By He Jun
HSBC, founded on March 3, 1865, is facing one of the major risks in peacetime since its establishment. It has become an unavoidable pawn in the geopolitical game between China and the U.S. because of its involvement in the U.S. government’s crackdown on Huawei.
HSBC has deep roots in the Chinese market. Its official name, The Hongkong and Shanghai Banking Corporation Limited, demonstrates its close ties with Hongkong and Shanghai. The original Chinese name of HSBC was ‘Waylee Bank’ but it was later changed to ‘Wayfoong Bank’ in 1881. It is said that the word ‘Wayfoong’ was proposed by the Chinese comprador Gu Yingchun after numerological calculation, and the new name has the meaning of “abundant remittance.” At the beginning of the 20th century, HSBC has become the largest bank in the Far East, regularly accounting for 60-70% of the turnover in the Shanghai foreign exchange market. From the late Qing Dynasty to the Republican Era of China, HSBC Shanghai was the main agency for the Chinese government to repay foreign debts and indemnities, and the main bank that collected tariffs and kept China’s domestic debt funds on behalf of the General Taxation Department. In 1915, the stock of gold and silver in Shanghai’s financial sector totaled 80.99 million taels, among which 17.3% were held by Chinese banks and financial institutions, 44.3% by other nine foreign banks, and 38.4% by HSBC alone. From its founding to the War of Resistance against Japanese Aggression, Shanghai has been HSBC’s most important market in the world.
After the founding of the People’s Republic of China in 1949, HSBC’s branches in mainland China were closed one after another, with only the Shanghai branch continued to operate, making it one of the few foreign banks in mainland China without interruption of business. HSBC China officially opened for business on 2 April 2007 with its head office in Shanghai, China. By 2014, HSBC had 135 outlets in China, with 29 branches in 29 cities including Beijing, Shanghai, and Guangzhou. Currently, HSBC has nearly 170 outlets in 57 cities, about one-third of which are located in Guangdong, making it the only foreign bank with outlets in all prefecture-level cities in the province. HSBC is now the largest foreign bank in the mainland with the most outlets.
However, HSBC, which has deep roots in the Chinese market, is now embroiled in a geopolitical game between China and the U.S., as it co-operates with the U.S. in cracking down on Huawei.
On May 28 this year, the Supreme Court of British Columbia ruled that the essence of Meng Wanzhou’s case was a crime of fraud. On the morning of July 24, the court disclosed the evidence materials for the next stage of the Meng Wanzhou extradition case. According to the disclosed evidence, HSBC is suspected to have participated by providing evidentiary materials on Huawei’s Iran business in exchange for the U.S.’s pardon of HSBC’s violation.
The U.S. Case Prosecution Record submitted to the Canadian court stated that Meng Wanzhou “concealed” the relationship between Huawei and Hong Kong Xingtong Technology Co., Ltd. (Hong Kong Xingtong, or Skycom) from HSBC and “misled” HSBC to continue to provide banking services to Huawei. HSBC therefore violated the U.S. sanctions against Iran and faced the “risk” of civil and criminal fines. Meng Wanzhou constituted a “fraud” against HSBC. The “only key evidence” in this case is a PPT file that Meng Wanzhou gave to HSBC. The public materials include the full text of the PPT, as well as the business email records of HSBC and Huawei. HSBC falsely stated that it did not know the relationship between Huawei and Hong Kong Skycom, which is a blatant lie. From the 2009/2010 financial report of Hong Kong Skycom issued by Huawei to HSBC, it can be seen that HSBC fully understands the business situation of Hong Kong Skycom in Iran. In order to justify the argument and strengthen the effectiveness of the “criminal evidence”, HSBC claimed that only “junior” employees were aware of the relationship between Huawei and Hong Kong Skycom, but these “junior” employees did not pass on relevant information to the “senior” managers, causing the latter to only rely on the PPT provided by Meng Wanzhou to judge the risk.
More critically, in December 2012, HSBC signed the “Deferred Prosecution Agreement” with the U.S. Department of Justice due to its own misconduct, including violations of U.S. sanctions on Iran. HSBC assured the U.S. Department of Justice that it will review and clean up the entire group of customers. During this process, how could HSBC fail to recognize the relationship between Huawei and Hong Kong Skycom? Even so, in February 2013, Hong Kong Skycom closed its HSBC account. This concludes the cooperation between Huawei and HSBC on the Iran business. The business has been terminated, and HSBC still repeatedly requires “communication” with Huawei. Out of respect, in August 2013, Meng Wanzhou met with HSBC executives to give a detailed statement of Huawei’s business in Iran. The PPT she presented was handed over by HSBC to the U.S. side, which became the key evidence for the U.S. to strike Huawei.
HSBC cooperated with the U.S. to frame Huawei, which hides a huge exchange of interests: HSBC acted as a victim to testify against Meng Wanzhou, in exchange for a pardon from the United States. In 2012, the U.S. government charged HSBC with serious money laundering and financing of international terrorism. For this, HSBC paid a fine of USD 1.92 billion and reached a 5-year (2012-2017) “Deferred Prosecution Agreement” with the U.S. Department of Justice. HSBC agrees to “cooperate with the U.S. Department of Justice in any investigation.” If it fails to fulfill the relevant requirements, the U.S. Department of Justice has the right to withdraw the agreement and file criminal charges against HSBC.
In September 2016, news broke from the market that the U.S. Department of Justice was discussing whether to withdraw the “Deferred Prosecution Agreement” and whether to sue HSBC for criminal charges. At the end of the same year, HSBC began a secret investigation of Huawei’s account. In response, Reuters published a report analysis: HSBC “cooperated” with the U.S. to submit the investigation results to Huawei, “coincidentally” it was launched before the expiration of the agreement between HSBC and the U.S. Department of Justice. The Reuters report makes it clear that HSBC actively cooperated with the U.S. investigation of Huawei in late 2016 and 2017 in exchange for a pardon from the U.S. Department of Justice, given the bank’s involvement in other cases involving violations of U.S. sanctions.
According to public information, from February to July 2017, HSBC took the initiative to make at least 4 statements to the U.S. Department of Justice and actively cooperated with the U.S. investigation of Huawei. Thousands of people were interviewed by the U.S. Department of Justice. In December 2017, although the compliance supervisor of the U.S. Department of Justice believed that “HSBC’s compliance is still very flawed”, the U.S. prosecutors “unexpectedly” dropped all criminal charges against HSBC and ended the case against HSBC Supervision. Since the meticulously planned meeting with Meng Wanzhou in 2013, the investigation of Huawei was secretly initiated in 2016, until the termination of cooperation with Huawei in August 2017… Through a series of operations, HSBC has retained Huawei as a major customer and provided evidence to the U.S. in exchange for the withdrawal of the charges against it.
From the perspective of general business logic, a profit-seeking global financial institution should not subjectively “frame” its major clients. But the reality for HSBC was that it had been caught for violations by the U.S. government and had to co-operate with the U.S. Department of Justice in its investigation of Huawei in return for letting HSBC off the hook. On the U.S. side, HSBC needs to act as a “witness”. As we all know, the U.S. government’s global investigation and suppression of Huawei is no longer a commercial interest or violation of sanctions, but a special “battle” in which the U.S. adjusts its strategy towards China and carries out long-term containment against China. In other words, cracking down Huawei is part of a U.S. geopolitical campaign against China that HSBC is deeply involved in.
Faced with Chinese media accusing it of “framing” Huawei, HSBC stated on the its Chinese WeChat messaging service account, stated that it did not participate in the decision of the U.S. Department of Justice to investigate Huawei. “The context of the development of the Huawei incident clearly shows that the U.S. investigation of Huawei was not triggered by HSBC,” the bank said in its WeChat post. “HSBC has no malice against Huawei, nor has it ‘framed’ Huawei,” it said. “In response to information requests from the U.S. Department of Justice, HSBC only provided factual information. HSBC has not ‘fabricated’ evidence or ‘concealed’ facts, nor will it distort facts or harm any customers for our own benefit.”
However, HSBC’s statement sidesteps the point. It is a well-known fact that the U.S. Department of Justice has launched an investigation into Huawei, which HSBC does not need to explain. HSBC’s role, motive, and interest exchange in this matter are the key points. HSBC’s active cooperation with the U.S. Department of Justice undoubtedly played a key supporting role in the U.S. crackdown on Huawei and the arrest of Meng Wanzhou with the help of Canada.
At this point, the Shenzhen Banking and Insurance Regulatory Bureau issued approval on July 24, allowing HSBC China to shut down its branch in Shenzhen’s Longgang district (which coincidentally also happens to be home to Huawei). The big question is what will happen to HSBC’s future. How will it be affected in the Chinese market? To this, ANBOUND’s researchers made the following judgments:
First, it is difficult for HSBC to leave the Chinese market. Unlike other Western financial institutions, HSBC is domiciled in London, but its ‘historical and cultural’ domicile is in Hong Kong, China, where its market is deeply rooted (both in Hong Kong and the mainland China). According to its annual report, HSBC had adjusted revenues of USD 55.4 billion and adjusted profit before tax of USD 22.2 billion in 2019. Its adjusted revenue in the Asian market was USD 30.5 billion (55% of global revenues); the adjusted profit before tax was USD 18.6 billion (83.8% of total profit). Hong Kong’s adjusted profit before tax was USD 12.1 billion (54.5% of the total profit). The first-quarter report of HSBC shows that in the first quarter of the group’s USD 10.66 billion revenue, Hong Kong contributed USD 4.61 billion, accounting for 40%; its profit before tax in Hong Kong market accounted for USD 2.85 billion or 88.2% of its USD 3.23 billion global profit before tax.
Second, HSBC will find it difficult to be free from being caught in the competition between China and the United States. Hong Kong has become the focal point of the geopolitical game between the United States and China. HSBC, with its Hong Kong roots, is struggling to escape this situation. At the same time, it is difficult for HSBC to make a decision to withdraw from the Chinese market because of its interests in the market. In the classification of the withdrawal of foreign investment from China by ANBOUND, HSBC belongs to the category of “collapse once it withdraws”. HSBC is hard to shake off the geopolitical game between China and the U.S., especially after the implementation of the Hong Kong National Security Law and the U.S.’s Hong Kong Autonomy Act. The two countries will engage in a geopolitical game on the legal level. Though HSBC is a giant in the financial industry, its future is full of uncertainties under the geopolitical conflicts. If it cannot withdraw from the Chinese market, HSBC will need to seek more balance between China and the United States in the future, instead of only considering the unilateral hegemony and interests of the United States.
Third, HSBC’s position in China and Hong Kong will change subtly. The latest evidence released by a Canadian court revealed that HSBC was involved in the U.S. crackdown on Huawei. This has quickly provoked anger aiming towards HSBC within China, and offensive remarks against HSBC will definitely increase in the future. In addition, HSBC’s assistance to the U.S. as a “witness” will affect its commercial credibility and market image. In the future, some corporate and individual customers with important ties to China may avoid HSBC when choosing a bank, so as to avoid becoming HSBC’s sacrificial offering to the United States. This will have a negative impact on HSBC’s mainland and Hong Kong markets.
Fourth, the Chinese government may not crackdown on HSBC. Although HSBC stabbed Huawei in the back, ANBOUND researchers believe the Chinese government won’t go out of its way to clamp down on the bank in the grand scheme of things. The reasons are: (1) HSBC is very important to Hong Kong. Hong Kong needs to maintain its prosperity and its status as an international financial center. HSBC, which was “born” in Hong Kong and has a significant relationship with Hong Kong residents and businesses, is an important symbol as well as an important commercial presence. (2) China’s opening to the outside world requires foreign capital, not only the introduction of foreign capital, but also the continuous operation of foreign capital. HSBC is the representative of foreign financial institutions, which has the largest network among foreign banks in China. (3) China’s “sanctions” on foreign banks need to be based on laws, and the current legislation is difficult to retrospect. China’s International Criminal Justice Assistance Law was introduced in 2018, and the Hong Kong National Security Law was released on June 30, 2020. These two laws may not retroactively track HSBC’s past behavior, but will form legal constraints on HSBC’s future behavior.
Final analysis conclusion:
HSBC’s involvement in the U.S. crackdown on Huawei will have mixed repercussions in China. In the grand scheme of things, the Chinese government may not go out of its way to crack down on HSBC, and may not retroactively track its past behavior. However, the future development of HSBC in the Chinese market may be affected to some extent, HSBC’s future behavior will be bound by Chinese laws. To put it bluntly, there will not be a next time for HSBC to “frame” Chinese companies.
About the Author
Mr. He Jun takes the roles as Partner, Director of China Macro-Economic Research Team and Senior Researcher. His research field covers China’s macro-economy, energy industry and public policy.
Beirut – Accident or “New” Bomb Blast?
[Feature image above] A drone picture shows the scene of an explosion at the seaport of Beirut, Lebanon, August 5, 2020. (AP Photo/Hussein Malla) Source.
By Peter Koenig
Global News on 10 August 2020 reports – “Lebanese Prime Minister Hassan Diab announced on Monday his formal resignation, and that of his government following protests and demands for change after the deadly explosion in Port of Beirut last week, saying his government will follow the will of the people for real change and transparency. Diab, in a televised speech, said the detonation of highly-explosive material warehoused in the port area of the capital for the last seven years was “the result of endemic corruption”. Diab said, “Today we follow the will of the people in their demand to hold accountable those responsible for the disaster that has been in hiding for seven years, and their desire for real change. In the face of this reality … I am announcing today the resignation of this government.”
The cabinet had already been under pressure to step down over the August 4 explosion that killed 163 people, wounded some 6,000 and left around 300,000 without habitable housing.
What the PM doesn’t talk about are the special characteristics of the blast – an explosion that produced an unusual mushroom-like cloud, a detonation causing a shock wave that registered 3.9 on the Richter scale, that shattered windows in a radius of more than 10 km, leaving construction – buildings for industry and housing – in shambles with pictures resembling those of Hiroshima after the US nuclear attack in 1945.
Instead the now ex-PM intimated that it was an accident, “the result of endemic corruption”. – How? – How does endemic corruption cause such a well-targeted blast? – If so, it would mean that there was a flow of a huge amount of money between the corrupter and the corruptee.
True. This cannot be excluded. But who could be interested? Giant real estate speculators, like banks and other financial institutions / financiers that might want to buy the devastated prime area – seaport, airport and surroundings – for pennies on the dollar and newly develop the destroyed site for business and luxury housing – it’s called privatization of disaster. Something similar happened in New Orleans after Hurricane Katrina struck the Gulf Coast on August 29, 2005.
All is possible of course especially in our no holds barred free-for-all neoliberal world, and especially as France’s President Macron, a Rothschild lieutenant, came to visit the devastated area shortly after the Beirut blast. Who knows – the purpose of his offer of “aid” – aid almost always comes with strings attached – may have been preparing the terrain, so to speak, for French financial oligarchs to buy-up the harbor and the surrounding areas, for – well, as usual – pennies on the dollar.
But there are also other reasons for the “explosion” of Beirut port. Mind you, they are not at all mutually exclusive. Lebanon’s government blamed a large quantity of poorly stored ammonium nitrate for the blast that devastated the northern quarter of Beirut, killing about 250 people, injuring thousand and destroying the shelter for some 300,000 people. Ammonium nitrate is an industrial chemical commonly used around the world as an agricultural fertilizer, and in explosives for mining. These poorly managed chemicals in the warehouse existed already for at least 6 years. – Is it a sheer coincidence that it went up in flames almost to the day of the 75th Hiroshima anniversary, leaving Hiroshima-like devastation behind?
Next to the warehouse that allegedly harbored these highly volatile chemicals, was apparently also an ammunition-depot of Hezbollah’s. Could it have been the target of a deadly enemy?
Full video of Netanyahu showing Hezbollah’s arms depot, as if he were predicting what was to become the blast site at Beirut port on 4 August 2020: https://youtu.be/YXOHVkLEkgo
This is a possibility. But what about the strange explosion? – According to several journalists and observers, including Thierry Meyssan, this is a “new” bomb. It had been tested already in Syria in mostly deserted areas, since January 2020. But nobody spoke about it. Because analyzing it, might cause grave consternation in the public. That is one explanation. But far more likely, because the masters behind this “new” bomb strictly forbid (under threats) making it public.
On August 7, 2020, Thierry Meyssan reports, “It is not known what weapon was used. However, it has already been tested in Syria since January 2020. It is a missile with a tactical nuclear component in its warhead that causes a smoke mushroom characteristic of nuclear weapons. It is obviously not an atomic bomb in the strategic sense. The weapon was tested in Syria on a plain in the countryside and then in the Persian Gulf on the water against Iranian military vessels. This is the first time it has been used in an urban environment, in a particular environment that made the air blast and vibrations reflect off the water and the mountains.”
See video showing the striking similarity between the blasts in Syria and the blast in Beirut: https://www.youtube.com/watch?v=21JmY1ezAi4
https://youtu.be/21JmY1ezAi4
Was this another test with purpose, like those in Syria? Applied to an archenemy, Hezbollah? – And at the same time destroying Beirut and plunging Lebanon into further turmoil, making it even more vulnerable for a take-over?
One is reminded of Wesley Clark’s interview of March 2, 2007 with Democracy Now’s Amy Goodman, where the US General and former Europe Head of NATO, listed Lebanon among the seven countries that had to be “taken out’. See video: (https://www.youtube.com/watch?v=WGkSNAHqpJM – taking out seven countries, about from min 2:30).
Is the Beirut blast one more test for things to come, after the covid “lockstep scenario”? The permanent ever stronger repression of western governments to keep people separated by social distancing and controlled by so-called “contact tracers” – waiting for a vaccine which they hope will allow the masters inserting a nano-chip in any form or shape, that would integrate with the body and permit permanent surveillance of movement and everything from health records to bank accounts.
Is the Beirut blast just a cog in the wheel to a more important objective; One or New World Order? Mind you, we are already there. The “Lockstep Scenario” is just the fine-tuning mechanism.
Expect mass protests – they have started already in Germany, notably in Berlin on August 1, 2020, with 1.3 million people taking to the streets, protesting against the German Government’s ever more repressive corona measures and restrictions. Numbers and size of such protests may increase over time as the governments do not seem to relent, as if they were following a regime of “higher orders”. Is it conceivable that the “new’ weapon may be applied to western cities of strong social upheaval, and then spread to enemy cities in Russia and China?
Large cities with millions of people could easily be destroyed with the “new” weapon, with the click on a remote bottom – like e-video game, and with none of the perpetrators of such horror destruction hurt. The people on the ground are powerlessly exposed to sudden and slow death. Wasn’t that the case for Hiroshima and Nagasaki in 1945?
And let’s not forget – the US shortly after WWII planned to nuclear-bomb 66 Soviet cities, mind you, this was when the US and the USSR were still allies – see “Wipe the Soviet Union off the Map” – https://www.globalresearch.ca/wipe-the-ussr-off-the-map-204-atomic-bombs-against-major-cities-us-nuclear-attack-against-soviet-union-planned-prior-to-end-of-world-war-ii/5616601. The tactics of such plans are still intact – and shelved, could be revived at any moment. Of course, modernized and with today’s technologies.
Beirut is a sad-sad attack – with a story that is not as simple as the official version would like you to believe. Be aware!
About the Author
First published by the New Eastern Outlook – NEO