Tuesday, April 9, 2013

Unequal justice – “too big to jail”

Crimes in this day and age are usually what ordinary people commit. But when the great and powerful commit them, they are often called business or statesmanship.
The United States today is considered the most aggressive country in imprisoning offenders. It puts more people in prison than any other nation on earth. American courts invariably sentence criminal offenders for longer periods of time, and for more trivial offences than any nation in the West.
The Rolling Stone magazine called HSBC the gangster bankers that was
"too big to jail."  Illustration by Victor Juhasz. Click link to view "After
Money Laundering $800 Million in Drug Money, How Did HSBC..."
But not everyone is subjected to this kind of penal harshness. It totally changes when the nation’s most powerful actors are caught breaking the law. With few exceptions, the justice system treats them not merely with leniency, but even grants them full-scale immunity from criminal punishment. The most egregious crimes of the last decade in America have been fully sheltered from prosecution when committed by those with the greatest political and economic power. We could point to examples such as 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.
Consider the recent full-scale immunity bestowed on HSBC, Europe’s largest bank headquartered in London. A US senate probe found that HSBC has lax controls that allowed money laundering for seven years. The bank’s lax controls allowed Mexican drug cartels to launder billions of dollars through its US operations, according to an investigation by the US senate. It also enabled HSBC bank affiliates to evade US government bans against financial transactions with Iran and other countries. The senate investigation also reported that the US division of HSBC provided money and banking services to some banks in Saudi Arabia and Bangladesh believed to have helped fund al-Qaeda and other terrorist groups.
What was the US response to HSBC’s transgressions?
The US Department of Justice under the Obama administration believed that big banks are “too big to jail” and decided to fine HSBC instead of criminally prosecuting its vast money laundering operation. Prosecution would upset markets, the White House feared. The US government’s excuse that HSBC is just too big to prosecute is the same lame argument used in refusing to break up the big American banks in the aftermath of the “too-big-to-fail” crisis of 2008.
It’s not just HSBC which was misbehaving badly. Before HSBC was investigated, the Barclays Bank scandal in the UK over manipulated interest rates has provoked international outrage over what many view as regulators’ failure to enforce financial regulation. Standard Chartered, another large British bank, also agreed to pay more than $660 million to settle charges for violating US sanctions on doing business in Iran, Burma, Libya and Sudan. The Royal Bank of Scotland is also reported to be facing investigations into possible violations of US sanctions on Iran. Money laundering by large international banks has reached epidemic proportions, and U.S. authorities are supposedly looking into Citigroup Inc. and JPMorgan Chase & Co.
Officials from the US Department of Justice flaunted the $1.9 billion fine HSBC would pay as the largest ever for such a case. However, the Guardian noted, “The sum represents about four weeks’ earnings given the HSBC’s pre-tax profits of $21.9bn last year.” There was no doubt that HSBC’s wrongdoing was serious and pervasive, but it is simply too big, too powerful, too important to prosecute, thus prompting the New York Times to declare in an editorial that “It is a dark day for the rule of law.”
Glenn Greenwald, writing for the Guardian, was outraged by the US tepid response to HSBC’s large-scale money laundering. He wrote: “The poor and racial minorities in particular are locked up at an astonishing rate, often for minor drug offenses. Yet HSBC gets off the hook. 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.”
Greenwald considers the HSBC case as a disgraceful illustration of a two-tiered justice system in America, the subject of his book, With Liberty and Justice for Some. He wrote that the principle where all stand equal before the blindness of Lady Justice 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.”  
HSBC,  Europe's largest bank  was caught in  drug money laundering scandal.
Photo by Julius Kielaitis/The Shuttershock. Click link to view "Monkeys &
Cocaine: HSBC Money Laundering Case,"
Listen to what Greenwald would further say about the perverse premise that large and powerful financial institutions ought to be shielded from the long arm of the law: “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 was the same reasoning for justifying immunity for state officials for torture of war prisoners and US telecom giants in illegally spying on Americans. We’re told that we need them to keep us safe and that we can’t disrupt them with prosecutions. That is, the government cannot prosecute Wall Street criminals for fraud because prosecuting them for financial crimes would disrupt our collective economic recovery.
If the justice system can be distorted to accommodate and protect the great and powerful, ordinary and powerless folks, on the other hand, who commit petty crimes are oftentimes prosecuted and imprisoned with the greatest aggression possible. Thus, when a Muslim is prosecuted for helping a terrorist group, even by accident, he would be going to prison for a long, long time. Powerless, obscure, low-level employees are in fact routinely 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.
Take for instance the following two petty crimes compared to the misdemeanours of HSBC and other large banks.
Robert Docherty, a wild mushroom picker from Maple Ridge, British Columbia, found himself an unhappy victim of the mighty hands of the law when applied to common people like him. Canadian customs officers at the Toronto Pearson International Airport seized from Docherty cash amounting to $10,000 which he was carrying while boarding a flight bound for Costa Rica.
Under Canada’s Proceeds of Crime (Money Laundering) and Terrorist Financing Act, Docherty was entitled to carry $10,000 and not a dollar more, out of the country without declaring it.
There was $9,880 in U.S. currency and another $335 Canadian in Docherty’s possession. Docherty explained he’d calculated the Canada-US exchange rate so the total amount to come in under the $10,000 limit. Unfortunately for Docherty, by the time he took his flight the US dollar had strengthened, making his package worth more than $10,000 Canadian.
Whether Docherty was telling the truth that the money he was carrying was destined for a real estate deal involving a seller who wanted cash, his experience shows what happens when ordinary people who live by the rules run afoul of the law.
Or consider the sad tale of Genet Shume, an Ottawa resident and single mother who came to Canada from Ethiopia. Last September 2012, Shume was about to travel to her home country with her two children. She was carrying a large amount of cash—$12,000—that she saved from working at a bank. Shume was unaware of the restrictions under Canada’s law on money laundering and terrorist financing which require those leaving the country with $10,000 or more in cash or foreign currency to report it to a border services officer.

Genet Shume, a single mother who came to Canada from Ethiopia, was headed to
 her home country with her two children to give family and friends money she had
 saved working at a bank. Photo by CBC News.
Before authorities seized the $12,000, they asked Shume whether she was involved in drugs or terrorism. When she answered no, they allowed Shume and her children to board the plane, but without the money. Shume was forced to beg for food when they arrived in Ethiopia.
The law is applied differently and much more leniently, however, for alleged perpetrators from the great and powerful, as in the case of the family of former Philippine strongman Ferdinand Marcos. Marcos had been accused of funnelling billions of dollars into Swiss and other foreign accounts abroad. Up until now, the Philippine government has not fully recovered money that was illegally pilfered from the country’s treasury. Meanwhile, the survivors of the dictator—his wife and children—are back in political power and have remained untouched by criminal prosecution.
Marcos wasn’t alone in this acknowledged custom of Philippine public officials of ransacking the government’s coffers. Former presidents Joseph Estrada and Gloria Macapagal-Arroyo and other major officials of the government and high-ranking officers of the military have remained unscathed despite accusations of plundering the country’s economy for personal gain.
It appears that the justice system and its courts, whether in advanced or less developed societies, are not where we can find the future’s best hopes for the idea of equal justice to prosper, and to apply it equally to everyone, no matter what their station in life is. When the great and powerful are shielded from criminal sanctions to which the rest of us are subject, it becomes only a matter of time when that tipping point is breached for the ordinary and powerless to take matters into their hands.

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