HSBC Chases Profit in Iran, Nations U.S. Says Sponsor Terrorism, related

The following Bloomberg article is no longer available from the  Office of the Arizona State Treasurer's website. (excerpts):

President George W. Bush said at a Nov. 7, 2001, news conference. "If you do business with terrorists, if you support them or sponsor them, you will not do business with the United States of America.'' Four years later, dozens of banks with offices in the U.S. have helped provide billions of dollars to Iran's government and the other nations accused of being terror sponsors.

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Iran has also been unwilling to deliver to the U.S. or a third country senior al-Qaeda members detained by Iran who were involved in planning the Sept. 11 attacks, he said. Frederick Jones, a spokesman for the National Security Council at the White House, said he couldn't say why the Bush administration allows companies to do business in the U.S. that are also in terror-sponsoring states. Two spokespeople at the State Department, Steven Pike and Carol Thompson, also said they were unable to answer that question.

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Financing Plants in Iran

In March 2002, it agreed to be the lead arranger of a $155 million credit to help build an ammonia and urea plant for Iran's National Petrochemical Co. In February 2003, HSBC agreed to provide NPC a $108 million export credit to finance equipment and services to construct a petrochemical plant. In July 2004, Iran Khodro Industrial Group, the country's biggest maker of cars and trucks, selected HSBC and BNP Paribas to manage a sale of 300 million euros in bonds. Khodro, which is 40 percent owned by the Iranian government, hadn't sold the bonds as of April. In August 2004, HSBC's Tokyo office joined with ING Groep NV, the biggest Dutch financial services company, and Japan Bank for International Cooperation, Japan's export credit bank, to provide a $154 million loan to NPC to finance imports of Japanese equipment and services, according to the Japanese bank, which lends money to help sales of Japanese products abroad. HSBC also has clients in Syria, the other country the U.S. singles out as among the worst of the designated terror states.

Lebanese Office

"Through the Lebanese office of HSBC, there is business done with Syrian entities," HSBC spokesman Martin in Dubai says. Syrians opening accounts have to meet the bank's standards of acceptability and go through the same identification checks as other HSBC clients, he says. HSBC does additional Syrian business through London-based British Arab Commercial Bank Ltd. HSBC owns 46.5 percent of the bank, whose chief executive officer is an HSBC employee on loan. HSBC holds five of the 11 board seats. Other shareholders of British Arab Commercial Bank, known as BACB, are the Libyan government's Libyan Arab Foreign Bank, with 25 percent, and Iraq's state-owned Rafidain Bank, with 4.91 percent. Libyan and Iraqi representatives sit on BACB's board alongside HSBC bankers. During Saddam Hussein's rule, an Iraqi representative traveled from Baghdad to London for some board meetings, according to BACB. BACB is a corner of the HSBC empire that specializes in doing business legally with countries that have been marginalized by sanctions, BACB General Manager and Deputy Chief Executive Mohamed Fezzani says.

'A Small Bank'

"We are a small bank, and we know exactly what we are doing,'' Fezzani, 67, says. "As long as we don't finance the wrong stuff.'' BACB's Web site calls these 'niche markets,' listing Iran, Libya, Sudan and Syria along with other countries that aren't on the U.S. terror list, such as Algeria and Morocco. Leaflets promoting BACB's activities in Syria and Libya are displayed in the lobby of its London headquarters on Mansion House Place, a six-story modern cement building decorated with stripes of brick, nestled behind the 250-year-old official residence of the lord mayor of London. HSBC does its Sudan business through BACB, Martin says. BACB also provides HSBC with a base in Libya; HSBC's Web site lists the BACB Tripoli office as its address in that country. ``We are their representatives in the countries where they have no presence,'' says BACB's Fezzani, whose corner office on the top floor of BACB's headquarters overlooks the Bank of England.

Sudan and Syria

Among BACB's clients, he says, are Commercial Bank of Syria, which the U.S. Treasury says has been used by terrorists; the Central Bank of Syria; Sudan's Kanana Sugar Co.; and Bank of Khartoum, a Sudanese state-owned bank undergoing privatization. Fezzani, a Libyan posted to BACB in 1975 by Libyan Arab Foreign Bank, says he, BACB and HSBC take measures to make sure none of the financing BACB provides is misused. BACB has a rule against financing weapons or anything related to the military, he says, and HSBC, as the biggest shareholder, provides legal help to keep the bank in compliance. BACB also hires a cargo inspection contractor to do spot checks of imports it finances to make sure countries such as Syria are actually buying what they say they are. Fezzani points out the window toward the Bank of England, which has been one of BACB's regulators. "They had a sanctions committee that came to examine us and found everything perfect,'' he says.

Enforcing Sanctions

Bank of England spokesman Peter Rodgers confirmed the central bank had audited BACB and said he couldn't discuss the outcome. The Bank of England helped enforce U.K. and UN sanctions against Libya and UN sanctions against Iraq. In the U.S., HSBC's business dealings -- like those of dozens of other banks including New York-based Citigroup and JPMorgan -- have fallen afoul of sanctions. The U.S. Treasury Department has fined at least 104 financial services companies for more than 300 transactions related to terrorists and terror sponsors since the beginning of 1998, according to a Bloomberg News analysis of Treasury documents that detail fines. The Treasury disclosed the records, which include copies of Treasury's letters to the companies, in response to a Freedom of Information Act lawsuit by Public Citizen, the consumer group founded by Ralph Nader, and the Corporate Crime Reporter newsletter, both based in Washington. Banks say most penalties stem from employees accidentally allowing money transfers to companies, people or countries blocked by the U.S. In some cases, banks voluntarily disclose the transfers after discovering the mistakes.

Modest Penalties

The maximum civil penalty per violation is $11,000 under Iran, Sudan, Syria and terrorism sanctions, according to a Treasury Department fact sheet, and they're often negotiated lower. That provides little deterrent, Arizona Treasurer David Petersen says. "Some of the fines are so puny it's laughable,'' the 55- year-old Republican says. The biggest banks have the greatest number of fines, according to Treasury records. Citigroup, the biggest U.S. bank, paid at least 22 fines from the start of 1998 to April 2005. JPMorgan, the No. 2 U.S. bank, had at least 32. Bank of America Corp. had at least 19, and Wachovia Corp. had at least 24. Both banks are based in Charlotte, North Carolina. American Express had at least 10. "We handle millions of international transactions, and occasionally, an inadvertent human or system error occurs,'' says Shirley Norton, a spokeswoman at Bank of America. "As soon as we become aware of such an instance, we voluntarily report it.''

Fined 18 Times

The Treasury Department has fined HSBC at least 18 times under terror-related sanctions since the start of 1998. One penalty was for a transfer in April 2000 of $100,000 benefiting the Taliban, which at the time was running Afghanistan and providing bin Laden and his al-Qaeda organization with the base from which he plotted the Sept. 11 attacks. Some U.S. regulators say HSBC's controls are inadequate. In April 2003, HSBC Bank USA agreed with the Federal Reserve Bank of New York and the State of New York Banking Department to improve its system of monitoring incoming and outgoing fund transfers for suspicious activity, according to the New York Fed. The agreement said there were "deficiencies'' in the bank's anti-money-laundering policies and procedures, customer due diligence practices and internal controls. "We are taking a number of steps to upgrade our systems and procedures," then HSBC Bank USA Chief Executive Youssef Nasr said in a statement at the time.

Office of the Arizona State Treasurer:

HSBC Chases Profit in Iran, Nations U.S. Says Sponsor Terrorism

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As this information came out (especially after the Deuxieme Bureau had assembled information in the months before and after 9/11 as well as information from many different sources) the debate really began about the aid groups and their ties to the Islamic banking community and terrorism. Western banks are also involved. For example, the Giro Credit Bank in Vienna had no problem administering the $350 million account of Islamic fundamentalists for the war in Bosnia. The al-Shamal Islamic Bank in Khartoum uses a correspondent bank, the British Arab Commercial Bank, and the al-Shamal bank is seen by secret services to have administered a great part of bin Laden’s business interests in the second half of the 1990s. The British Arab Commercial Bank is 25% owned by the Libyan Central Bank-controlled Libyan Arab Foreign Bank while another main holder is Hong Kong-Shanghai Banking Corporation (HSBC). During testimony in court regarding the 1998 attacks on the U.S. embassies in Kenya and Tanzania, the State witness Jamal Mohammed al-Fadl said that Al Qaida members had accounts at al-Shamal. Another account was in the Bank Faisal Islami, a second Sudanese bank that the Geneva-based DMI has part ownership in as well. In the same court case another Al Qaida defector, Essam al-Ridi, said bin Laden took $230,000 and transferred it from al-Shamal Bank to Arizona to acquire a plane which was supposed to fly Stinger missiles from Pakistan to Sudan.

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CONCLUSION: THE NAZI–ISLAMIST CONNECTION?

The overwhelming thrust of this report has been to give the reader a great deal of empirical information that he or she may not have easy access to in order that they may evaluate the claims for themselves. I have avoided drawing any conclusions because I do not feel qualified to draw conclusions about the Islamist financial machinations this report discusses. However I find it impossible not to put out a call for further research involving the overlap between Nazi and Islamist networks that seem to have been in continual contact from the 1930s until today. In the case of Genoud, Huber, and Ramadan this is becoming more and more impossible to avoid.

My own belief is that it is less the apparently fantastic and "James Bond"-like quality of this analysis that is most difficult to understand. The real difficulty is the utter ignorance of most Westerners (Americans in particular) about the very existence of such people as Francois Genoud. Thus when Ernst Backes, one of Europe’s leading experts in money laundering, told the Luxemburg-based economic journal Plus Minus last year that he believed the financial source of funds for the 9/11 terrorists would ultimately be traced back to Swiss bank accounts established by Genoud, few Americans had any idea what Backes could possibly be talking about. For this same reason there has been virtually no independent investigation into SICO’s Baudoin Dunand’s relationship to Genoud or (for that matter) the role that the Syrian-born Muhammad Mardam Bay (believed to be related to a former Syrian foreign minister) has played both as a member of Magnin, Dunand & Associes as well as Bay’s possible links with Genoud. And what does it mean when we are told that Youssef Nada, for example, is believed by Egyptian authorities to have worked for German intelligence in World War II?

It is not at all impossible that networks first developed in the 1930s and who saw their economic power fantastically multiplied in the wake of the enormous hike in oil prices in 1973 are now engaged in trying to enact a major financial shift away from the dollar and Anglo-American financial networks and to shift the vast wealth of the Muslim oil states into a new Euro-based financial network that would vastly increase the power of those banks and financial interests in Europe associated with elements of far right elites that survived World War II relatively intact.

If this were at all the case, it would not be a new development. The very same attempt to develop an independent Saudi-German hookup to subvert the U.S. and British domination of the Saudi oil markets was actually attempted in the mid-1950s. At that time the Saudi royal family – using the advise of the famous German banker Hjalmar Schacht – attempted to employ Aristotle Onassis to transport Saudi oil on new oil tankers that would be constructed in the shipyards of Germany. This attempt to break the Western oil control over Saudi Arabia was finally blocked by the United States, a story well documented in Jim Hougan’s book Spooks (New York: William Morrow, 1978).

The documentation regarding this complex question is there for anyone who wants to examine it. Of course I am NOT attempting to suggest a simple mono-causal explanation for the current crisis. What I am suggesting is that sooner or later these connections between the far right and groups like the Muslim Brotherhood that began in the 1930s and continue today will have to become the subject of serious and sober research in order to help us shed new light on the extraordinary circumstances we are living under today.

Report On Islamists, The Far Right, And Al Taqwa by Kevin Coogan

also see:

The Strange Case of Ahmed Chalabi

FTR Supplemental: Blog

In Washington, Carl Levin, chairman of the Senate's permanent investigations subcommittee, said last week that Bin Laden is suspected of using Sudan's Al-Shamal Islamic bank to shield his financial activities. The bank has correspondent accounts with leading western banks, including three in London, and it is believed that Bin Laden may have used these to transfer funds anonymously.

Al-Shamal was allegedly founded with a £30m cash injection by Bin Laden and its shareholders include senior Saudi businessmen. It was claimed in an American trial this year that it was used to transfer Al-Qaeda funds. Al-Shamal last week denied that Bin Laden was a backer.

The British Arab Commercial Bank (BACB), Banque Française de l'Orient and the American Express Bank in London all had accounts linked to the bank. "We closed the account last Monday," said a spokesman for the American Express Bank. The French bank said it was checking for links to Bin Laden. BACB was unavailable for comment.

British Companies at Heart of Cash Network
The Sunday Times, September 30, 2001