HSBC,
Too Big to Jail, is The New Poster Child For US Two-tiered Justice
System
By Glenn Greenwald
By Glenn Greenwald
http://www.informationclearinghouse.info/article33303.htm
December
12, 2012 "The Guardian" --
The US is the world's
largest prison state, imprisoning more of its citizens than any
nation on earth, both in absolute
numbers and proportionally.
It imprisons people for longer periods of time, more mercilessly, and
for more trivial transgressions than
any nation in the west.
This sprawling penal state has been constructed over decades, by both
political parties, and it punishes the poor and racial minorities
at overwhelmingly
disproportionate rates.
But
not everyone is subjected to that system of penal harshness. It all
changes radically when the nation's most powerful actors are caught
breaking the law. With few exceptions, they are gifted not merely
with leniency, but full-scale immunity from criminal punishment. Thus
have the most egregious crimes of the last decade been fully shielded
from prosecution when committed by those with the greatest political
and economic power: the construction of a worldwide torture regime,
spying on Americans' communications without the warrants required by
criminal law by government agencies and the telecom industry, an
aggressive war launched on false pretenses, and massive, systemic
financial fraud in the banking and credit industry that triggered the
2008 financial crisis.
This
two-tiered justice system was the subject of my
last book, "With Liberty and Justice for Some", and
what was most striking to me as I traced the recent history of this
phenomenon is how explicit it has become. Obviously, those with money
and power always enjoyed substantial advantages in the US justice
system, but lip service was at least always paid to the core precept
of the rule of law: that - regardless of power, position and prestige
- all stand equal before the blindness of Lady Justice.
It
really is the case that this principle is now not only routinely
violated, as was always true, but explicitly repudiated, right out in
the open. It is commonplace to hear US elites unblinkingly insisting
that those who become sufficiently important and influential are -
and should be - immunized from the system of criminal punishment to
which everyone else is subjected.
Worse,
we are constantly told that immunizing those with the greatest power
is not for their good, but for our good, for our collective good:
because it's better for all of us if society is free of the
disruptions that come from trying to punish the most powerful, if
we're free of the deprivations that we would collectively experience
if we lose their extraordinary value and contributions by prosecuting
them.
This
rationale was popularized in 1974 when Gerald Ford explained why
Richard Nixon - who built his career as a "law-and-order"
politician demanding harsh punishments and unforgiving prosecutions
for ordinary criminals - would never see the inside of a courtroom
after being caught committing multiple felonies; his pardon was for
the good not of Nixon, but of all of us. That was the same reasoning
hauled out to justify immunity for officials of the National Security
State who tortured and telecom giants who illegally spied on
Americans (we
need them to keep us safe and can't disrupt them with prosecutions),
as well as the refusal to prosecute any Wall Street criminals for
their fraud (prosecutions
for these financial crimes would disrupt our collective economic
recovery).
A
new episode unveiled on Tuesday is one of the most vivid examples yet
of this mentality. Over the last year, federal investigators found
that one of the world's largest banks, HSBC, spent
years committing serious crimes, involving money laundering for
terrorists; "facilitat[ing] money laundering by Mexican drug
cartels"; and "mov[ing] tainted money for Saudi banks tied
to terrorist groups". Those investigations uncovered substantial
evidence "that senior
bank officials were complicit in the illegal activity."
As but one example, "an HSBC executive at one point argued that
the bank should continue working with the Saudi Al Rajhi bank, which
has supported Al Qaeda."
Needless
to say, these are the kinds of crimes for which ordinary and
powerless people are prosecuted and imprisoned with the greatest
aggression possible. If you're Muslim and your conduct gets anywhere
near helping a terrorist group, even by accident, you're
going to prison for a long, long time. In fact, powerless,
obscure, low-level employees areroutinely
sentenced to long prison terms for engaging in relatively
petty money laundering schemes, unrelated to terrorism, and on a
scale that is a tiny fraction of what HSBC and its senior officials
are alleged to have done.
But
not HSBC. On Tuesday, not only did the US Justice Department announce
that HSBC would not be criminally prosecuted, but outright
claimed that the reason is that they are too important, too
instrumental to subject them to such disruptions. In other words,
shielding them from the system of criminal sanction to which the rest
of us are subject is not for their good, but for our common good. We
should not be angry, but grateful, for the extraordinary gift
bestowed on the global banking giant:
"US authorities defended their decision not to prosecute HSBC for accepting the tainted money of rogue states and drug lords on Tuesday, insisting that a $1.9bn fine for a litany of offences was preferable to the 'collateral consequences' of taking the bank to court. . . .
"Announcing the record fine at a press conference in New York, assistant attorney general Lanny Breuer said that despite HSBC"s 'blatant failure' to implement anti-money laundering controls and its wilful flouting of US sanctions, the consequences of a criminal prosecution would have been dire.
"Had the US authorities decided to press criminal charges, HSBC would almost certainly have lost its banking licence in the US, the future of the institution would have been under threat and the entire banking system would have been destabilised.
"HSBC, Britain's biggest bank, said it was 'profoundly sorry' for what it called 'past mistakes' that allowed terrorists and narcotics traffickers to move billions around the financial system and circumvent US banking laws. . . .
"As part of the deal, HSBC has undertaken a five-year agreement with the US department of justice under which it will install an independent monitor to assess reformed internal controls. The bank's top executives will defer part of their bonuses for the whole of the five-year period, while bonuses have been clawed back from a number of former and current executives, including those in the US directly involved at the time.
"John Coffee, a professor of law at Columbia Law School in New York, said the fine was consistent with how US regulators have been treating bank infractions in recent years. 'These days they rarely sue individuals in any meaningful way when the entity will settle. This is largely a function of resource constraints, but also risk aversion, and a willingness to take the course of least resistance,' he said."
DOJ
officials touted the $1.9 billion fine HSBC would pay, the largest
ever for such a case. As the Guardian's Nils Pratleynoted,
"the sum represents about four weeks' earnings given the bank's
pre-tax profits of $21.9bn last year." Unsurprisingly, "the
steady upward progress of HSBC's share price since the scandal
exploded in July was unaffected on Tuesday morning."
The
New York Times Editors this
morning announced: "It is a dark day for the rule of law."
There is, said the NYT editors, "no doubt that the wrongdoing at
HSBC was serious and pervasive." But the bank is simply too big,
too powerful, too important to prosecute.
That's
not merely a dark day for the rule of law. It's a wholesale
repudiation of it. The US government is expressly saying that banking
giants reside outside of - above - the rule of law, that they will
not be punished when they get caught red-handed committing criminal
offenses for which ordinary people are imprisoned for decades. Aside
from the grotesque injustice, the signal it sends is as clear as it
is destructive: you
are free to commit whatever crimes you want without fear of
prosecution.
And obviously, if the US government would not prosecute these banks
on the ground that they're too big and important, it would - yet
again, or rather still - never let them fail.
But
this case is the opposite of an anomaly. That the most powerful
actors should be immunized from the rule of law - not merely treated
better, but fully immunized - is a constant, widely affirmed precept
in US justice. It's applied to powerful political and private sector
actors alike. Over the past four years, the CIA and NSA have received
the same gift, as have top Executive Branch officials, as has the
telecom industry, as has most of the banking industry. This is how I
described it in "With Liberty and Justice for Some":
"To hear our politicians and our press tell it, the conclusion is inescapable: we're far better off when political and financial elites - and they alone - are shielded from criminal accountability.
"It has become a virtual consensus among the elites that their members are so indispensable to the running of American society that vesting them with immunity from prosecution - even for the most egregious crimes - is not only in their interest but in our interest, too. Prosecutions, courtrooms, and prisons, it's hinted - and sometimes even explicitly stated - are for the rabble, like the street-side drug peddlers we occasionally glimpse from our car windows, not for the political and financial leaders who manage our nation and fuel our prosperity.
"It is simply too disruptive, distracting, and unjust, we are told, to subject them to the burden of legal consequences."
That
is precisely the rationale explicitly invoked by DOJ officials to
justify their decision to protect HSBC from criminal accountability.
These are the same officials who previously immunized Bush-era
torturers and warrantless eavesdroppers, telecom giants, and Wall
Street executives, even as they continue to persecute whistleblowers
at record rates and prosecute ordinary citizens - particularly poor
and minorities - with extreme harshness even for trivial offenses.
The administration that now offers the excuse that HSBC is too big to
prosecute is the same one that quite consciously refused to attempt
to break up these banks in the aftermath of the "too-big-to-fail"
crisis of 2008, as former
TARP overseer Neil Barofsky, among others, has
spent years arguing.
And,
of course, these HSBC-protectors in the Obama DOJ are the same
officials responsible for maintaining and expanding what NYT
Editorial Page editor Andrew Rosenthal has
accurately described as "essentially a separate justice
system for Muslims," one in which "the principle of due
process is twisted and selectively applied, if it is applied at all."
What has been created is not so much a "two-tiered justice
system" as a multi-tiered one, entirely dependent on the
identity of the alleged offender rather than the crimes of which they
are accused.
Having
different "justice systems" for citizens based on their
status, wealth, power and prestige is exactly what the US founders
argued most strenuously had to be avoided (even as they themselves
maintained exactly such a system). But here we have in undeniable
clarity not merely proof of exactly how this system functions, but
also the rotted and fundamentally corrupt precept on which it's
based: that some actors are simply too important and too powerful to
punish criminally. As the Nobel Prize-winning economist Joseph
Stiglitz warned
in 2010, exempting the largest banks from criminal prosecution
has meant that lawlessness and "venality" is now "at a
higher level" in the US even than that which prevailed in the
pervasively corrupt and lawless privatizing era in Russia.
Having
the US government act specially to protect the most powerful
factions, particularly banks, was a major impetus that sent people
into the streets protesting both
as part of the early Tea Party movement as well as the
Occupy movement. As well as it should: it is truly difficult to
imagine corruption and lawlessness more extreme than having the
government explicitly place the most powerful factions above the rule
of law even as it continues to subject everyone else to disgracefully
harsh "justice". If this HSBC gift makes more manifest this
radical corruption, then it will at least have achieved some good.
UPDATE
By
coincidence, on the very same day that the DOJ announced that HSBC
would not be indicted for its multiple money-laundering felonies, the
New York Times published a story featuring the harrowing
story of an African-American single mother of three who was sentenced
to life imprisonment at the age of 27 for a minor drug offense:
"Stephanie George and Judge Roger Vinson had quite different opinions about the lockbox seized by the police from her home in Pensacola. She insisted she had no idea that a former boyfriend had hidden it in her attic. Judge Vinson considered the lockbox, containing a half-kilogram of cocaine, to be evidence of her guilt.
"But the defendant and the judge fully agreed about the fairness of the sentence he imposed in federal court.
"'Even though you have been involved in drugs and drug dealing,' Judge Vinson told Ms. George, 'your role has basically been as a girlfriend and bag holder and money holder but not actively involved in the drug dealing, so certainly in my judgment it does not warrant a life sentence.'
"Yet the judge had no other option on that morning 15 years ago. As her stunned family watched, Ms. George, then 27, who had never been accused of violence, was led from the courtroom to serve a sentence of life without parole.
"'I remember my mom crying out and asking the Lord why,' said Ms. George, now 42, in an interview at the Federal Correctional Institution in Tallahassee. 'Sometimes I still can't believe myself it could happen in America.'"
As
the NYT notes - and read her whole story to get the full flavor of it
- this is commonplace for the poor and for minorities in the US
justice system. Contrast that deeply oppressive, merciless punishment
system with the full-scale immunity bestowed on HSBC - along with
virtually every powerful and rich lawbreaking faction in America over
the last decade - and that is the living, breathing two-tiered US
justice system. How this glaringly disparate, and explicitly
status-based, treatment under the criminal law does not produce
serious social unrest is mystifying.
Glenn
Greenwald is a columnist on civil liberties and US national security
issues for the Guardian. A former constitutional lawyer, he was until
2012 a contributing writer at Salon.
He is the author of How Would a Patriot Act? (May 2006), a critique
of the Bush administration's use of executive power; A Tragic Legacy
(June, 2007), which examines the Bush legacy; and With Liberty and
Justice For Some: How the Law Is Used to Destroy Equality and Protect
the Powerful
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