US report accuses UK officials of hampering HSBC probe
LONDON (AP) -- A U.S. report is accusing British officials of hampering a probe into HSBC, one of the world's largest banks.
The U.S. House Financial Services Committee said Monday it released the report to "shed light" on whether the Department of Justice made prosecutorial decisions based on the size of the institution under investigation. It argued that HSBC was not prosecuted because of fears for the global economy.
In 2013, the bank agreed to pay U.S. authorities $1.9 billion to settle charges that its practices enabled Latin American drug cartels to launder billions of dollars. The bank was accused of "stunning failures of oversight" by federal prosecutors, but in paying the fine the bank avoided a legal battle that could have savaged its reputation.
The report, called "Too Big to Jail: Inside the Obama Justice Department's Decision Not to Hold Wall Street Accountable," accuses Britain's Treasury chief George Osborne of intervening in the investigation into the London-based bank.
The report says that Osborne "insinuated" that the U.S. was unfairly targeting U.K. banks by seeking settlements higher than those for U.S. banks. However, Osborne wrote to Ben Bernanke, the chairman of the Federal Reserve, copying the letter to Treasury Secretary Timothy Geithner - rather than the Justice Department investigators.
"I would also ask that the outcome of current and future investigations against the U.K. headquartered banks is consistent with previous settlements, and with U.S. settlements made with banks headquartered in the world," Osborne said in the Sept. 10, 2012, letter.
Osborne went on to note that the $1.9 billion settlement under discussion was "three times greater than the largest U.S. settlement to date." While Osborne stressed in the letter that it was not his intention to interfere in a criminal or regulatory action, he also warned in the letter that prosecuting a "systemically important financial institution like HSBC" had the risk of leading "to contagion."
The committee concluded that the Financial Services Authority "appears to have hampered the U.S. government's investigations and influenced DOJ's decision not to prosecute HSBC."
The FSA's successor agency, the Financial Conduct Authority, declined to comment.