Congress Claims Eric Holder Misled on Decision Not to Prosecute HSBC Bank

Report: Justice Department let bank off easy, considered it ‘too big to jail’

Attorney General Eric Holder / AP
July 11, 2016

Justice Department officials overruled their prosecutors’ recommendation to pursue criminal charges against HSBC Bank and struck a deal with the bank to settle money laundering allegations, according to a report about the bank’s 2012 settlement by Republican members of a House committee.

Former Attorney General Eric Holder misled Congress about the Justice Department’s decision not to prosecute the United Kingdom-based bank, according to the report released Monday by Republican staff of the Committee on Financial Services.

The report found that Holder overruled an internal recommendation by a Justice Department prosecutor due to concerns that prosecuting the bank would have adverse consequences on the financial system.

The United States and HSBC agreed to defer prosecution in exchange for a fine and the bank's acknowledgment it violated four U.S. laws designed to protect the financial system, including the Bank Secrecy Act and the Trading With the Enemy Act.

Holder defended the agreement, which did not result in charges against the institution or any of its executives. The report found that Justice officials feared that HSBC played too important a role in the economy to prosecute.

"Rather than lacking adequate evidence to prove HSBC’s criminal conduct, internal Treasury documents show that DOJ leadership declined to pursue [the] recommendation to prosecute HSBC because senior DOJ leaders were concerned that prosecuting the bank ‘could result in a global financial disaster,’ " the 282-page report stated.

These findings come nearly three years after the initial inquiry in March 2013.

"Approximately three years after its initial inquiries, the Committee finally obtained copies of internal Treasury records showing that DOJ has not been forthright with Congress or the American people concerning its decision to decline to prosecute HSBC," the committee stated in a press release.

The Justice Department and the Treasury Department failed to comply with the committee’s requests to obtain relevant documents, necessitating the issuance of subpoenas to both agencies.

"DOJ to date has failed to produce any records pertaining to its prosecutorial decision making with respect to HSBC or any large financial institution, notwithstanding the Committee’s multiple requests for this information and a congressional subpoena requiring Attorney General Lynch to timely produce these records to the Committee," it wrote. "Attorney General Lynch and Secretary Lew remain in default on their legal obligation to produce the subpoenaed records to the Committee."

The committee wrote that attempts by DOJ and Treasury to impede its investigation "may constitute contempt and obstruction of Congress."