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A few pieces from the last few days—first, how corporations are on track to pay record fines this year for fraud:
Pharmaceutical companies, military contractors, banks and other corporations are on track to pay as much as $8 billion this year to resolve charges of defrauding the government, analysts say — a record sum and more than twice the amount assessed last year by the Justice Department.
But…
But while the collections are a boon to the government and taxpayers, they are resurrecting questions about the relative lack of charges against executives at the companies that are getting the stiffest penalties.
“A lot of people on the street, they’re wondering how a company can commit serious violations of securities laws and yet no individuals seem to be involved and no individual responsibility was assessed,” Senator Jack Reed, Democrat of Rhode Island and chairman of a subcommittee that oversees securities regulation, said at a recent hearing.
Second, a nice contrast between the average accused loiterer and the bank HSBC:
It’s a splendidly large bank, with $2.5 trillion in global assets, 300,000 employees and a 2011 profit of about $22 billion. It is one of our city’s prominent corporate citizens, contributing to museums and charitable groups.
It also let Mexican drug cartels launder money on a grand scale, according to a Senate report, and it evaded laws intended to stop banks from doing business with Iran and North Korea. Perhaps most astonishing, the report said it had conducted business for many years with Al Rajhi, a bank in Saudi Arabia whose founder was an Al Qaeda benefactor.
All of this is detailed in the report, 335 pages long, issued a few weeks ago by Senator Carl Levin. It reads like a racketeering indictment of the Genovese crime family, replete with evidence that senior officials knew the contours of the game.
Finally, a nice piece at Reuters titled “Regulators irate at NY action against Standard Chartered:”
The Treasury Department and Federal Reserve were blindsided and angered by New York’s banking regulator’s decision to launch an explosive attack on Standard Chartered Plc over $250 billion in alleged money laundering transactions tied to Iran, sources familiar with the situation said…
[New York financial regulator Benjamin] Lawsky’s stunning move, which included releasing embarrassing communications and details of the bank’s alleged defiance of U.S. sanctions against Iran, is rewriting the playbook on how foreign banks settle cases involving the processing of shadowy funds tied to sanctioned countries. In the past, such cases have usually been settled through negotiation - with public shaming kept to a minimum.
In his order, Lawsky said Standard Chartered’s dealings exposed the U.S. banking system to terrorists, drug traffickers and corrupt states.
According to the article, Standard Chartered hired a top Washington fixer to determine just how much money they had been moving for Iran:
As part of a review the bank sought to give to regulators, Standard Chartered hired Promontory Financial Group, a Washington D.C. consulting firm run by Eugene Ludwig, who served as U.S. Comptroller of the Currency from 1993-98. Promontory was hired to review Standard Chartered’s transactions tied to Iran. The bank’s review ultimately settled on the figure of less than $14 million for improper transactions.
But Lawsky is alleging a somewhat larger figure:
One area of sharp disagreement between Lawsky and Standard Chartered is just how much in illicit funds is involved. The bank put the value of Iran-related transactions that did not comply with regulations at less than $14 million. Lawsky estimated them at $250 billion.
Note that the bank would be fined based on the size of their transactions with Iran, so they have a definite incentive to juke the stats. And the bank is lawyering up:
The bank has hired two prominent law firms - Sullivan & Cromwell in New York and Slaughter and May in London - to represent it in its dealings with various U.S. authorities over transactions linked to Iran. Among the Sullivan & Cromwell partners working for Standard Chartered is Rodgin Cohen, one of the best-known U.S. corporate lawyers, a person familiar with the matter said. Sullivan & Cromwell has represented other non-U.S. banks probed for allegedly ignoring U.S. sanctions against countries.
Now, here’s where that last story gets interesting. I happened to have that article open in my browser from yesterday. But if you click over there using the original link, the article has been largely rewritten. The title is now “Standard Chartered begins fightback on Iran allegations,” and all the details about the DC consulting firm Promontory and the law firm Sullivan & Cromwell are gone. Yves Smith has proof (as well as the original article in full) that Reuters has scrubbed it from their site entirely (my searches also turn up nothing), and there is no correction notice on the article or anywhere else I can find.
Why did Reuters change the story? I’ll post an update if I hear anything from them. Until that time, Marcy Wheeler has some all-too-convincing speculation.
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SteveT on August 09, 2012 11:20 AM:
As I've said before, conservatives LOVE to claim that the One Percent pay as much as 83% of all taxes in the U.S.
Whatever the percentage is, in exchange the One Percent receive carte blanche to break the laws that we peasants have to follow. The only exceptions are if they rip off people who are even richer than they are (Bernie Madoff), or they break the same laws so many times that they wear out the judicial deference they usually receive (Lindsay Lohan).
And even then, the few who are convicted are sent to a "prison" that looks and feels more like Canyon Ranch Spa and Resort.
Sounds like a pretty good deal to me.
schtick on August 09, 2012 11:39 AM:
Look for a little "incident" to happen with Lawsky along the lines of Spitzer. The whitewash has begun and if Lawsky doesn't back off, the teapubs will ruin his career.
Ron Byers on August 09, 2012 11:45 AM:
Of course, the bank hired a couple of fixer outfits. That is to be expected.
The real question is why did Reuters scrub the fixer angle from its first story? There is the real story. But what reporter would ever report on the shady dealings and financial motivations of reporters and editors at Reuters. I mean such reporting would require integrity, curiosty and a little courage, all in short supply among our Washington and Wall Street press corps.
Sgt. Gym Bunny on August 09, 2012 12:01 PM:
And to think I can hardly drive down 295 in DC without getting snapped by one of those goddamn speeding cameras... (my last ticket--going more than 12 mph over the speed limit. Of course, I was 13 mph over the speed limit.)
Well, at least the Justice Dept, regulators, et al, are trying, mere David's against the corporate Goliath's, nonetheless.
c u n d gulag on August 09, 2012 12:13 PM:
Scrubbing stories, like airbrushing photographs, is nothing new - at least if you lived in a Fascist or Communist country.
Well, since I know we ain't the latter, that leaves the former - which, I think we fit the definition of very well. For those who don't know it, here are the 14 defining characteristics of Fascism:
http://rense.com/general37/char.htm
And as for the companies who are robbing and/or defrauding all of us, maybe we need to take a fresh look at this.
Instead of looking to prosecute the company executives alone, we need to also start to prosecute the shareholders, who are either allowing, enabling, or ignorant of abuses - and as we little untermenschen are constanty being told, "Ignorance of the law is no excuse... yadda, yadda, yadda... SLAM!"
Or, start with the shareholders, and let them help with prosecuting the executives.
If their money and/or prison time is at stake, I think we'll find those executives will not have as easy a time of avoiding prosecution themselves.
These folks will squeel on their own mothers to save their money and avoid time in a REAL prison.
This is kind of like going after the Mafia middle-men in the original RICO investigations.
Eventually, the investigations led to the Gambino's/Gotti's and Genvese's themselves.
No reason this can't lead to the Jamie Dimon's and other financial criminals.
TCinLA on August 09, 2012 4:27 PM:
Sullivan & Cromwell, one of the greatest criminal enterprises in US history, financial home of some of the greatest war criminals to ever con the American public. The Dulles brothers came from Sullivan and Cromwell. Sullivan and Cromwell represented the Guatemalan land lords who saw Jacobo Arbenz' moderate land reform as "communism" and got their former senior partners John Foster and Allen Dulles (respectively at the time Secretary of State and head of the CIA) to organize the overthrow of Arbenz in the name of "freedom."
Sullivan & Cromwell engineered the Panama revolution to foist $3.5 million dollars of investments into $40m sales to the US govt three years later.
Sullivan & Cromwell attorney Allen Dulles, who later ran the OSS operation in Switzerland and founded the CIA, was at the von Papen-Hitler meeting in 1933 when Hitler gained the support of the German conservatives to become Chancellor, representing the interests of American financiers of the Nazis, including Prescott Bush, father and grandfather of the Presidents Bush.
Both Dulles brothers and other people in Sullivan & Cromwell were involved in the attempted fascist coup against FDR through the "American Liberty League" in 1933.
Read: Allen Dulles, the Nazis and the CIA"
http://www.enter.net/~torve/trogholm/secret/rightroots/dulles.html
One can pretty much figure that when Sullivan & Cromell's name comes into the picture, that one is looking at Serious Criminals.
"Come the revolution, we kill all the (corporate) lawyers."
Rick B on August 09, 2012 9:52 PM:
@c u n d gulag 12:13 PM:
That's an interesting proposal. Make the shareholders responsible for the behaviors of the boards of directors and the top executive team.
As it is now, shareholders have very little to do with selecting those individuals. The Board selects the CEO, and the CEO selects who sits on the board after that. The board selections are approved by proxy votes, but most people don't even bother to cast those votes. If a shareholder is unhappy with the management they simply sell the shares. The shareholders have no real skin in the game.
But if they did, those board elections might begin to matter.
Catcha remains unreadable.