by most accounts, they serve those reasonably well.
So yeah, they could maybe make a case that Britain is the most corrupting country in the world. But that is not the same thing. Compared to other nations, Britain's public trustees probably aren't so bad at serving the interests of the public.
> Compared to other nations, Britain's public trustees probably aren't so bad at serving the interests of the public.
Dave & Co have probably been the worst offenders in recent recent years for selling public assets and companies they have nationalized to buddies of theirs at massively discounted prices, beginning with the RBS.
"some of the City’s biggest investment banks – including Goldman Sachs and UBS – are charging the government a £1 fee for work that would normally cost tens of millions of pounds."
"Oliver Holbourn, head of market investments at UKFI, said some City firms had even offered to pay the government to work on its privatisations."
"The banks, however, eventually concluded that such arrangements could be an offence under the US foreign corrupt practices act."
The Royal Mail would be a much better example of that; but then that happened on Vince Cable's watch (a part of then David's coalition). Of course the banks involved were accused of providing bad advice according to a committee of MPs; in particular undervalued property owned by Royal Mail.
I don't think Dave has yet surpassed Bliar and Brown. Especially once you include public private partnerships and the lifetime of debt landed on the schools and hopsitals as a result.
"the share price had been at 400p as recently as February, leading critics to blast the decision to sell now and question the relationship between banks and the Treasury"
You wouldn't even be arguing that. You'd be arguing that money corrupts people, and because there's lots of international money managed by the UK, the UK is therefore "corrupting".
So what? Money corrupts, this is not news. In any economy where you have regions of the world that specialise, there will be regions with lots of banks.
> The premise is that because corruption involves money and money involves banks and London has lots of banks, transitively, London is very corrupt.
The premise was that the banks of London launder huge amounts of drug money... I don't necessarily agree with this article but you're just avoiding the points it makes.
Money laundering used to have a fairly precise definition when the crime was first invented in the 1970's: "knowingly working to disguise the origins of money gained through crime". But over time various people (primarily aggressive tough-on-crime politicians) have watered down the definition until it's now more like "any financial transaction that someone somewhere doesn't like".
We can see the slide in the USA PATRIOT Act which removed the "knowingly" from the original definition. Now you can do money laundering without even being aware of it, under the American definition, simply by interacting with money that was earned by criminals.
Once they started chipping away at the mens rea requirement, the standards had to be redefined. Now it's not enough to avoid money you know to be criminal. You also have to avoid money you merely suspect might be criminal, lest it later on turn out to be the result of crime and you get sucked in after the fact. Hence banks turning away people who want to deposit cash. The fact that the cash has innocent origins is insufficient.
Then they went further and defined money laundering as failing to do 'enhanced due diligence' on any transactions related to a 'politically exposed person'. There is no clear definition of either term, meaning banks have to make it up as they go along. But the spirit of the law is that a PEP is anyone who might conceivably be corrupt. This was meant to fight corruption by forcing banks to investigate anyone who might be receiving bribes. With no definition and heavy penalties for non-compliance, which by this time is entirely in the eye of the beholder, private firms sprang up to compile blacklists of PEPs, some of which contain millions of people. There is of course no way to get yourself off such a blacklist.
Now throw sanctions compliance into the concept of money laundering and now you can be an evil corrupting money launderer simply by processing a payment from a firm in country A to a firm in country B where there are no laws in either country A or B against the trade, and the firm in country B is run by a guy who some powerful bureaucrat has decided is in some way shady. No evidence or trial is required and there's usually no way to get yourself off such sanctions lists. One US list of sanctioned people is simply a list of names with no other clarifying information, meaning people with generic names end up being treated as guilty-until-proven-innocent.
By the time we're done, you realise that every bank in the world is guilty of the modern definition of money laundering, simply by virtue of working with money.
If you're interested in the topic of abuse of AML laws, read the book "Treasuries War".
These secret lists are a real problem. I have to hope that no one sharing my name does anything wrong (or is put on one of these lists by mistake). When will the people in charge of these programs realise that names are not a unique identifier.
How do you feel about HSBC being convicted of money laundering? Do you feel that they were wrongly convicted based on the original definition of the term?
They were not convicted of anything, if you're referring to the Mexico/Iran story which I guess you are. You heard the US Government's side of the story. The USG agreed not to take the charges to court as long as HSBC accepted big fines and didn't say anything (i.e. didn't attempt to defend itself in public). So there was never any court case or any judicial process involved.
If you hear only the government's story and the other side is gagged, the listener will always conclude the perp is guilty. You can dig in and find the other side if you like: I did. The case looks a lot less clear, then. For instance HSBC was accused of laundering lots of money for Mexican drug cartels. Most people think that means "knowingly laundering". It doesn't: the money in question actually came from remittances firms. The American's case was something like this: there's so much money being remitted across the border, there must be drug money in there. HSBC is moving money for remittances firms. Therefore HSBC must be moving drug money without knowing. Therefore their AML standards are too low, therefore they are money laundering.
As you can see, I am not sympathetic to this kind of logic or "justice". Certainly the US case would not have been successful in court under the original definition as they never presented evidence any kind of conspiracy inside HSBC to launder drug money. The allegations revolved entirely around HSBC not trying hard enough, which is not the same thing.
Actual convictions for anti-money laundering offences are very rare. This kind of fine-and-silence outcome is much more common.
The reasons are simple. The current situation is kind of like a Cuban missile crisis. It's very volatile and unstable. Every banker knows that every banker is guilty of some kind of AML offence, because it's impossible to work in finance and not be guilty. The laws are just that badly written. What's more, western governments know this too. Almost every big bank has been fined under AML laws in the past 20 years or so.
But American justice is extremely vicious (and it's in America where the whole idea of anti-money-laundering originated). Like many laws, AML offences can carry 20 year jail sentences.
If you mix 20 year sentences with "everyone is guilty" you have a situation that is like a minefield. If the government actually started prosecuting bankers under these laws, there's a risk they might win and that could be apocalyptic - it could trigger a collapse of the entire financial system as bankers exited the industry en-masse.
In the HSBC case, one part of the US Gov (either Treasury or DoJ, I forget which) actually did want to prosecute. The other part convinced them not to, using the above logic. The chance of successfully jailing a banker is high enough that they can't actually do so, lest it cause the industry to self destruct.
You're attempting to imply that HSBC was an innocent party, and that's simply nonsense.
HSBC was fined because it failed to follow the rules put in place to prevent money laundering. Often it completely failed to make any attempt to follow those rules. E.g.
"...The monitor’s findings described several incidents, among them one where an HSBC branch in Sinaloa, a Mexican state that has experienced much drug-related violence, opened a private-wealth account for a 19-year-old man who arrived with a bag containing thousands of dollars in cash. The man described himself as a shrimp farmer."
There was a consistent pattern of failing to flag, investigate, or report transactions that were clearly suspicious.
That's why HSBC was fined. There's no grey area here, and the laws aren't particularly onerous. They were simply ignored.
>it could trigger a collapse of the entire financial system as bankers exited the industry en-masse.
Considering the close association between banks and fraud/criminality, that would hardly be a bad thing.
So far in the UK we've had prosecutions for fraudulent mis-selling of payment protection insurance; fraudulent mis-selling of premium accounts; LIBOR rate fixing; forex rate fixing; and insider trading.
Last month DB settled out of court with traders who alleged - and provided evidence - of precious metal price fixing.
The entire financial industry is rotten to the core. It's the single biggest destroyer of genuine economic growth in the planetary economy, and it also has anti-democratic political influence which operates outside the usual constitutional checks and balances.
There is nothing remotely positive here. The industry needs to die, and it needs to be replaced by completely new structures and institutions that use the profit motive as an excuse for criminality in quite the same psychopathic ways.
> HSBC was fined because it failed to follow the rules put in place to prevent money laundering.
First, failing to follow rules put in place to prevent money laundering is not itself money laundering. Just like failing to follow rules put in place to prevent traffic accidents is different than driving your car into someone.
Second, the true story is one degree removed even from what you say. A key element of the government's case against HSBC was that it classified Mexico as "standard or medium risk" when classifying it as high risk would have triggered additional controls intended to prevent money laundering: https://www.justice.gov/sites/default/files/opa/legacy/2012/... (pages 7-8). The government states that HSBC "should have known Mexico was high risk" based on various publications discussing money-laundering risks in Mexico.
HSBC was not an innocent party, but it was guilty of regulatory rather than criminal violations. It failed to put country X in risk category Y; it failed to adequately staff it's AML department, etc. For those regulatory violations, it paid a fine, which was the appropriate punishment.
You're attempting to imply that HSBC was an innocent party
Not quite. I said explicitly that all banks are guilty of violating AML laws, because it's impossible not to be guilty.
You then go ahead and prove my point: someone turned up with some cash, and gave an explanation of where he got it. The banker in question accepted the story and the monitor found it to be "clearly suspicious".
"Suspicious" is such a vague standard that nobody can ever comply with such laws. There will always be transactions that are debatable, grey area, or turn out to be suspicious in hindsight but weren't at the time. Your own example proves this: apparently if you ran a bank nobody would ever be able to open an account and deposit money there, which is a problem, because being able to do that is kind of the point of having banks.
The story you link to admits as such in the very next paragraph after the shrimp farmer quote:
Compliance officials who must decide whether a bank should open an account or extend a loan can face a tough job, having to make the call based on the movement of money through existing accounts or sketchy data such as local knowledge and material found online. Regulators want to see signs that compliance departments are at least flagging suspicious transactions and customers. That didn’t appear to happen in the Sinaloa matter.
Maybe people open accounts that way in this part of Mexico all the time? Heck, maybe the person who opened the account thought it was suspicious but was afraid of turning up inconveniently dead if he turned the guy down. It's very easy for Americans to sit around on their Aeron chair in nice safe Washington DC and criticise people on the front line of the drug war for not trying hard enough.
But I'm not sure I'm arguing with a reasonable person. Your response to "the banking system might collapse" is "that would hardly be a bad thing", which is a position so far out that I doubt you will ever change your mind. What's your intended alternative? Bitcoin?
That said, my focus in this thread has been on money laundering rules, not trading fraud.
The American's case was that HSBC frequently circumvented the rules designed to prevent dealings with Burma, North Korea and Iran.
That they did not disclose tens of thousands of sensitive transactions when they should have.
That when setting up banks in Mexico they marked them as low risk when they should be marked as high.
That their Japanese branch accepted huge blocks of sequentially numbered travellers cheques that originated from Russia without applying any scrutiny.
Is all of the above just 'moving money for remittances firms'? Or is it the US govs propaganda, reprinted by the BBC?
Your comment just seems winding and lacking logic. First you argue that HSBC didn't really do anything wrong and then that the US gov didn't even want to prosecute them because they knew the consequences would be 'apocalyptic'. If these things are both true then why did HSBC settle out of court? Why did they publicly appologise? Why not just see the case through to save face and $1.9 billion.
The payments in question were legal at the time: they were from countries that did not have sanctions against Iran to Iran.
The Americans took a novel position in that case: that because the payments were denominated in dollars and were processed by computers in New York, American sanctions should apply to foreign payments. They then proceeded to punish HSBC for "evading sanctions" that didn't actually exist. It did achieve one thing though: it sent a powerful message that US law is in fact international law.
Saying "Mexican banks should have been high risk instead of low risk" is the kind of subjective judgement call that highlighst my entire point. Maybe the high risk category was reserved for places like Congo or Nigeria or Pakistan, and Mexico - being a relatively stable state that engages in heavy trade with America - did not justify the same level of scrutiny as those.
My logic is very simple. The laws are so vague that any kind of activity can be retroactively labelled as 'suspicious' and thus illegal. But that is not the rule of law.
Your final paragraph shows you didn't understand what I wrote at all. HSBC is absolutely guilty of violating AML laws, as are all other banks, and if they went to court then a whole lot of bankers would have gone to prison for a long time ... just for engaging in the business of banking. This is not in the best interests of society because we then might find ourselves without banks, and neat though such a world might seem, we'd need an alternative first.
The public apology was a part of the plea bargain struck with the US Gov. They were forced to do it. You'd do the same if the alternative was spending the rest of your life rotting in jail.
There's no problem with prosecuting bankers under laws that are tightly written and which can only be violated knowingly. The apocalypse case can only occur if bankers feel like they have no way to avoid being guilty, which is certainly true under AML laws but not really true under many other kinds of laws (like ordinary fraud).
How can you honestly think that after reading this thread?
The parent comment may or may not be correct (I honestly don't know), but author makes it really, really clear what his logic is, and it's nothing like it.
If you came to such a conclusion, it means that you skimmed through the comments above in 2 seconds, and not even trying to understand what was actually written.
Oh, I read the thread. The problem with his logic is that it leads to the conclusion of systemic importance; it's the same argument as too big to fail, in a different guise. If the evidence truly is enough to convict in court, isn't it antithetical to the rule of law not to convict, and accept settlements instead?
Size of organizations involved was never mentioned, so I really don't see how it's related to "too big to fail".
His logic was completely different, and pretty straightforward: that anti-laundering legislation first threw mens rea out, and then ended up in a state where everybody is guilty be default.
It's an analagous moral hazard, though. Even if bringing a bank down threatens the banking system, it must be done otherwise banks act with impunity. It's little different with bankers and "stupid and illogical law" - if we rely on discretion for which laws we apply, then we're entirely corrupt. We must apply the laws we have and live with the consequences, otherwise we don't live in a lawful society.
I see this as an absolute. I don't really see how it can be otherwise.
> The premise is that because corruption involves money and money involves banks and London has lots of banks, transitively, London is very corrupt.
I thought it was based on the premise that:
London is the drug money laundering capital
of the world
and:
90 per cent of drug cash ends up in
the US and Europe via London
and:
criminal corporate activities within the City of
London which have dominated the headlines
over the past decade
and:
an alternative metric for financial corruption
[puts Britain and its dependencies] top of the list
and:
the four companies in line to buy [from the Government]
the UK Land Registry [which tracks the (often foreign)
ownership of UK properties] are all based in or have
close links to the offshore tax havens of Jersey,
Cayman Islands or Delaware
> career issue
AKA:
powerful financial firms will destroy the lives
and reputations of whistleblowers [claiming] a
100% success rate
From the BBC page linked to under 100% success rate:
The BBC spoke to one such whistleblower who wrote
to the FSA [UK financial services regulator] on
numerous occasions with his concerns about
behaviour at his then-investment bank.
The FSA refused to act on the information
and even requested that the whistleblower
never contact them again.
If the British Prime Minister is happy to defame other countries by name, then the UK should be prepared to have its own monumental corruption problems put under the spotlight.
This is about financial corruption; corruption in other spheres - police, judiciary and politics - is rife in the UK too.
The only question about whether the UK is the "worst" is whether other so-called open, accountable democracies are any better, which I doubt.
But it's about time we started putting our own house in order, instead of blindly pointing the finger at the usual suspects, poor developing countries, who can only dream of having corruption so established that it's not even referred to as such; and when someone does call it what it is, people instinctively write it off as "idiotic".
The quote about a "100% success rate" is meaningless. It comes from here:
According to our whistleblowing source, who has been asked to give evidence to the new Parliamentary Committee on Banking Standards, set up in the wake of the Libor scandal in June, banks tend to take a very dim view of employees who break ranks.
"No risk manager wants to admit that he didn't do his job. So an unholy alliance of mutual self-interest kicks in," the source, who asked to remain anonymous, said. "So they'll do anything to bad-mouth a whistleblower as an underperformer. They have a 100% success record."
This is literally a figure of speech from a single guy who considers himself to have been "bad-mouthed as an underperformer", yet in the Independent article it became:
Powerful financial firms will destroy the lives and reputations of whistleblowers. Newsnight found they have a 100 per cent success rate
... which not only mis-attributes the quote but makes it sound like an actual statistic related to "destroying lives".
This is the worst piece of journalism I've seen for a while.
I wasn't addressing the veracity or otherwise of the "100% success rate" claim, I was using a different quote from the article that was linked, stating the UK's financial regulator told a whistleblower to not contact them again.
Here's another quote from it:
Newsnight can reveal that not a single UK-
based bank has ever been punished for firing
a whistleblower within its ranks - even though
these individuals are protected in law
Debating whether the UK is the worst or not, or whether financial firms have a 100% or perhaps merely just a 86.4% success rate at destroying honest people's lives and/or careers is a distraction.
The issue is that the UK has serious corruption and (organized) crime problems, seemingly tolerated (at best) at some of the highest levels in the UK.
However hyperbolic you may find the journalism to be, it's a lot more instructive and interesting than yet another bullshit list designed to show just how jolly honest and law abiding we are, compared to the developing world.
> The issue is that the UK has serious corruption and (organized) crime problems, seemingly tolerated (at best) at some of the the highest levels in the UK.
The "Mafia Expert" (sic) is an investigative journalist and writer, fairly famous in Italy, which for his work has received enough death threats that he will probably have to live under police protection the rest of his life...
I would like to shed some light on this "mafia expert".
Saviano is officially known in Italy to be a writer, way more than a journalist - actually he was completely unknown before his first book "Gomorra", which made him famous, and he admitted not to be "a journalist, (nor a reporter), ... but a writer" (http://www.thedailybeast.com/articles/2015/09/24/mafia-autho...). I would add that in Italy he is pretty known to be a good show-man, even more than a writer.
Not that i have any aversion to Roberto Saviano, but i would strongly prefer to see Giovanni Falcone being mentioned, above and before any other real (or so-called) anti-mafia warrior (anti-mafia means a lot of professional layers of "antiness").
No, because the English are a race apart. No Englishman is too low to have scruples: no Englishman is high enough to be free from their tyranny. But every Englishman is born with a certain miraculous power that makes him master of the world. When he wants a thing, he never tells himself that he wants it. He waits patiently until there comes into his mind, no one knows how, a burning conviction that it is his moral and religious duty to conquer those who have got the thing he wants. Then he becomes irresistible.
Like the aristocrat, he does what pleases him and grabs what he wants: like the shopkeeper, he pursues his purpose with the industry and steadfastness that come from strong religious conviction and deep sense of moral responsibility. He is never at a loss for an effective moral attitude. As the great champion of freedom and national independence, he conquers and annexes half the world, and calls it Colonization. When he wants a new market for his adulterated Manchester goods, he sends a missionary to teach the natives the gospel of peace. The natives kill the missionary: he flies to arms in defence of Christianity; fights for it; conquers for it; and takes the market as a reward from heaven.
In defence of his island shores, he puts a chaplain on board his ship; nails a flag with a cross on it to his top-gallant mast; and sails to the ends of the earth, sinking, burning and destroying all who dispute the empire of the seas with him. He boasts that a slave is free the moment his foot touches British soil; and he sells the children of his poor at six years of age to work under the lash in his factories for sixteen hours a day. He makes two revolutions, and then declares war on our one in the name of law and order.
There is nothing so bad or so good that you will not find Englishmen doing it; but you will never find an Englishman in the wrong. He does everything on principle. He fights you on patriotic principles; he robs you on business principles; he enslaves you on imperial principles; he bullies you on manly principles; he supports his king on loyal principles, and cuts off his king's head on republican principles. His watchword is always duty; and he never forgets that the nation which lets its duty get on the opposite side to its interest is lost.
So the most ruthless mafia operate among international organizations, but from London, thus making Britain the most corrupt country in the world? Perhaps they never leave London, not old enough to travel alone, or they don't know how to use the internet.
There's nothing new under the sun, just the sensationalist Bremain propaganda you'd expect a few weeks before an EU referendum.
So much hand-wringing. Anyone who thinks Britain is corrupt has never been to a corrupt country. I lived in Britain 5 years and never had to pay a bribe, ever. In some countries bribes are required to even clear customs. Then driving in from the airport, the police stop you at road-blocks and demand bribes. And so on.
If true (and I have my doubts), this is particularly funny in view of the British PM's recent comments accidentally caught on mic in which he called out the most corrupt countries in the world by name.
I think a distinction between most corrupt and largest dollar sums involved in corruption, should be made. The UK is a very wealthy nation with very large, global banking interests. That inherently tilts things in terms of scale.
If we're going by most corrupt, the UK is absolutely not at the top of that list, nor is Spain, in regards to Europe.
I'll go with Transparency International's rankings of most corrupt in Europe, I find it far more plausible: Ukraine at #130 globally, Russia at #119 globally, Belarus at #107. Those last two are fascist dictatorships, the corruption is nearly absolute in terms of state power and abuse.
I listened to a MoneyBox radio programme about this. The "financial expert" said that it was effectively a tax-deferral program, just like a pension plan. Any gains inside the fund were tax free until the money was brought back into the UK. It may seem unfair at face value, but any UK citizen can defer taxes on up to 100% of their annual income in a registered pension plan[0]. So, IMO, the fairness would depend on what investors can do with the offshore fund that regular people can't do with their pension plans?
It's factually incorrect that high ranking British politicians are named on the Panama papers.
It's widely known Cameron's dad was in the PP but also that he was not a British politician. It still stinks but there's no evidence of David Cameron being directly involved.
> David Cameron has finally admitted he benefited from a Panama-based offshore trust set up by his late father.
> Cameron also admitted he did not know whether the £300,000 he inherited from his father had benefited from tax haven status due to part of his estate being based in a unit trust in Jersey.
Maybe he was not directly named in the papers, but he committed as much (or as little) corruption as the Spanish politicians.
Ironically, when I read this article, there was a banner advert for a company that helps people get MBEs, OBEs and Knighthoods: https://pic.twitter.com/UsTf892sr6
The depressing thing about this is that us UK lefties have screaming about this years and years. I know a man who works in politics that is convinced that the Tory party is not privatising the NHS because they Tory party put elections above all else.
Clearly the author has not taken account of india. India is the most corrupt country. You can not get done anything with out paying bribe in government offices.
I read Saviano's book. It is enjoyable but it should be said that his intention is purely drama, not rigorous, deep and comprehensive information.
The same can be said about this accusation since he doesn't provide evidence, just moral outrage. How do you measure corruption? How do you know that there is more crime-originated money in Jersey than in Moscou, Lagos or Caracas?
I would confirm that it's my country, Spain. But you can't know it if you just read our main press, because they fake the reality. Our politicians, their relatives, their companies and their mass-media have stolen thousands of million of euros, and nothing happens. Nobody goes to jail, except the people who claims agains it.
Why do we not have the tools for tracing money the way we do for phone calls or data packets? We can argue about how governments should choose to use this data to prosecute crimes, but it seems mad that banks do not have to know where money comes from.
I don't know, njloof. Why don't banks track cash deposits? Should we track cash deposits? Why do we track phone calls and IP traffic? Should we track phone calls and IP traffic?
FWIW, a friend of mine once defined the corruption level of the country by the smallest size of a bribe you would have to pay someone. The lower the number, the more corrupt the country. Obviously not the best measure, but certainly practical.
I like this definition, but another way of looking at it is that in more corrupt countries, the middle and lower classes have access to the bribery economy that exists regardless.
I'm surprised nobody cares to define corruption. Given that the very topic at hand is measuring corruption, wouldn't the obvious starting point be a definition of corruption that is measurable?
The corruption described is almost entirely contained within the area of high finance; it's not a very corrupt country from the perspective of the average John Bull. It is however quite deferential, which means that power and prestige let you get away with things.
Have to add that in truly corrupt societies the degree of power circles corruption is not any lower. It just looks less appalling from corrupt baseline.
The 'old boy' network that powers the country is not contained within high-finance. It is just tightly linked to through wealth management and lobbying.
I was invovled a couple of times in bidding for the government contracts. Do not have proofs, of course, but the entire design of this system was very open for corruption.
Hint: corruption isn't just about simple bribery and envelopes full of banknotes passing hand. Ask yourself why so many cabinet ministers retire and end up on the boards of large conglomerates that specialise in bidding for government outsourcing contracts, or why so many long-term viable agencies of government (the Post Office, the Land Registry, the National Air Traffic Control System, the NHS ...) find themselves in need of privatization in the name of "efficiency". You can make any agency -- however potentially profitable -- fail if you run it into the ground through deliberate mismanagement, then show a rebound improvement when you sell it (or the service it provides) off to your golf-course cronies. And when you roll up to the banquet later, there's no evidential chain that can prove beyond reasonable doubt that what you did was grand theft.