At long last people are realising the part HSBC played as a correspondent bank in both the Madoff and the Stanford ponzi schemes. Let us all hope HSBC are held to account for their failure to practice due diligence when dealing with Madoff and Stanford, it is HSBC who should pay for their failure NOT the VICTIMS!The trustee seeking assets for victims of Bernard L. Madoff’s global Ponzi scheme filed a lawsuit on Sunday seeking $9 billion from a roster of defendants headed by HSBC, the London-based financial giant with hedge fund clients that fed piles of cash into the enormous fraud.
The lawsuit is the third multibillion-dollar complaint the Madoff trustee, Irving H. Picard, has filed against major financial institutions in the last two weeks. It almost certainly will not be the last.
Under federal bankruptcy law, the trustee must file all his recovery claims within two years of the initial bankruptcy filing. That did not occur until Dec. 15, 2008, but the bankruptcy court has defined the filing date as Dec. 11, 2008, the day of Mr. Madoff’s arrest.
That gives Mr. Picard until midnight on Saturday either to sue to recover cash withdrawn from Madoff accounts before the Ponzi scheme collapsed or to seek punitive damages from anyone involved in those withdrawals.
The large banks the trustee has sued — the Swiss-based UBS, JPMorgan Chase in New York, and now HSBC in London — were not alone in providing services or marketing products related to the Madoff fraud. For example, several other global banks sold investment vehicles that tracked Mr. Madoff’s performance, and some smaller banks provided services to “feeder funds” that channeled investments into Mr. Madoff’s funds.
It is unclear how many of those other entities may be in Mr. Picard’s sights. With the deadline approaching, Mr. Picard said in a recent report to the bankruptcy court that he “anticipates that he will file extensive additional litigation in the coming weeks.” Some complaints may be filed in foreign jurisdictions. The trustee has law firms working for him in Europe, Gibraltar, Canada, Bermuda and the Caribbean to help untangle connections between Mr. Madoff and “foreign individuals, feeder funds and international banking institutions,” he said in the court filing.
The latest lawsuit contends that the Madoff’s fraud “could not have been accomplished or perpetuated unless the HSBC defendants agreed to look the other way and to pretend that they were ensuring the existence of assets and trades when, in fact, they did no such thing.”
It asserts that HSBC and a dozen of its subsidiaries “aided, enabled and sustained” Mr. Madoff’s fraud in two important ways: by lending the bank’s prestige and performing services for hedge funds that raised money for Mr. Madoff; and by developing complex derivative products that provided additional sources of cash for the Ponzi scheme.
A dozen hedge funds, nearly two dozen European money-management businesses and 13 individuals were included as defendants in the 170-page complaint.
Among them were Sonja Kohn, the prominent Viennese financier who had ties to some of the largest Madoff feeder funds, and UniCredit, the Italian holding company whose Bank Austria unit was a partner with Ms. Kohn in her flagship company, Bank Medici.
Representatives of the defendants in Europe could not be reached for comment Sunday evening.
But in vigorous defenses against similar lawsuits filed by investors, lawyers for the HSBC units, the UniCredit subsidiaries and the Bank Medici defendants have all consistently denied that their clients had any knowledge of the Madoff fraud or were responsible in any way for not detecting it before its collapse.
To outsider investors, the “labyrinth” created by the hedge funds, managers and HSBC subsidiaries named as defendants looked like “a formidable system of checks and balances,” said Oren J. Warshavsky, a partner at Baker & Hostetler, the trustee’s law firm. “Yet the purpose of this complex architecture was just the opposite,” he said, “to avoid scrutiny and generate more fees.”
The trustee’s HSBC claim, filed electronically in United States District Court in Manhattan, is the largest, surpassing a $7.2 billion demand filed against the estate of Jeffry Picower, a longtime Madoff investor who died last year.
By the end of September, Mr. Picard had filed 19 lawsuits seeking to recover a total of $15.5 billion from members of Mr. Madoff’s immediate family, longtime individual investors such as Mr. Picower, and major feeder funds, including those operated by the Fairfield Greenwich Group and J. Ezra Merkin, a prominent Wall Street investment manager.
Mr. Picard’s recent lawsuits against JPMorgan, UBS and HSBC have added $17.4 billion to the amount he is claiming on behalf of victims, for a total of more than $32 billion.
That amount, which includes demands for punitive damages, is 50 percent more than the $20 billion he has estimated as the actual cash losses in the fraud, but he is not assured of recovering all the money he is seeking.
JPMorgan, UBS and HSBC have already vowed that they will fight the trustee’s claims in court and those battles could take years.
The total shown on investor account statements on the eve of the fraud’s collapse was nearly $65 billion, the sum of fictional paper profits that had accumulated in some accounts for decades. Mr. Picard has recovered approximately $1.5 billion through asset sales and out-of-court settlements.
Mr. Madoff is serving 150 years in prison after pleading guilty to orchestrating the fraud.
Showing posts with label Correspondant Bank. Show all posts
Showing posts with label Correspondant Bank. Show all posts
Sunday, 5 December 2010
Saturday, 27 November 2010
HSBC Paid off Wealthy Madoff Investors
HSBC not only failed in their duty of care in the Stanford case they also failed in the Madoff case, the difference being HSBC reimbursed their wealthy clients. It appears if you are wealthy and can afford a barrister HSBC will pay but if your a pensioner who lost all your money because of HSBC negligence they are not going to pay.
More than 720,000 victims of the fraudster Bernard Madoff have won an estimated $15.5bn (£11bn) back from non-American banks that had channelled the victims' money towards the corrupt Wall Street investment manager.
An alliance of victims' lawyers yesterday said that 14 months on from Madoff's conviction, dozens of European banks including Santander and HSBC had made partial reimbursement, for fear of losing long-standing and often lucrative customers. About 80% of Madoff investors represented by the alliance have struck deals with their banks. The average profile of a victim is a 54-year-old male who invested $35,000 in Madoff's phoney Wall Street fund management business.
Javier Cremades of Spanish law firm Cremades & Calvo-Sotelo, who is co-ordinating the victims' network, said customers were typically getting their original investment without the false profits the jailed financier claimed to have added. "Client confidence is banks' most important asset," he said at a press conference in New York. "They're facing a huge reputational problem at a time when confidence is not particularly abundant."
Generally speaking, banks are not refunding their customers in cash, but are using a variety of forms of credit or convertible paper intended to tie in victims as ongoing clients. Santander, one of the biggest sources of money to Madoff outside the US, has offered its clients a form of convertible paper redeemable in 10 years and has settled 98% of claims.
When asked about settlements in Britain, Cremades named HSBC as one of the banks involved in deals. The British bank has taken charges of $1.05bn to cover Madoff-related losses, and revealed in its annual report that it was the subject of litigation with "numerous defendants" over the Madoff scandal in jurisdictions including the US, Ireland and Luxembourg. However, sources close to HSBC expressed scepticism, saying they were not aware of such settlements.
Cremades said victims' lawyers had been surprised at the willingness of banks to settle: "In Europe, one year later, most of the victims have solved their problems through settlements. It has been easier than we thought."
An exception, however, is Switzerland, where the situation has been complicated by its banking privacy laws. Some victims had secret accounts and are unwilling to air their losses in litigation.
Regarded as the biggest financial crime in Wall Street history, Madoff Investment Securities claimed to have $65bn of assets under management. But the financial crisis led to attempts by investors to withdraw money, exposing Madoff's firm as a vast Ponzi scheme. He is serving a 150-year sentence in North Carolina.
Within the US, most of his victims were either direct investors or had channelled money through boutique firms that acted as so-called feeder funds. They face a longer struggle for recompense as a court-appointed trustee, Irving Picard, sorts through claims. European banks will wait in line with US victims to get their own share of any distribution, though they are not likely to get back anything close to the sums that they are reimbursing clients.
"They can't expect to get back much of what they've given," said Gaytri Kaychoo, a lawyer for US victims. "They [European banks]looked at their own situation and rationalised making their settlements with wealthy, very good clients, because they can't afford to lose them."
More than 720,000 victims of the fraudster Bernard Madoff have won an estimated $15.5bn (£11bn) back from non-American banks that had channelled the victims' money towards the corrupt Wall Street investment manager.
An alliance of victims' lawyers yesterday said that 14 months on from Madoff's conviction, dozens of European banks including Santander and HSBC had made partial reimbursement, for fear of losing long-standing and often lucrative customers. About 80% of Madoff investors represented by the alliance have struck deals with their banks. The average profile of a victim is a 54-year-old male who invested $35,000 in Madoff's phoney Wall Street fund management business.
Javier Cremades of Spanish law firm Cremades & Calvo-Sotelo, who is co-ordinating the victims' network, said customers were typically getting their original investment without the false profits the jailed financier claimed to have added. "Client confidence is banks' most important asset," he said at a press conference in New York. "They're facing a huge reputational problem at a time when confidence is not particularly abundant."
Generally speaking, banks are not refunding their customers in cash, but are using a variety of forms of credit or convertible paper intended to tie in victims as ongoing clients. Santander, one of the biggest sources of money to Madoff outside the US, has offered its clients a form of convertible paper redeemable in 10 years and has settled 98% of claims.
When asked about settlements in Britain, Cremades named HSBC as one of the banks involved in deals. The British bank has taken charges of $1.05bn to cover Madoff-related losses, and revealed in its annual report that it was the subject of litigation with "numerous defendants" over the Madoff scandal in jurisdictions including the US, Ireland and Luxembourg. However, sources close to HSBC expressed scepticism, saying they were not aware of such settlements.
Cremades said victims' lawyers had been surprised at the willingness of banks to settle: "In Europe, one year later, most of the victims have solved their problems through settlements. It has been easier than we thought."
An exception, however, is Switzerland, where the situation has been complicated by its banking privacy laws. Some victims had secret accounts and are unwilling to air their losses in litigation.
Regarded as the biggest financial crime in Wall Street history, Madoff Investment Securities claimed to have $65bn of assets under management. But the financial crisis led to attempts by investors to withdraw money, exposing Madoff's firm as a vast Ponzi scheme. He is serving a 150-year sentence in North Carolina.
Within the US, most of his victims were either direct investors or had channelled money through boutique firms that acted as so-called feeder funds. They face a longer struggle for recompense as a court-appointed trustee, Irving Picard, sorts through claims. European banks will wait in line with US victims to get their own share of any distribution, though they are not likely to get back anything close to the sums that they are reimbursing clients.
"They can't expect to get back much of what they've given," said Gaytri Kaychoo, a lawyer for US victims. "They [European banks]looked at their own situation and rationalised making their settlements with wealthy, very good clients, because they can't afford to lose them."
Thursday, 25 November 2010
HSBC Take Note!
UBS is sued for £1.25bn over Madoff fraud
A lawyer representing investors who fell victim to fraudster Bernard Madoff 's £40billion 'Ponzi' scheme is suing Swiss bank UBS and others for more than £1.25billion.
UBS stands accused of facilitating Madoff 's swindle - in which investors were shown false returns based on cash from new victims - by sponsoring so-called 'feeder' funds that channelled money into the fraudulent operation.
The complaint - lodged by court - appointed trustee Irving Picard - alleges that UBS lent the funds 'an aura of legitimacy', allowing the bank to collect nearly £50million in middleman fees. Picard said that despite identifying warning signs about Madoff Investment Securities, UBS 'chose to enable Madoff's fraud for their own gain'.
Complaint: UBS has been accused that it was party to 23 counts of fraudulent transfers and other misconduct
Picard has filed around 20 lawsuits to recover £11billion from feeder funds that poured money into Madoff 's pockets and claims to have recouped £950million from former clients of the conman, who is serving a 150-year jail term.
His case alleges that UBS worked with co-defendant Access International Advisors, led by French executive Thierry Magon de la Villehuchet who was found dead in an apparent suicide in New York following the discovery of Madoff's fraud. He was said to have been distraught at losing nearly £900million of clients' money and around £30million of his own.
UBS said investors had been well aware that funds were being directed to Madoff, adding that it 'does not have responsibility to these shareholders for the unfortunate results of the Madoff scandal'.
Picard has not yet said whether he intends to file claims against other European banks. But HSBC could yet find itself embroiled in the saga, due to a ruling by a Luxembourg court earlier this year.
The court told clients filing claims against UBS to seek redress through the US liquidation process being led by Picard.
The ruling means that investors who claim to have lost £630million through Herald, a fund affiliated with a Luxembourg division of HSBC, could add their claims to those being managed in the US.
HSBC declined to comment.
A lawyer representing investors who fell victim to fraudster Bernard Madoff 's £40billion 'Ponzi' scheme is suing Swiss bank UBS and others for more than £1.25billion.
UBS stands accused of facilitating Madoff 's swindle - in which investors were shown false returns based on cash from new victims - by sponsoring so-called 'feeder' funds that channelled money into the fraudulent operation.
The complaint - lodged by court - appointed trustee Irving Picard - alleges that UBS lent the funds 'an aura of legitimacy', allowing the bank to collect nearly £50million in middleman fees. Picard said that despite identifying warning signs about Madoff Investment Securities, UBS 'chose to enable Madoff's fraud for their own gain'.
Complaint: UBS has been accused that it was party to 23 counts of fraudulent transfers and other misconduct
Picard has filed around 20 lawsuits to recover £11billion from feeder funds that poured money into Madoff 's pockets and claims to have recouped £950million from former clients of the conman, who is serving a 150-year jail term.
His case alleges that UBS worked with co-defendant Access International Advisors, led by French executive Thierry Magon de la Villehuchet who was found dead in an apparent suicide in New York following the discovery of Madoff's fraud. He was said to have been distraught at losing nearly £900million of clients' money and around £30million of his own.
UBS said investors had been well aware that funds were being directed to Madoff, adding that it 'does not have responsibility to these shareholders for the unfortunate results of the Madoff scandal'.
Picard has not yet said whether he intends to file claims against other European banks. But HSBC could yet find itself embroiled in the saga, due to a ruling by a Luxembourg court earlier this year.
The court told clients filing claims against UBS to seek redress through the US liquidation process being led by Picard.
The ruling means that investors who claim to have lost £630million through Herald, a fund affiliated with a Luxembourg division of HSBC, could add their claims to those being managed in the US.
HSBC declined to comment.
Sunday, 12 September 2010
THE ROLE OF HSBC IN THE STANFORD BANK FRAUD
The following letter is being sent to the British and European MP's and MEP's by the Stanford Victims Coalition European Group.
I would urge all Europeans to write similar letters to their MP's, Prime ministers, newspapers and anyone else who will listen. The role of HSBC in Stanford's massive fraud must be brought to the Public's attention, and the bank forced to tell Stanford's victims where the money was sent and WHY they failed in their duty of care as a Correspondent Bank.
Dear Mr .........
THE ROLE OF HSBC IN THE STANFORD BANK FRAUD
I am writing to you as one of the thousand British and European Investors who lost their life savings and retirement funds following the collapse of Stanford International Bank (SIB) based in Antigua.
As you may be aware, Allen Stanford has been accused by the US Securities and Exchange Commission of running a massive Ponzi scheme. Moreover he used the British banking system as the conduit for all European deposits. HSBC in London acted as the correspondent bank. Most people around the world are aware of HSBC. Their willingness to act as correspondent gave Stanford an aura of respectability.
Stanford provided deposit instructions indicating that customers could make deposits in Antigua based SIB by wiring funds to HSBC in London. HSBC were aware of these instructions, and expressly agreed with Stanford to receive wire deposits for further transfer to SIB in Antigua. Further, these instructions specifically included a SWIFT code, purportedly for SIB in Antigua.
Depositors in SIB throughout Europe wired funds to HSBC with the intent that such funds would be transferred to SIB in Antigua for deposit in their accounts. HSBC conveyed to depositors in SIB that funds transmitted to HSBC were being deposited in Antigua, and being entrusted to a legitimate banking institution.
It has been determined by the receivers’ forensic accountants that all, or substantially all, of the funds never reached Antigua, but were redirected by HSBC, in concert with and/or at the direction of Stanford, to other Stanford controlled bank accounts in Toronto, Canada; Houston, Texas; and elsewhere. The funds were then distributed to other Stanford entities; “invested” in Allen Stanford’s private ventures; used to fund his lavish lifestyle; or paid out to earlier investors to perpetuate the fraudulent scheme.
Based upon its longstanding correspondent banking relationship with Stanford, HSBC knew, or should have known, that Stanford was conducting an illegal and fraudulent scheme, and that depositors were being deceived into believing their funds were being deposited in a legitimate banking institution in Antigua.
Furthermore, HSBC have refused to divulge the ultimate destination of the funds without a UK Court Order, and the Financial Services Ombudsman is powerless to investigate.
The UK Money Laundering Regulations, introduced throughout the EEA in 2007, and which were passed into British law as Statutory Instrument 2007 number 2157, state:-
1)A credit institution (“the correspondent”) which has or proposes to have a correspondent banking relationship with a respondent institution (“the respondent”) from a non-EEA state must—(a) gather sufficient information about the respondent to understand fully the nature of its business; (b) determine from publicly-available information the reputation of the respondent and the quality of its supervision.
In 1991 HM Treasury requested Allen Stanford surrender the banking licence of his earlier Guardian International Bank, then situated on Montserrat, for alleged money-laundering activities. Later, sanctions were imposed on Antigua following Stanford’s attempt to rewrite the Country’s banking regulatory laws. Stanford was repeatedly fined by FINRA for violations of the US Banking Code, and was made to hand over $3million of laundered Mexican drug money to the DEA. When determining his ‘reputation’ prior to agreeing to act as correspondent, HSBC would have been aware of all of this.
2)A credit institution must not enter into, or continue, a correspondent banking relationship with a shell bank….A “shell bank” means a credit institution, or an institution engaged in equivalent activities, incorporated in a jurisdiction in which it has no physical presence involving meaningful decision-making and management, and which is not part of a financial conglomerate or third-country financial conglomerate.
In the course of their investigation into SIB, the receiver has stated that, in his opinion no meaningful decision making or management was undertaken in Antigua. Hence, as defined in these regulations, SIB is a ‘shell’ bank. It would have been clear to HSBC that the management of SIB was not from Antigua, yet they continued to act as correspondent.
In 2002, The Wolfsberg Group, of which HSBC is a member, published its Principles for Correspondent Banking. In these Principles, ‘Higher Risk; correspondents are defined under; ‘Customer Risk,’ specifically, private offshore banks such as SIB; and ‘Country Risk,’ in particular, Countries such as Antigua, which have a history of sanctions, corruption, and inadequate anti-money laundering regulations. Under the Principles, such correspondents are required to be subject to even higher levels of due diligence, and those correspondents associated with shell banks, or where the results of the due diligence produce significant uncertainties that cannot be resolved, are to be specifically avoided.
The UK and EU Regulations, and the recommendations of the Wolfsburg Group are just a few of the guidelines that HSBC chose to ignore. Had they abided by the Basel II Accords, the Financial Action Task Force (FATF) Recommendations, or even the recognised Know Your Client (KYC) list of advice given to banks, it ought to have been very clear that Allen Stanford was perpetrating a fraud of enormous proportions with a clear aim of defrauding thousands of innocent victims of their money. The red flags are there, yet they went unheeded. HSBC had an obligation to report the Red Flags, and a duty of care that could have safeguarded many depositors from losing their life savings. It is clearly stated in the Basel II report that if a bank fails to deliver funds to the requested account, and account holders consequently lose money, then the bank has to make good those losses.
Whilst many of the subtleties of the Stanford scandal have only recently entered the public domain, HSBC as one of the worlds leading banks, has a wealth of industry knowledge, and considerable resources to undertake detailed due diligence. Their willingness to act as correspondent, not only gave Stanford a veneer of respectability, but enabled him to extend and perpetuate the fraud throughout Europe.
Prior to, and during, their establishment of a correspondent banking relationship with Stanford, HSBC gathered sufficient information concerning Stanford to understand Stanford’s business and, as a result, knew, or should have known, that Stanford was conducting a fraudulent scheme, and that it was both inappropriate, and illegal, for HSBC to continue to act as correspondent Bank.
HSBC must be made to answer why they failed in so many areas to abide by the regulations governing their correspondent relationship with Stanford; why
They chose not to report what was happening to the deposits they so willingly transferred; and must be held accountable that those funds were not delivered to the specified accounts.
Your help and assistance in this matter is requested to help the innocent victims who have suffered as a result of HSBC’s lack of care and due diligence, resulting in the loss of their life savings totalling £150 Million.
Whilst writing this letter, I have today learned that HSBC Chairman, Stephen Green, is to become the UK Minister of Trade. You can imagine my dismay.
I look forward to hearing what action you intend to take and how you can help all of the European victims in this fraud.
I would urge all Europeans to write similar letters to their MP's, Prime ministers, newspapers and anyone else who will listen. The role of HSBC in Stanford's massive fraud must be brought to the Public's attention, and the bank forced to tell Stanford's victims where the money was sent and WHY they failed in their duty of care as a Correspondent Bank.
Dear Mr .........
THE ROLE OF HSBC IN THE STANFORD BANK FRAUD
I am writing to you as one of the thousand British and European Investors who lost their life savings and retirement funds following the collapse of Stanford International Bank (SIB) based in Antigua.
As you may be aware, Allen Stanford has been accused by the US Securities and Exchange Commission of running a massive Ponzi scheme. Moreover he used the British banking system as the conduit for all European deposits. HSBC in London acted as the correspondent bank. Most people around the world are aware of HSBC. Their willingness to act as correspondent gave Stanford an aura of respectability.
Stanford provided deposit instructions indicating that customers could make deposits in Antigua based SIB by wiring funds to HSBC in London. HSBC were aware of these instructions, and expressly agreed with Stanford to receive wire deposits for further transfer to SIB in Antigua. Further, these instructions specifically included a SWIFT code, purportedly for SIB in Antigua.
Depositors in SIB throughout Europe wired funds to HSBC with the intent that such funds would be transferred to SIB in Antigua for deposit in their accounts. HSBC conveyed to depositors in SIB that funds transmitted to HSBC were being deposited in Antigua, and being entrusted to a legitimate banking institution.
It has been determined by the receivers’ forensic accountants that all, or substantially all, of the funds never reached Antigua, but were redirected by HSBC, in concert with and/or at the direction of Stanford, to other Stanford controlled bank accounts in Toronto, Canada; Houston, Texas; and elsewhere. The funds were then distributed to other Stanford entities; “invested” in Allen Stanford’s private ventures; used to fund his lavish lifestyle; or paid out to earlier investors to perpetuate the fraudulent scheme.
Based upon its longstanding correspondent banking relationship with Stanford, HSBC knew, or should have known, that Stanford was conducting an illegal and fraudulent scheme, and that depositors were being deceived into believing their funds were being deposited in a legitimate banking institution in Antigua.
Furthermore, HSBC have refused to divulge the ultimate destination of the funds without a UK Court Order, and the Financial Services Ombudsman is powerless to investigate.
The UK Money Laundering Regulations, introduced throughout the EEA in 2007, and which were passed into British law as Statutory Instrument 2007 number 2157, state:-
1)A credit institution (“the correspondent”) which has or proposes to have a correspondent banking relationship with a respondent institution (“the respondent”) from a non-EEA state must—(a) gather sufficient information about the respondent to understand fully the nature of its business; (b) determine from publicly-available information the reputation of the respondent and the quality of its supervision.
In 1991 HM Treasury requested Allen Stanford surrender the banking licence of his earlier Guardian International Bank, then situated on Montserrat, for alleged money-laundering activities. Later, sanctions were imposed on Antigua following Stanford’s attempt to rewrite the Country’s banking regulatory laws. Stanford was repeatedly fined by FINRA for violations of the US Banking Code, and was made to hand over $3million of laundered Mexican drug money to the DEA. When determining his ‘reputation’ prior to agreeing to act as correspondent, HSBC would have been aware of all of this.
2)A credit institution must not enter into, or continue, a correspondent banking relationship with a shell bank….A “shell bank” means a credit institution, or an institution engaged in equivalent activities, incorporated in a jurisdiction in which it has no physical presence involving meaningful decision-making and management, and which is not part of a financial conglomerate or third-country financial conglomerate.
In the course of their investigation into SIB, the receiver has stated that, in his opinion no meaningful decision making or management was undertaken in Antigua. Hence, as defined in these regulations, SIB is a ‘shell’ bank. It would have been clear to HSBC that the management of SIB was not from Antigua, yet they continued to act as correspondent.
In 2002, The Wolfsberg Group, of which HSBC is a member, published its Principles for Correspondent Banking. In these Principles, ‘Higher Risk; correspondents are defined under; ‘Customer Risk,’ specifically, private offshore banks such as SIB; and ‘Country Risk,’ in particular, Countries such as Antigua, which have a history of sanctions, corruption, and inadequate anti-money laundering regulations. Under the Principles, such correspondents are required to be subject to even higher levels of due diligence, and those correspondents associated with shell banks, or where the results of the due diligence produce significant uncertainties that cannot be resolved, are to be specifically avoided.
The UK and EU Regulations, and the recommendations of the Wolfsburg Group are just a few of the guidelines that HSBC chose to ignore. Had they abided by the Basel II Accords, the Financial Action Task Force (FATF) Recommendations, or even the recognised Know Your Client (KYC) list of advice given to banks, it ought to have been very clear that Allen Stanford was perpetrating a fraud of enormous proportions with a clear aim of defrauding thousands of innocent victims of their money. The red flags are there, yet they went unheeded. HSBC had an obligation to report the Red Flags, and a duty of care that could have safeguarded many depositors from losing their life savings. It is clearly stated in the Basel II report that if a bank fails to deliver funds to the requested account, and account holders consequently lose money, then the bank has to make good those losses.
Whilst many of the subtleties of the Stanford scandal have only recently entered the public domain, HSBC as one of the worlds leading banks, has a wealth of industry knowledge, and considerable resources to undertake detailed due diligence. Their willingness to act as correspondent, not only gave Stanford a veneer of respectability, but enabled him to extend and perpetuate the fraud throughout Europe.
Prior to, and during, their establishment of a correspondent banking relationship with Stanford, HSBC gathered sufficient information concerning Stanford to understand Stanford’s business and, as a result, knew, or should have known, that Stanford was conducting a fraudulent scheme, and that it was both inappropriate, and illegal, for HSBC to continue to act as correspondent Bank.
HSBC must be made to answer why they failed in so many areas to abide by the regulations governing their correspondent relationship with Stanford; why
They chose not to report what was happening to the deposits they so willingly transferred; and must be held accountable that those funds were not delivered to the specified accounts.
Your help and assistance in this matter is requested to help the innocent victims who have suffered as a result of HSBC’s lack of care and due diligence, resulting in the loss of their life savings totalling £150 Million.
Whilst writing this letter, I have today learned that HSBC Chairman, Stephen Green, is to become the UK Minister of Trade. You can imagine my dismay.
I look forward to hearing what action you intend to take and how you can help all of the European victims in this fraud.
Thursday, 19 August 2010
(Sir) R Allen Stanford – The World’s Biggest Bank Robber
By Ian Moncrief-Scott
When Verity (not her real name) retired she had simple dreams of living in the sun, caring for animals and putting something back into society.
R Allen Stanford, with his many active and passive accomplices, true fellow criminals, calculatingly shattered those dreams.
Indeed, Stanford created Verity’s worst nightmare, which has left her destitute, entirely reliant on family support and needing scraps from kind neighbours to feed her dog.
Pretending his innocence, Stanford languishes in an American prison with room TV, entertainment and exercise, hiring and firing attorneys, with three square meals a day, heat and light paid by the taxpayer.
Meanwhile, Verity desperately worries from where the next meal will come.
So who allowed this tragedy unfold?
As long ago as 2007, Verity, simply asked her bank to transfer her personal funds. These were for her retirement.
This was not an investment in Stanford’s fraudulent Certificates of Deposit but a straightforward, routine, everyday bank to bank SWIFT transfer.
Verity’s bank was Barclays Wealth "the UK's leading wealth manager in terms of assets under management and the largest retail multi-manager.”
The pensioner had worked hard all her life and wanted her savings to be conveniently placed in Stanford International Bank in Antigua, the country she had chosen for her retirement.
She trusted and relied upon Barclays Wealth to safely transfer her entire life savings.
Verity gave her clear instructions in writing as provided by Stanford International Bank.
Substantial monies were to be transferred to HSBC, London, using the SWIFT system - code MIDLGB22XXX for further credit to SIB in Antigua (Sort Code 40-05-15) etc.
However, the Sort Code 40-05-15 is not Stanford International Bank’s but HSBC International Bank London.
HSBC acts as an official correspondent bank for SIB, which is now in receivership.
According to Vantis, the Receiver appointed by the Government of Antigua, her money is not at Stanford International Bank in Antigua at all. It has simply disappeared from the SIB account at HSBC in London.
HSBC contends, in its own remarkable blaze of self-publicity, “We aspire to be one of the world's great specialist banking groups, driven by commitment to our core philosophies and values."
Much has been made of Stanford’s Ponzi Scheme but there has been little focus on the missing bank deposits in Antigua.
Antigua does not have a banking deposit protection scheme so any funds held in or associated with the country, are potentially vulnerable.
Antigua is also irrefutably well-known as a most dubious and corrupt place.
In 2001, with the formation of First Caribbean International Bank, Barclays effectively withdrew its own brand from the region.
Antigua has been the subject of two countrywide Treasury Advisories connected to Stanford and a US Senate report highlighting concerns about its links to correspondent banking.
Described at the time by the U.S. Department of Justice as "the largest case of non-drug-related money laundering every brought to justice", the case was significant enough to warrant inclusion in a report dated February 5, 2001, produced by the Minority Staff of the Permanent Subcommittee on Investigations, entitled Correspondent Banking: A Gateway to Money Laundering.
So why did Verity wait until 2009 before alerting Barclays that the funds were missing.
The reason for this was because Verity was told by Stanford International Bank that for cost saving purposes it did not issue written account statements but that a Stanford Financial Adviser would telephone her monthly to confirm her standing.
Each month she was assured by SIB Financial Advisers that her account was in good order, which she properly took to mean, held the expected level of funds following the transfer from Barclays Wealth.
During this time Verity had dealings with Kathy Belaziar and Yecella Mondez, at SIB Antigua.
Thus, using this method, the huge banking fraud at Stanford International Bank, Antigua remained concealed from March 2007 to December 2008, until Verity attempted to withdraw her funds.
Who has allowed this to happen?
Unlike the financial regulators, Verity knew nothing of Stanford’s reckless and criminal Ponzi Scheme.
She just needed a safe and convenient bank to hold her retirement savings and trusted the high profile name of Stanford, much endorsed by celebrities, international politicians and world leaders.
Verity, like any of us, relied upon the financial regulators in the United States of America, UK and Antigua.
Meanwhile, Leroy King, the former head of the financial regulatory authority in Antigua, is the subject of a US extradition warrant. This is is not in Antigua’s or, more correctly, certain Antiguan politicians’ interest, that this should ever be fulfilled.
Karyl Van Tassel, FTI Consulting, a forensic accountancy acting for Ralph Janvey, the Receiver appointed by the Court to unravel Stanford’s crimes has proved that billions of dollars destined for his dubious bank in woefully-regulated Antigua, never arrived.
Instead, on Stanford’s instructions billions of dollars (sterling/euros) were transferred from HSBC International London to Stanford’s corporate accounts at Toronto Dominion Bank in Canada, Trustmark National Bank in Mississippi and, mainly, the Bank of Houston.
The position of the victims of Stanford’s crimes suing HSBC and the other banks involved in a class action is even clearer.
They claim that “Upon information and belief, prior to and during their establishment of a correspondent banking relationship with Stanford, HSBC gathered sufficient information concerning Stanford to understand Stanford’s business and, as a result, knew, or should have known, that Stanford was conducting an illegal and fraudulent scheme.
Stanford provided members of the Class (sic the Stanford crime victims) with deposit instructions indicating that they could make deposits in Antigua-based SIBL by wiring funds to HSBC in London. HSBC was aware of these instructions that were provided to members of the Class, and expressly agreed with Stanford to receive wire deposits from members of the Class for further transfer to SIBL in Antigua.
After the establishment of the HSBC-Stanford correspondent bank relationship, members of the Class transferred funds to HSBC with the intent that such funds would be transferred to SIBL in Antigua for deposit there. Upon information and belief, all or substantially all of the funds that members of the class transferred to HSBC, with the intent that such funds would be transferred to SIBL in Antigua for deposit there, were redirected by HSBC, in concert with and/or at the direction of Stanford, to bank accounts in Houston, Texas, and elsewhere, after which such funds were distributed to other Stanford entities, “invested” in Allen Stanford’s private ventures, used to fund Allen Stanford’s lavish lifestyle, and reinvested in the criminal venture to keep the fraudulent scheme in operation.
Based upon the foregoing, and based upon its longstanding correspondent banking relationship with Stanford, HSBC knew, or should have known, that Stanford was conducting an illegal and fraudulent scheme.”
However, this matter is far from just about Stanford.
The role of HSBC and the competence of the international payment agencies and regulators involved must now be questioned.
The question is a simple one:
How did a single shareholder institution with impossible multi-billion dollar yearly growth, with its base in ineptly regulated Antigua, having its accounts passed by a 73 year old from his a terraced house in Harrigey, satisfy the most basic due diligence tests expected by the Wolfsburg and Basel accords for correspondent banking relationships?
Meanwhile, as Verity and her dog go hungry, bankers, politicians, regulators and ombudsmen enjoy their inflation-proof pensions and well-compensated lifestyles.
Ends.
When Verity (not her real name) retired she had simple dreams of living in the sun, caring for animals and putting something back into society.
R Allen Stanford, with his many active and passive accomplices, true fellow criminals, calculatingly shattered those dreams.
Indeed, Stanford created Verity’s worst nightmare, which has left her destitute, entirely reliant on family support and needing scraps from kind neighbours to feed her dog.
Pretending his innocence, Stanford languishes in an American prison with room TV, entertainment and exercise, hiring and firing attorneys, with three square meals a day, heat and light paid by the taxpayer.
Meanwhile, Verity desperately worries from where the next meal will come.
So who allowed this tragedy unfold?
As long ago as 2007, Verity, simply asked her bank to transfer her personal funds. These were for her retirement.
This was not an investment in Stanford’s fraudulent Certificates of Deposit but a straightforward, routine, everyday bank to bank SWIFT transfer.
Verity’s bank was Barclays Wealth "the UK's leading wealth manager in terms of assets under management and the largest retail multi-manager.”
The pensioner had worked hard all her life and wanted her savings to be conveniently placed in Stanford International Bank in Antigua, the country she had chosen for her retirement.
She trusted and relied upon Barclays Wealth to safely transfer her entire life savings.
Verity gave her clear instructions in writing as provided by Stanford International Bank.
Substantial monies were to be transferred to HSBC, London, using the SWIFT system - code MIDLGB22XXX for further credit to SIB in Antigua (Sort Code 40-05-15) etc.
However, the Sort Code 40-05-15 is not Stanford International Bank’s but HSBC International Bank London.
HSBC acts as an official correspondent bank for SIB, which is now in receivership.
According to Vantis, the Receiver appointed by the Government of Antigua, her money is not at Stanford International Bank in Antigua at all. It has simply disappeared from the SIB account at HSBC in London.
HSBC contends, in its own remarkable blaze of self-publicity, “We aspire to be one of the world's great specialist banking groups, driven by commitment to our core philosophies and values."
Much has been made of Stanford’s Ponzi Scheme but there has been little focus on the missing bank deposits in Antigua.
Antigua does not have a banking deposit protection scheme so any funds held in or associated with the country, are potentially vulnerable.
Antigua is also irrefutably well-known as a most dubious and corrupt place.
In 2001, with the formation of First Caribbean International Bank, Barclays effectively withdrew its own brand from the region.
Antigua has been the subject of two countrywide Treasury Advisories connected to Stanford and a US Senate report highlighting concerns about its links to correspondent banking.
Described at the time by the U.S. Department of Justice as "the largest case of non-drug-related money laundering every brought to justice", the case was significant enough to warrant inclusion in a report dated February 5, 2001, produced by the Minority Staff of the Permanent Subcommittee on Investigations, entitled Correspondent Banking: A Gateway to Money Laundering.
So why did Verity wait until 2009 before alerting Barclays that the funds were missing.
The reason for this was because Verity was told by Stanford International Bank that for cost saving purposes it did not issue written account statements but that a Stanford Financial Adviser would telephone her monthly to confirm her standing.
Each month she was assured by SIB Financial Advisers that her account was in good order, which she properly took to mean, held the expected level of funds following the transfer from Barclays Wealth.
During this time Verity had dealings with Kathy Belaziar and Yecella Mondez, at SIB Antigua.
Thus, using this method, the huge banking fraud at Stanford International Bank, Antigua remained concealed from March 2007 to December 2008, until Verity attempted to withdraw her funds.
Who has allowed this to happen?
Unlike the financial regulators, Verity knew nothing of Stanford’s reckless and criminal Ponzi Scheme.
She just needed a safe and convenient bank to hold her retirement savings and trusted the high profile name of Stanford, much endorsed by celebrities, international politicians and world leaders.
Verity, like any of us, relied upon the financial regulators in the United States of America, UK and Antigua.
Meanwhile, Leroy King, the former head of the financial regulatory authority in Antigua, is the subject of a US extradition warrant. This is is not in Antigua’s or, more correctly, certain Antiguan politicians’ interest, that this should ever be fulfilled.
Karyl Van Tassel, FTI Consulting, a forensic accountancy acting for Ralph Janvey, the Receiver appointed by the Court to unravel Stanford’s crimes has proved that billions of dollars destined for his dubious bank in woefully-regulated Antigua, never arrived.
Instead, on Stanford’s instructions billions of dollars (sterling/euros) were transferred from HSBC International London to Stanford’s corporate accounts at Toronto Dominion Bank in Canada, Trustmark National Bank in Mississippi and, mainly, the Bank of Houston.
The position of the victims of Stanford’s crimes suing HSBC and the other banks involved in a class action is even clearer.
They claim that “Upon information and belief, prior to and during their establishment of a correspondent banking relationship with Stanford, HSBC gathered sufficient information concerning Stanford to understand Stanford’s business and, as a result, knew, or should have known, that Stanford was conducting an illegal and fraudulent scheme.
Stanford provided members of the Class (sic the Stanford crime victims) with deposit instructions indicating that they could make deposits in Antigua-based SIBL by wiring funds to HSBC in London. HSBC was aware of these instructions that were provided to members of the Class, and expressly agreed with Stanford to receive wire deposits from members of the Class for further transfer to SIBL in Antigua.
After the establishment of the HSBC-Stanford correspondent bank relationship, members of the Class transferred funds to HSBC with the intent that such funds would be transferred to SIBL in Antigua for deposit there. Upon information and belief, all or substantially all of the funds that members of the class transferred to HSBC, with the intent that such funds would be transferred to SIBL in Antigua for deposit there, were redirected by HSBC, in concert with and/or at the direction of Stanford, to bank accounts in Houston, Texas, and elsewhere, after which such funds were distributed to other Stanford entities, “invested” in Allen Stanford’s private ventures, used to fund Allen Stanford’s lavish lifestyle, and reinvested in the criminal venture to keep the fraudulent scheme in operation.
Based upon the foregoing, and based upon its longstanding correspondent banking relationship with Stanford, HSBC knew, or should have known, that Stanford was conducting an illegal and fraudulent scheme.”
However, this matter is far from just about Stanford.
The role of HSBC and the competence of the international payment agencies and regulators involved must now be questioned.
The question is a simple one:
How did a single shareholder institution with impossible multi-billion dollar yearly growth, with its base in ineptly regulated Antigua, having its accounts passed by a 73 year old from his a terraced house in Harrigey, satisfy the most basic due diligence tests expected by the Wolfsburg and Basel accords for correspondent banking relationships?
Meanwhile, as Verity and her dog go hungry, bankers, politicians, regulators and ombudsmen enjoy their inflation-proof pensions and well-compensated lifestyles.
Ends.