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Top US officials rejected push to prosecute HSBC: lawmakers' report
[NEW YORK] Senior US Department of Justice officials overruled internal recommendations to prosecute global bank HSBC Holdings Plc for money laundering violations because of concerns about the stability of the financial system, a congressional report released on Monday said.
In 2013, the Financial Services Committee of the US House of Representatives, led by Republican Congressman Jeb Hensarling of Texas, began investigating the Justice Department's November 2012 decision to enter into a US$1.92 billion settlement agreement with HSBC.
The report, which relies on internal records from the Department of the US Treasury, said then-US Attorney General Eric Holder "misled" Congress about the Justice Department's reasoning for declining to prosecute.
He and other top officials decided against criminal charges for London-based HSBC over the recommendations of prosecutors as they had concerns about financial stability, the report said.
Politicians and others have criticised the Justice Department for not charging high level executives following the 2008 financial crisis. The report said it sought to shed light on the department's decision-making behind the scenes and did not outline specific recommendations.
The 2012 settlement detailed how Mexico's Sinaloa drug cartel and Colombia's Norte del Valle cartel laundered US$881 million through HSBC and a Mexican unit and how the bank violated US 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 Monday on the report. Mr Holder also declined to comment.
The Justice Department did not immediately respond to a request for comment. The US Department of the Treasury declined to comment.
The report said both the Justice Department and Treasury did not comply with the committee's request for documents, forcing them to issue subpoenas.
Internal emails in the report show the Justice Department's Asset Forfeiture and Money Laundering Section, represented by then-chief Jennifer Shasky Calvery was "considering seeking a guilty plea from HSBC" as early as September 2012.
Senior leadership at the Justice Department, including Mr Holder, ultimately overruled prosecuting the bank even though Mr Holder had testified in front of Congress that "banks are not too big to jail," the report said.
Ms Shasky Calvery later joined HSBC in a senior global financial crime fighting role, according to a source familiar with her plans.
As part of HSBC's agreement with the US government, the bank installed an outside monitor, former prosecutor Michael Cherkasky to improve its anti-money laundering controls. A court heard in April that despite progress, HSBC was still not doing enough to thwart money laundering.