On Tuesday, Assistant Attorney General Lanny Breuer heralded the Justice Department’s record money-laundering settlement with HSBC as a “very just, very real and very powerful result.”
On Thursday, Sen. Charles Grassley (R-Iowa) dumped cold water on it. The Senate Judiciary Committee ranking member released a letter admonishing the Justice Department for giving the banking giant a “get-out-of-jail-free card” with its deferred prosecution agreement.
“The department has not prosecuted a single employee of HSBC — no executives, no directors, no [anti-money laundering] compliance staff members, no one,” Grassley wrote to Attorney General Eric Holder.
“By allowing these individuals to walk away without any real punishment, the department is declaring that crime actually does pay. Functionally, HSBC has quite literally purchased a get-out-of-jail-free card for its employees for the price of $1.92 billion dollars.”
The British bank agreed to pay $1.92 billion to settle charges it laundered money from Mexican drug cartels and violated U.S. sanctions by processing transactions for Iran, Libya and Sudan, among others. Grassley joins a number of critics who have said the DPA is merely a slap on the wrist for a prosperous financial institution. No individuals were indicted in the case.
“Did HSBC profit from the DPA because it actually made more than $1.92 billion by providing services to drug kingpins and terrorists?” Grassley asked in his letter. “The American people may never know, because you have declined to prosecute.”
DPAs have becoming increasingly popular among federal law enforcement, giving prosecutors flexibility to hold companies accountable while not going so far as to put them out of business. Companies avoid the uncertainty of a trial and get to scrub their record after implementing heightened legal compliance standards. DPA detractors often complain the agreements allow individuals responsible for the misconduct to escape prosecution.
Grassley quoted a recent New York Times editorial criticizing the government for its decision to settle with HSBC. The editorial board called DOJ’s decision not to indict HSBC a “dark day for the rule of law.”
“But what I have seen from the Department is an inexplicable unwillingness to prosecute and convict those responsible for aiding and abetting drug lords and terrorists,” he wrote. “I cannot help but agree with an editorial in the New York Times that ‘the government has bought into the notion that too big to fail is too big to jail.’ ”
Grassley has requested a briefing with Justice Department staff to discuss how its settlement decision was reached.
“Notwithstanding this request, I strongly urge the Department to prosecute the responsible individuals and send a powerful message to the banks that laundering money for America’s enemies will not be tolerated,” he wrote.