Where HSBC’s true allegiance lies
[Published on SCF October 7, 2019.] For some this subject may be considered old news, but in truth it just slithered back into the dark before you could take a good look at its face.
As the story goes, Meng Wanzhou was arrested at the Vancouver (Canada) airport Dec 1, 2018, on her way from Hong Kong to Mexico City and ultimately Buenos Aires. Her arrest was based off of the accusation that she had lied to the HSBC executive at a 2013 meeting meant to reassure the bank that Huawei was not violating US sanctions against Iran. Meng Wanzhou CFO and Ren Zhengfei CEO of Huawei have maintained that Huawei was not in breach of any sanction, stating that the Iranian company Skycom was a local partner in Tehran and not a Huawei subsidiary. In addition, they have maintained that they have evidence in email correspondences with HSBC, that it was aware from the very start the nature of Huawei’s relationship to Skycom, and therefore the accusation by HSBC that the bank was deceived is completely unfounded. Though none of the transactions allegedly occurred in the US, it is being claimed that the US has jurisdiction due to money allegedly passing through the US banking system.
This case has proved to be odd for a number of reasons.
It is the first time in history that a non-US person is being charged for violation of US sanctions and the first time a non-US person has been criminally charged solely for having ‘caused’ another non-US entity, in this case a bank, to violate US sanctions. In addition, when charges of this sort, having to do with sanctions, are made it is typically done against the institution and not an individual. The thought that Meng Wanzhou’s arrest is meant to be used as leverage over the trade war and Huawei’s future business dealings is thus not unfounded.
According to HSBC, its hand was forced into providing ‘intel’ for Meng Wanzhou’s arrest, since its holdings were being monitored by the DOJ. HSBC, who is far removed from innocence in its personal practices, was under this monitorship for the very fact that it had been found guilty of consistent shady dealings which included several of their high level staff being charged with criminal activity. In 2016 Mark Johnson, a senior British banker of HSBC, was arrested at a New York City airport for currency benchmark rigging. Stuart Scott, also a senior British banker and former head of the HSBC foreign exchange cash trading for Europe, the Middle East and Africa, was also charged. HSBC was fined $6 billion in 2015 over this scandal. In 2018, former director at HSBC Private Bank Suisse in Geneva was found guilty and fined $229,000 for money laundering in a Paris drug case. Also in 2018, HSBC was being investigated for tax evasion and money laundering and had actually publicly released that it had a provision of $632 million ready for a future fine and that they were cooperating fully. No need to waste anyone’s time with denial hmm?
However, nothing beats the 2012 allegations against HSBC itself of allowing terrorists to move money around the financial system and for which it had to pay a record $1.9 billion, with no form of regulated control on the bank afterwards but rather an agreement with the DOJ that the bank itself would install a 5 year independent monitor. HSBC managed to avoid being criminally prosecuted, a move that could have stopped the bank from operating in the US. Lanny Breuer, assistant attorney general at the time, stated:
“ HSBC is being held accountable for stunning failures of oversight – and worse…that led the bank to permit narcotics traffickers and others to launder hundreds of millions of dollars through HSBC subsidiaries and to facilitate hundreds of millions more in transactions with sanctioned countries.”
This just scratches the surface, and makes you rather wonder why Meng Wanzhou is being given such a hard time when actual support of terrorist funding is merely fined in the case of HSBC.
HSBC in a “challenging global environment”
Since providing ‘intel’ against Meng Wanzhou, HSBC has been busily working to repair its relationship with the Chinese government. In early August, its chief executive John Flint of the HSBC headquarters in London was asked to step down due to a change in leadership needed to address a “challenging global environment”. Shortly after, its Greater China Chief Helen Wong also stepped down. It is no surprise that HSBC is feeling rather nervous since China is preparing a widely anticipated “unreliable entity list” of companies that have undermined China’s national interests, which was initiated as a response to the US crackdown on Chinese tech companies but also includes those who ignore or challenge the one-China principle. This would include supporting arms sales to Taiwan, and supporting violent protesters in Hong Kong.
HSBC has a lot to lose if its relationship to the Chinese government falters.
In 2017, the first joint venture securities company majority owned by a foreign bank, HSBC Qianhai Securities Limited, was formally opened for business in China. Though this was a great achievement by HSBC, its foreign majority ownership is a mere 51%, which could be easily taken away if they were considered at any point to be unfit for that level of responsibility. Recently, HSBC has also carried out the first transaction in yuan-denominated blockchain letters of credit. HSBC’s position at the forefront of facilitating blockchain trade in the yuan promises a way into a major market, with China-related trade producing an estimated 1.2 million letters of credit worth $750 billion last year.
Thus at first glance, it seems rather believable that HSBC was indeed forced in its dealing with the US Department of Justice and was not guilty in trying to undermine China in its 5G endeavours with Huawei, since not only was HSBC being monitored by the DOJ but they had only a great deal to lose and seemingly nothing to gain.
This is where knowing the history of the Hong Kong Shanghai Banking Corporation is absolutely vital.
Where HSBC’s true allegiance lies
For the sake of brevity the story starts with the First Opium War (1839-42). In short, the British Empire had made a move towards a free trade system in the 1840s, modelled off of Adam Smith’s ‘A Wealth of Nations’. In this new system of trade it was believed that if there is a demand for a product, a country has no right to intervene in its transaction. Protectionism, which had been practiced by Britain up until that point, had now been deemed unfit by…Britain, and all other countries were naturally to follow along according to the “new rules” chosen for them.
In the case of China, the trade of opium was ultimately banned by the Chinese, and severe punishments were to be delivered to those involved in smuggling the product into the country, which included British merchants. The British Empire considered this a direct threat to its ‘security’ and its new enforcement of free trade, thus when China did not back down, the First Opium war was waged. The result was the forced signing of the Nanking Treaty in 1842. This treaty, known as the first of the unequal treatises, ceded the territory of Hong Kong to Britain and allowed British merchants to not only trade at Guangzhou but were now also permitted to trade with five additional “treaty ports” and with whomever they pleased.
Created in 1600 with a Royal Charter from Queen Elizabeth I, the East India Company was from its inception indistinguishable from the British Empire itself, rising to account for half of the world’s trade. As is aptly said by Lord Macaulay in his speech to the House of Commons in July 1833, since the beginning, the East India Company had always been involved in both trade and politics, just as its French and Dutch counterparts had been. In other words, the East India Company was to facilitate the geopolitical chess game that the British Empire wished to see played out. Not only the trade contracts it received but whole colonised territories won by the British Empire were handed over to this company to manage, along with a large sized private military, all under the decree of the Crown. This would be most evidently seen in the freedom it was given to control opium production in British India and to then facilitate its trade within Hong Kong and other colonised parts of Southeast Asia.
China was deemed uncooperative to the conditions signed under the Nanking Treaty and a Second Opium war was declared on them by the British Empire, lasting from 1856-60.
HSBC was founded in 1865. A British-friendly bank needed to be created to facilitate trade in the region, connecting the Empire’s newly acquired treasures Shanghai and Hong Kong with its British India (the major world producer of opium) along with the rest of the British Empire and Europe. This bank was not only meant to facilitate foreign trade within China in however it deemed fit, but in addition was created namely to trade in the product of opium. It is important to note that although the founder of HSBC is credited as Thomas Sutherland of the Peninsular and Oriental Steam Navigation Company, a Scottish merchant who wanted the bank to operate under “sound Scottish banking principles”, the bank had been created from the start to facilitate trade on behalf of the British Empire.
Hong Kong was only returned back to China in 1997, and HSBC up until that point had always been run under British economic policy. This is not to be brushed over! Though HSBC claims to have its base in Hong Kong and Shanghai, it always has up until this date had its headquarters in London, England as a banking institution. Not only this, but despite their attempts to claim that their banking practices have long since moved away from opium trade to healthier prospects, as earlier listed in this paper, HSBC clearly deals presently with not only drug money laundering but is also tied to money laundering for the use of terrorist activity.
So what are we to make of this mess?
Well the question needed to be asked is, “Is this all simply about profit?” And if the answer is clearly no, then what is it about? After all, isn’t it true that the British Empire no longer exists?
So what is the real nature of the game?
If it is not just about profit, why were two opium wars ultimately waged against China?
Well, simply put, China was considered a threat by the very autonomy of its existence. For all the effort made to convolute the obvious, it was never just about money at the end of the day but rather geopolitical control. And China has, up until very recently, been maintained in a position of subservient head bowing, even being put in the humiliating position of having to answer to and convince Britain that their handling of Hong Kong since its return to China is satisfactorily democratic. It is thought by the ridiculous, that China somehow needs to answer to Britain as the overseer of what is democratic and civil, when Britain had violently taken the region while waging war to push opium on its people. But the problem actually runs much deeper.
HSBC can be regarded for all intents and purposes as a British entity operating for British interests under the guise of a Chinese bank. However, anyone who has a little sense can see that HSBC could never be considered a Chinese bank with its history and its headquarters in London. But even if this may be already recognised by the Chinese, HSBC is very much embedded in the economic structure of Hong Kong, and it cannot simply be removed being one of the largest derivatives-holding banks in the world, with obvious dire consequences to the world economy if it should crash. In addition, HSBC is operating as one of only three banks that are allowed to print Hong Kong banknotes. By just this alone, Hong Kong’s economy is tied into the world drug trade. Something I am sure its foreign controllers do not want to lose.
Then there is the whole affair with the Hong Kong protests occurring, suspiciously close to the 70th anniversary of the People’s Republic of China on October 1st and very clearly pushing for a Tiananmen Square-like debacle. This has not only been tied to American Intelligence but also British Intelligence, with the latter actually being the one in the driver’s seat.
In response to the British Foreign Office threatening ‘severe consequences if a fully independent investigation’ into the so-called police brutality in Hong Kong does not occur, the Chinese Foreign Ministry responded saying “the UK has no sovereign jurisdiction or right of supervision over Hong Kong…it is simply wrong for the British Government to exert pressure. The Chinese side seriously urges the UK to stop its interference in China’s internal affairs and stop making random and inflammatory accusations on Hong Kong.”
It is of great interest to anyone who is paying attention that Britain has been showing its hand in broad daylight lately, which can only mean that the walls must really be closing in. The so-called “second player” to the US has actually been implicated in some rather large-scale meddling on the world stage that would indicate that Britain does not perceive itself as second player to anyone. This has been namely the exposure of GCHQ in orchestrating Russia Gate in an ongoing attempt to destabilise the US from within and its very direct role in the still bizarre-as-ever Skripal case as the pretext to start WWIII with Russia.
It is no surprise to anyone that the 5G network controlled by Huawei poses a great threat to western hegemony over intelligence gathering, and it is no mystery why British Intelligence is very much concerned over its bleak future. The Five Eyes are clearly under British control with four of the five members acting directly under the British Crown. While US Intelligence may once have been American, the British coup which destroyed the OSS soon after FDR’s untimely death put an end to that. British Intelligence and the CIA alike answer to the Crown.
Originally published on Strategic Culture Foundation.
Cynthia Chung is the President of the Rising Tide Foundation and a writer at Strategic Culture Foundation, consider supporting her work by making a donation and subscribing to her substack page for free.