Dirty Money (2018–…): Season 1, Episode 4 - Cartel Bank - full transcript

[Matt Taibbi]
This is the rare Wall Street case

that the person on the street
can understand.

[Brett Wolf] The amounts of money involved
were massive.

Sometimes millions of dollars.

[Anabel Hernández] Billions of dollars.

[Patrick Keefe] Money that was being
laundered from Mexican drug cartels.

[Elise Bean] Drug lords, terrorists,
they were facilitating these criminals.

[Ken del Valle] It's greed,
that's all it is. It's greed.

[announcer 1] At HSBC, we're committed
to helping protect the financial system

on which millions of people depend
by only doing business with customers

who meet our high standards
of transparency.



[gunfire]

[announcer 2] The world's local bank,
HSBC.

[Keefe] HSBC stands for the Hong Kong
and Shanghai Banking Corporation.

It is a huge global institution

with, frankly, a kind of indifference to
the people that it was doing business with

and the laws that govern
financial services operations.

[Don Semesky] There were

hundreds of billions of dollars
in transactions

that were not monitored.

[Richard Elias] It's basic,
simple money laundering

and HSBC had its hand
right in the middle of it.

Drug cartels themselves said,
in their own words,

it is the place to bank.

Everybody's seen Scarface,



where the guy walks into the bank
with the duffle bags full of cash.

That was HSBC.

[announcer] By working together,
with each of us playing our part,

we are leading the fight
against financial crime,

helping businesses to grow
and communities to thrive.

HSBC, together protecting
a world of opportunity.

[theme song playing]

[Hernández] These banks, they move
millions for the cartels every day

and every dollar is helping
to kill people in Mexico.

Being a journalist in Mexico
is very dangerous.

I received threats of death
and my family received gun attacks.

I mean, many of my sources
were kidnapped or murdered.

My father was
the most important figure in my life.

When I told my father
that I wanted to be a journalist,

he was very angry with me.
He hated me.

He said, "You cannot be a jour--
Is that a profession?"

[crowd cheering]

Because in those years, in Mexico,

many of the media were very corrupt.

They were accepting bribes
from the government.

That was an old tradition.

And I said, "No, I want to be a journalist

and I will be
a very different journalist."

I remember that
when I published my first story,

when my father saw this,
he really changed his mind about that.

So my father was very proud of me
and of my job.

In December 2000,

my father was kidnapped and murdered.

And that changed my life forever.

Because when we went to claim for justice,
the police asked us for money.

They said, "If you want me to investigate,
you have to pay."

When, at a distance,

you see the injustice,
the corruption, it's one thing.

But when you suffer this injustice
and the corruption,

your point of view of the things
change completely, change your life.

So, I really started to do
another kind of journalism.

[reporter 1] Journalist Anabel Hernández

has spent five years
investigating the cartels

and the toll they've taken on Mexico.

[reporter 2] Hernández published
a groundbreaking book

linking top Mexican officials

to the world's most powerful drug cartels.

[Hernández] The drug cartels
are really destroying my country.

Just this year...

between January and July, 10,000 people

have been murdered in Mexico
by the drug cartels.

[sirens wailing]

-[gunfire]
-[officer speaking Spanish]

[reporter 1 in English] Another 24 hours
of terror in Ciudad Juárez.

[agent yelling in Spanish]

[reporter 1 in English] Fifteen teenagers
gunned down at a birthday party

including Luz Maria Davila's
only two children.

[speaking Spanish]

[reporter 2 in English]
Mexican soldiers and police

rushed to evacuate several schools,

all signs of surging violence.

[gunfire]

[reporter 3] Vicious cartels battling

to control the $14-billion-a-year
illicit trade,

feeding an insatiable US appetite
for drugs.

[siren wailing]

[in Spanish] The increase in violence
kept going up little by little,

especially in zones
where these drugs are produced

and in the border areas where they cross
into the United States.

[Victor Avila in English] It's a very
surreal experience because I grew up here.

I grew up going to Ciudad Juárez.

That was our place to go visit
and eat and visit family.

And so it almost was very unreal for me

that this violence was happening
in a place that I love.

These cartels are considered
terrorist organizations

in the sense that you wouldn't know
the difference between the violence

sometimes between ISIS and al-Qaeda,

versus the drug cartels, the Sinaloa,
the Juarez cartel, the Gulf cartel,

because of the level of barbarity
that they have.

-[explosion]
-[distorted voices]

The business is not the violence,
the business is not murdering people.

The business is trafficking drugs
to get money.

A lot of money.

Millions of dollars, that is the goal.
All the--

If you have to kill,
if you have to pay bribes,

if you have to destroy one country,
it's an accident.

The goal is the money.

[Avila] The drugs come north,
and the money goes south.

It's a cycle that continues over and over.

[del Valle] Cross-border smuggling
has been going on

ever since there's been a border.

Everybody makes money off of this.

Let's say you get a guy in Mexico.

He gets offered $3,000
to cross a car with a compartment.

[dog barks and growls]

Now he's gonna cross the border
and take it over to the local Walmart,

drop the car off.

Leave the keys under the mat.
He's gonna go shopping for two hours.

When he comes back,
that car will be in that parking lot,

but probably in a different spot.

Somebody will have picked up that car,
taken it to a garage,

off-loaded the 300 pounds of marijuana
and brought the car back.

That young man is gonna take it back
to the people that loaded him up,

and they're gonna give him $3,000.

That's more than he can make in Mexico
in six months of honest labor.

So what happens to the three kilos
that were picked up?

They will be taken to a stash house,

where they will be distributed
and sold on the street.

Now how do you get the money back?
All kinds of ways.

[Keefe] Moving the drugs is easy.

Moving and laundering the money
is the hard part.

As a narcotics agent,
you focus a lot on the drugs,

but you then quickly learn that in order
to have an effective investigation,

don't follow the drugs, follow the money.

[Keefe] You get the drugs up here
and then all those drugs change hands,

and American consumers pay US dollars
for those drugs.

Now you've got to get the money
out of the US

in order to get it
into the licit financial system.

[Elizabeth Warren] Drug dealing
is so enormously profitable

that the amount of cash
that has to move is physically...

If they had to do it in cash, it's huge.

Drug trafficking generates street money.

And street money, you're talking about
ones, fives, tens and twenties.

The volume is just incredible.

A million dollars in $100 bills
weighs 22 pounds.

In twenties is five times that.

In fives is 20 times that.

So you're talking about hundreds
and hundreds of pounds of cash

that you have to move.

[Keefe] If you go to the border,

you're gonna see a huge line
of vehicles on the Mexico side,

trying to go north,

and all these fortifications and controls
checking every single vehicle.

Then you go to the other side,
nobody suspects anything.

You're driving down
from the US into Mexico.

They're much less vigilant
about checking the vehicles.

[Olivera in Spanish] Money crosses
continuously from the US to Mexico

that is a product of drug sales.

This creates a big problem
for criminal groups because

they can't just arrive at a bank
with a truck full of drug money.

[in English] Once they manage to get
all this American cash,

these US dollars, down into Mexico,

there are a bunch of different things
they can do with them,

in order to launder it.

You have ten millions of dollars.

You need to move them.

So how they do it?

Through the banks.
Through the legal system.

[del Valle] Let's say you're a banker
in Mexico, you're a mid-level banker.

I walk up to you and I go,
"Listen, mister mid-level banker.

I want a business loan for $300,000.
I want to open up a bakery."

They go, "Well, what equity do you have?"

"Well, I got a million dollars in equity
for my $300,000 loan."

Well, I think we can make you this loan.

[del Valle] "We'll open up an account
for you."

You have a line of credit of $300,000.

But it's backed by your
million-dollar deposit. Real simple.

This seems okay.

[del Valle] Think a banker's gonna want
to know where that money came from?

Fine.

How do they prove
that the one million dollars

that I just took to a mid-level banker

are the proceeds of
controlled substance trafficking?

Maybe I just found it.

Maybe I bought a used car,
and it was inside of the used car.

[Keefe] This is also about
the banking culture in Mexico.

There's an expression
that you often hear in Mexico,

plata o plomo... "Silver or lead."

[in Spanish] Take the cash...
or take a bullet.

It's your choice.

[Keefe in English] It's not purely
the case where you had bankers

who were always willing to take
a little kickback.

Often, the person
who was walking in the door,

sitting across from you,
saying, "I'd like to open an account,"

would lay out on the desk
photos of your children and tell you,

"You're going to open this account.
You're going to look the other way."

They'll get you to do it either
by bribing you with silver

or by killing you with lead.

[Sandy Flockhart] Probably most of you
know that HSBC has been trying to acquire

a larger presence in Mexico
for a number of years,

and that's why we're particularly pleased
the principal shareholders of Bital

have decided to join with HSBC.

Bital. Banco Bital.

[in Spanish] Banco Bital
had a great presence in Mexican territory

prior to this,

particularly in Sinaloa,
which is an area of drug production.

Large amounts of money

were coming into the bank
without any form of control.

There was no monitoring.

[Keefe in English] HSBC had this system

for rating how risky
a banking culture was.

Standard was the very lowest.

Medium was higher than that.

Cautionary was higher than that
and high was the highest.

And for Bital,

HSBC repeatedly said it's standard,
they said it's the lowest level.

So in spite of ample evidence
that this was an environment in which

you would actually want to introduce
all kinds of protections,

they said, "No. This isn't something
we should look at."

There was an institutional decision
not to look closely at transactions

that were going on in Mexico at that time.

[Hernández] So when HSBC bought Bital,

they bought all these bank accounts
that belongs to members of the cartels.

All this illegal Mexican money

that belongs to the cartels
started to be everywhere.

Many of the people that used to work
for these corrupt Mexican banks

started to work now
for these transnational banks.

HSBC had operated as sort of
a group of federated fiefdoms.

You had these entities
operating all over the world,

that largely did their own thing.

And it was based on business.

They were looking to make money.

They had these branches
that were taking in, in some cases,

hundreds of thousands of dollars a day

of questionable money
from certain customers,

and they were being exposed
to tremendous risk.

[Keefe] In the casinos in Las Vegas,

you have big spenders, high-rollers.

And these are extremely valuable customers
for the casino.

In 2007, there was an unusual customer.

They referred to him as Mr. Ye.

His name was Zhenli Ye Gon.

He was born in Shanghai,
but he actually was a Mexican national.

In Mexico, they called him El Chino.

If you have a high-roller at a casino,

you might get comped
a room upstairs in the hotel,

steak dinner at the restaurant.

Zhenli Ye Gon was comped a Rolls Royce,
because he was that much of a big spender.

When the Sinaloa cartel decided
to move into meth in a big way,

they would send free samples
in shipments of their other drugs,

that people could give out to clients

which would get them hooked
and create this new market.

Zhenli Ye Gon ran a company
in Mexico called Unimed,

which was a pharmaceutical business.

One of the things that Unimed had done was

import to Mexico pseudoephedrine

and other ingredients that could be used
as precursor chemicals

for making methamphetamine.

There was a shipment
of precursor chemicals

and it was coming in for Zhenli Ye Gon.

So at that point,

they decided to raid Mr. Ye's home
in Mexico City.

And this was this big kind of lavish,
grand mansion.

And when they got in there, they found

a series of firearms
and, everywhere, cash.

Stacks and stacks and stacks
of $100 bills.

It's piled up waist high.

205 million US dollars,

and it turns out that Mr. Ye
and his company, Unimed,

have been doing a lot of banking

in addition to having
this huge store of cash in his home,

and that they've been doing this banking
at HSBC.

When they had the raid on Ye Gon's house,
HSBC Mexico looked into their records,

found out that he was
a long-time customer of theirs,

that there had been a number of concerns

about suspicious transactions
involving his accounts.

And in fact, HSBC London,
the headquarters of the bank,

had ordered them to close
the account back in 2004.

But guess what?

They didn't close it.

[Keefe] One of the standard elements
of any kind of compliance program

at a big financial institution,
they call it, "Know Your Customer."

Know who you're dealing with.
Who is this person who's coming in here

and making these deposits
five times a week?

We want to know who they actually are,

where's the money coming from,
how do we explain this.

The whole purpose of a bank
is that you're supposed to know, right?

That's the idea behind
money laundering laws is that

you're not supposed to just take in money
from anywhere.

If you think it's dirty money,

you have a responsibility.
That's your job.

[Wolf] Whether it's something
like drug trafficking

or extortion,
or any of a litany of crimes,

if these are occurring
through your financial institution,

you need to be capable of detecting
and reporting them.

At one point, we got ahold of documents

that suggested there were serious problems
at HSBC.

The problems were emerging
in various areas, various jurisdictions.

They weren't just popping up in one place.

And one place they were popping up
was West Virginia.

[William Ihlenfeld] I've been a prosecutor
ever since I graduated from law school.

Because my grandfather
and my father were both attorneys,

and they both used to their legal training
and their law degrees to serve the public.

So I sort of followed in their footsteps.

Before becoming US Attorney in 2010,

I was an assistant prosecuting attorney
in Ohio County and in Brooke County.

And then in May of 2010,
I was appointed by President Obama.

After that,
I served for six and a half years.

As United States Attorney,

you are the chief federal law
enforcement officer within your district.

Any federal crime that occurs
in the Northern District of West Virginia,

the US Attorney's responsible
for prosecuting.

Barton Adams was a doctor
in Vienna, West Virginia.

He had a business known as
Interventional Pain Management.

He frequently prescribed opioids
to his patients

who were dealing with some kind of pain
that required a Schedule II narcotic.

The suspicion was that
he was committing fraud

with Medicare and West Virginia Medicaid.

Not surprisingly,
he also failed to report all the income

that he received
as a result of this scheme.

So he underreported his income,
he filed false tax returns.

And then he also laundered this money.

[Wolf] But as they looked at
the transactions linked to this fraud,

they started looking at the bank involved,

because they saw that there were
a lot of transactions

that were criminal
that hadn't been detected.

And they realized a lot of these
were coming from HSBC.

[Ihlenfeld] What the investigators found
is that

Dr. Adams and his relation to HSBC
was just the tip of the iceberg.

They found that the anti-money laundering
program at HSBC was very lax,

that it was not looking at alerts
that were being generated by the system.

And it was missing

not just money being laundered
by a doctor in Vienna, West Virginia,

but also hundreds of millions
if not billions of dollars

that were being moved through the bank
by other criminal organizations,

by drug cartels and by organizations

that we believed were associated
with terror financing.

[Bean] In 2010,

the OCC issued a 31-page
very intense order,

describing money laundering problems
at HSBC.

It was very unusual to see
such a long, detailed order like that,

requiring so many changes
in the bank procedures.

That letter went to HSBC
to put them on notice that

some suspicious activity with the bank
had been uncovered

and that they were going to take
a closer look at HSBC.

One of the things the bank was ordered
to do to fix its problems

was go back and look at many transactions

that had been conducted back
when they weren't properly monitoring,

which is a massive undertaking.

So they set up this office space
in Newcastle, Delaware,

and they brought in various executives,

and pretty much any consultant
they could find.

They needed bodies.

And one of those executives
was Everett Stern.

[man] Stern.

Four. Mark.

Sure, I mean, um, I mean,
my dream was to join the CIA

and I was a candidate
for the Clandestine Service, um,

and that was my plan.
That was my dream.

Um, and I ended up getting rejected
from that program.

And then, I saw this position online

for this anti-money laundering
compliance officer position,

and the job was for HSBC Bank,
and I never heard of HSBC Bank before.

I didn't really know what it was,

but I figured anti-money laundering,
that could help make a difference.

You have to understand,
after the CIA rejection,

I was devastated, because I...

My main purpose is to...

I wanted to serve a life with meaning,
and I wanted to serve the country, um,

and be a, you know,
[stammers] an instrument of goodness

and be able to serve
a higher purpose and meaning.

And that's just not what happened.

I remember, like, my first day on the job.

It wasn't like a bank building,
it was a shopping center.

There were all these people in jeans
and T-shirts, and I'm in this suit.

There are all these empty cubicles,

the walls were half painted,

and there are maybe 15 compliance officers
in the whole department.

At the time, I thought they hired me
'cause I was this smart guy

and I had it all going and everything.

No. They hired me 'cause I was an idiot
and didn't know what I was doing.

What I learned was that most of that

one-story shopping center
was a call center.

So that was where HSBC credit card people
were calling to collect debts.

All these people in T-shirts
and jeans and everything,

those were all the debt collectors.

And these people just... They didn't...

They had the look on them
that they didn't care.

And I knew right away...

The minute I sat down at my cubicle,

I knew I did not belong there,

and I was in trouble.

It was all for show.

These anti-money laundering procedures,

the bank was essentially forced to hire

a certain number of people
as a condition of their,

"I promise
we'll never do this again" settlements.

But they were phony.

And that's what
Everett Stern's story is really all about.

[Stern] I just sat down,
and they told me to start clearing alerts,

and an alert was generated

when a certain rule
was broken in the system.

Now, the problem HSBC had is that
they had a major backlog of these alerts.

So this is why they had to hire
as many people as possible.

It wasn't actually proving
that the entities were legal.

It was just showing the regulators
that we tried. That was it.

But he wasn't the only person
telling this story.

I had been hearing for months
from these people

that were working at this facility
at Newcastle that

they were seeing things

that struck them
as an inappropriate approach

to going back and looking at transactions.

So OFAC has a list of companies
that we can't do business with.

It's actually called
the OFAC Sanctions List.

And on this list,

there's Russian mobsters,
terrorists, drug cartels,

any bad guy you can possibly think of.

And this company called Tajco

was listed on this
OFAC Sanctions announcement.

So I ran through the system

Tajco and Hassan Tajideen,
which is the CEO of Tajco,

and the Tajideen brothers are...

They were named
as actual financiers for Hezbollah.

And I found that there were thousands
and thousands in transactions

that were approved
and that went through the bank,

and it didn't make sense because
if they're on the OFAC Sanctions List,

how are these wires getting through?

And then I noticed they were putting
little dots and dashes

in the actual names in the wire filter.

For instance, if Tajco was sending money
from Hezbollah to some other organization,

instead of T-A-J-C-O,
it would be T-A-J-dot-C-O.

Or "TAJ-CO."

And that's how they criminally
manipulated the wire filter

to allow money laundering for terrorists
and drug cartels.

And I realized that this was way beyond

a whole bunch of idiots in cubicles
trying to close alerts.

This is why three weeks in,
I started passing information to the CIA.

[Elias] What is clear is that

HSBC's role in this conduct
is not marginal, it is substantial.

HSBC London saw the whole picture
and did nothing.

[Carl Levin] Good morning, everybody.
Today's hearing will examine

the money-laundering, drug-trafficking,
and terrorist-financing risks

when a global bank uses its US affiliate

to provide US dollars and access
to the US financial system

to a network of high risk affiliates.

[Bean] Senator Levin has been

on the permanent subcommittee
on investigations

for about 15 years.

And he's looked at
money laundering conduct

and misconduct by financial institutions
on a number of occasions

during that time period.

When we looked at HSBC,
we found a lot of shocking information.

This global bank was allowing

a lot of dirty money
to run through the United States.

[reporter 1] The banking giant is
under investigation by the US Senate,

accused of turning a blind eye
to billions of dollars in money transfers.

[reporter 2] The investigation focused
on HSBC having lax control

of dealings between 2006 and 2009.

[reporter 3] And internal documents show

HSBC executives knew
exactly what they were doing.

"We are allowing organized criminals
to launder their money."

[Keefe] The Sinaloa cartel,

an organization identified
in the Senate report

as having benefited
from this money laundering,

is unquestionably responsible
for tens of thousands of deaths in Mexico.

[Avila] The murders, the beheadings,

the shootings, the kidnappings,
the extortion,

all of that has to do with the money.

And having the bank participate with that,

they've become
part of this terrorist organization.

Do you swear the testimony you'll give
before this subcommittee

will be the truth, the whole truth,

and nothing but the truth,
so help you, God?

[Bean] Some of the witnesses
included Stuart Levey...

My name is Stuart Levey,
I am the Chief Legal Officer of HSBC.

...who had been a treasury official
in the United States.

We had Irene Dorner.

Thank you,
Chairman Levin and Senator Coburn.

My name is Irene Dorner
and I serve as President and CEO

of HSBC Bank, USA,
and HSBC North America Holdings Inc.

At our hearing,
HSBC did not deny the facts.

Instead, what they said is,
"We're trying to do better."

HSBC's compliance history,
as examined today, is unacceptable.

HSBC has learned some very hard lessons
from the experience of the past few years,

but we have taken very substantial steps
to address the problems

that we, our regulators
and this subcommittee have identified.

The problem is,
they've been saying that for many years

and the problems are not resolved.

[Warren] You're dealing in drug money
here. You're not supposed to do that.

That's against the law.

HSBC more than once gets caught and says,

[gasps] "You're right,
we'll be more careful in the future."

Do you agree that given past commitments
that have not been kept,

that the bank has a heavy burden of proof,

both as to changing behavior
and as to changing the culture?

It is quite clear that we've had failures
in the past which we deeply regret.

And I would agree
that we have some way to go

to regain the trust of our regulators
and of yourselves on this subcommittee.

We welcome the commitments.

We welcome the apologies.

But there is that nagging question
of accountability,

which others are going to have to judge.

[Ihlenfeld] The primary role of
a US Attorney really is as a prosecutor.

You are prosecuting drug crimes,
gun crimes, white collar crimes,

all of the federal crimes
that Congress has created.

And so the Barton Adams case,
it just grew in scope very quickly.

And from 2008 until 2010,

our investigators worked on it
and put in thousands of hours.

[Wolf] Anytime a prosecutor wants to take
on a bank over money laundering issues,

it has to go
through the Justice Department.

What's known as the Asset Forfeiture
and Money Laundering Section of Justice.

This prosecutor in West Virginia,
according to these documents,

was prepared to indict the bank.

That would have been a huge step to take.
It would have been unprecedented.

[Ihlenfeld] In early September of 2010,

I was told that I needed
to go to Washington, D.C.,

to meet with Lanny Breuer,

who was the Assistant Attorney General

in charge of the Criminal Division
of the Department of Justice,

and also Loretta Lynch, who at the time

was the United States Attorney
for the Eastern District of New York.

At the conclusion of the meeting,

I received a call a few days later
from Assistant Attorney General Breuer

asking me to stand down.

And I told him I couldn't do that.

We had worked too long. We had developed
some really important information.

This was a case against
one of the world's largest banks,

and we just wanted to make sure that

if there was an individual who should be
held accountable, he or she was.

And that if the bank should be held
accountable through a guilty plea,

which might cause its charter to be pulled
in the United States,

that we should see it all the way through.

But he asked me to step aside.

He said that we could still continue
to investigate Dr. Adams and his wife,

but that we should stand down
from looking at HSBC.

Good afternoon and thank you for coming.

[Taibbi] I remember exactly that day.

I was home in Jersey City.

I had a lot of friends
who work on Wall Street.

We had been kind of waiting
for the settlement to come down

and most of us expected
that it would be pretty rough.

We are here today to announce the filing
of criminal charges against HSBC Bank,

both its US entity, HSBC US,
and the parent HSBC Group,

for its sustained and systemic failure

to guard against the corruption
of our financial system

by drug traffickers and other criminals
and for evading US sanctions law.

And HSBC was the one
we were all looking at, saying,

"That's the one
where they have to go to trial.

They have to take these people and they
have to put somebody away for it."

Because HSBC was something
that you could understand in one sentence.

Rich bankers laundering
$800 million dollars

for evil drug gangs and narco terrorists
who chop people's heads off.

HSBC is being held accountable

for stunning, stunning failures
of oversight and worse.

Even prosecutors
that I was talking to at the time,

law enforcement sources,
they thought that if ever there was a time

you indict a bank for money laundering,
this is it.

HSBC has admitted its guilt
to the four-count information filed today,

which sets forth two violations
of the Bank Secrecy Act,

a violation of the International
Emergency Economic Powers Act,

or IEPA, and a violation of
the Trading with the Enemy Act.

As part of its resolution
of these charges,

HSBC has agreed to forfeit $1.256 billion.

They have also agreed
to pay civil penalties of $665 million.

[Keefe] A deal was worked out.

They paid a fine of $1.9 billion.

That's five weeks' profit for HSBC.

We thought, I guess naively,
that this was gonna be different.

But it wasn't different.
It was exactly the same.

What we ended up with was
a deferred prosecution agreement.

[reporter] A deferred prosecution
agreement with HSBC,

in effect meaning
there will be no prosecution

of the bank or its top executives,

despite more than a decade of dealing
with criminals and terrorists.

HSBC has engaged and agreed

to partially defer bonus compensation
for its most senior executives...

A portion of the bonuses of some
of the senior executives was withheld.

Just a portion.

They have agreed to a five-year term
under this deferred prosecution agreement,

with a corporate monitor and a requirement
of ongoing cooperation.

This was not your typical
Northern West Virginia press conference.

It was in Brooklyn.
You had reporters from major networks

that attended because of the scope of the
case. And there were some good questions.

In London, analysts are saying
the bank can easily absorb this cost.

They made profits of $38 billion
the last two years.

-Is it really that significant?
-Well, I think...

Are we really
holding the bank accountable?

Look, our goal here
is not to bring HSBC down.

It's not to cause a systemic effect
on the economy.

It's not for people
to lose thousands of jobs. It's to--

They don't deserve that?

Ultimately, no individual was charged
with any crimes,

and no individual was fined
any amount of money.

Here's this big bank,
that was essentially let off the hook.

It was fined, but it's a speeding ticket.

[reporter] If the Sinaloa cartel had
agreed to not do any more drug smuggling,

would you also defer prosecution
in their case?

Well, I think
that's a little bit of hyperbole.

Look, my...

When you look at this,

one of the things
we also have to think about,

frankly, is who are
the innocent people here?

The connection between a bank
who was by its own admission

the preferred financial institution
of the drug cartels,

the most brutal organizations
on Earth, okay?

That connection
between doing that conduct

and the over 100,000 massacred in Mexico
really has to be made.

We found it hard to believe,
as an investigative team,

that upper-level management was unaware
of what was happening.

It was our theory that the bank knew
what was happening,

that it was good for business,
that it was good for the bottom line,

but that it didn't want it to cease,

because that would then affect
its profit margins.

[Bean] Eric Holder was
the Attorney General at the time.

And what we found out is that
the regulator in the United Kingdom

really pressed the case
and said, "Please don't indict HSBC

because it's going to have
a huge financial impact."

Eric Holder bought that argument.

You think about it,

who's doing the regulation,
who's making these cases?

You think about Eric Holder
and Lanny Breuer,

again they both came
from the same big law firm,

Covington and Burling in Washington

which represented
almost all the too-big-to-fail banks.

They know that when they leave,

the instant they go back
to the private sector,

they're going to get a partnership worth
three, four, five million dollars a year.

But if you're too rough on your clientele,
that partnership might not be there.

So there's a powerful incentive
for you to behave a certain way

towards the people you're regulating.

[Wolf] The Justice Department went to OCC,
and they asked,

"What's gonna happen? Can we do this?"

You know, I think they wanted cover,

so that if they do this,
and there's a calamity, it's not on them.

But nobody was willing
to give them comfort with doing that.

And I think, you know, Lanny Breuer,

the head of the criminal division,
had to make a choice.

Because we had a financial crisis we were
still climbing out of in this country.

And frankly, nobody knew what would be the
consequence if you do this, if you indict.

[Taibbi] When the HSBC settlement
came down,

there were editorials
in financial newspapers that said,

"This looks bad for everybody."

And that was a major signal
that it was a soft-touch settlement...

that even the financial press thought
it was a giveaway.

You'll likely go to jail
if you're caught with an ounce of cocaine.

If it happens repeatedly, you may
go to jail for the rest of your life.

But evidently,
if you launder nearly a billion dollars

for drug cartels and violate
our international sanctions,

your company pays a fine and you go home
and sleep in your own bed at night.

Every single individual
associated with this.

I think that's fundamentally wrong.

That's not equal justice under law.
That is not accountability.

You don't think the bank got off easy?

No, and I don't think
the bank thinks it got off easy.

I really don't.
I don't think the bank got off easy, no.

[journalists murmuring]

[Elias] A part of the deferred prosecution
agreement process

is there's going to be
some sort of admission by the company

that they've done something wrong.

You have to understand,
those are admissions that come out

after an army of lawyers for HSBC

negotiate as hard as they can
with the Department

to get the language
as watered down as they can.

I know from experience that's the process.

[Kristi Jacobson] Yeah, I think this one.

Go ahead with the first one.

I'll hold it up more.

"The following statement of facts
is incorporated by reference

as part of
the deferred prosecution agreement."

"HSBC Bank USA and HSBC Holdings
hereby agree and stipulate

that the following information
is true and accurate."

"HSBC Bank USA
and HSBC Holdings accept..."

"...that they are responsible for the acts
of their respective officers,

directors, employees and agents as
set forth in this prosecution agreement."

"If this matter were to proceed to trial,

the department would prove
beyond a reasonable doubt

by admissible evidence
the facts alleged below

and set forth in the criminal information
attached to this agreement."

"From 2006 to 2010, HSBC Bank USA

violated the BSA
and its implementing regulations."

"Specifically, HSBC Bank USA ignored
the money laundering risks

associated with doing business
with certain Mexican customers

and failed to implement a BSA/AML program

that was adequate
to monitor suspicious transactions."

"As a result of these concurrent
AML failures,

at least $881 million
in drug trafficking proceeds..."

"...including proceeds of drug trafficking
by the Sinaloa cartel in Mexico,

and the Norte del Valle cartel
in Colombia..."

"...were laundered through HSBC Bank USA
without being detected."

[Stern] "From at least 2000 to 2006,

HSBC group knowingly and willfully engaged

in conduct and practices
outside the United States

that caused HSBC Bank and other financial
institutions located in the United States

to process payments
in violation of US sanctions.

To hide these transactions,

HSBC Group affiliates altered and routed
payment messages

in a manner that ensured that payments
involving sanctioned countries

and entities cleared without difficulty

through HSBC Bank, USA,
in New York County and elsewhere."

See, they admitted to everything.

It's incredible. It's, um...

It's an admission.

It's shocking for me to read that.
[chuckles] Yeah.

[Jacobson] How does it make you feel?

We talked at the beginning about the fact
that here in West Virginia, we've got...

We might be at the epicenter of
the drug problem in the entire country.

We lead the nation in drug overdose deaths
on a per capita basis.

And so to hear that there's a bank
that is enabling the Sinaloa drug cartel

to move money around
so it could continue to operate,

and continue to push heroin
from Mexico to Appalachia,

to northern West Virginia,
makes it all the more upsetting,

because the government had an opportunity

to do a better job of
addressing this conduct, and it failed.

[Hernández] This conclusion of the US
government for me is just another proof

that all this war against drug cartels
is just fake. It's not real.

Because if really
they want to fight against them,

they have to fight against the banks
that help them to move the money.

[Wolf] Was justice done here?

That's a hard question to answer.

[Taibbi] We would never allow
this kind of thing

if it was a different kind of person.

But because they're white people

who drive nice cars
and live in Connecticut or whatever it is,

they get off. That's the reality.

It's a completely different process.

You wouldn't arrest a drug dealer
and then go into a back room

and craft a settlement
that allowed the person to retain

his home, his family, his lifestyle,
his cars, all those things.

But that's what they did with this case.

And it formalized
what everybody already knew,

which was that when these companies
become so systemically important

that prosecuting
even the individuals in them

threatens to disrupt the world economy,
then they're too big to jail.

They're a member of a class
that is not jailable.

[music playing]