The Magnitsky Hoax: The U.S. Sanctioned Russia to protect Britain’s notorious offshore crime center: Part 1

Op-ed views and opinions expressed are solely those of the author.

A 2012 U.S. Senate investigation documented that the British bank HSBC laundered billions for the Mexican drug cartels whose narcotics cripple the United States; laundered hundreds of millions for mobsters looting Russia; provided cash flows to terrorists including 9-11 hijackers; and robbed American customers, investors and dying elderly persons.

The U.S. Senate’s exposure and call for legal action against HSBC was echoed by the Russian government’s crackdown on the bank’s Moscow subsidiary, the largest looter of Russia. The manager of HSBC’s Moscow unit, William Browder, activated U.S. Congress allies to push through legislation imposing sanctions against Russia for prosecuting the bank the Senate was exposing. The “Magnitsky Act” was introduced three days after the Senate’s earth-shaking report was issued.

Later in 2012, the Obama administration decided to protect HSBC with minimal penalties, and three days after that, Obama signed the Magnitsky Act into law, initiating economic warfare against Russia.

This was the start of a heightened offensive of the new Cold War that has since spiraled into a deadly danger to humanity. And the HSBC case had made it clear that in this conflict, the “West” was not promoting actual Western values, but openly criminal globalism.

HSBC – originally the Hong Kong and Shanghai Bank – was established in 1865 in Hong Kong, the colonial coastal enclave the British Empire had taken from China in the 1839-1842 Opium War. The British bank was notorious as the leading institution in the opium trafficking that continued into the 20th century.

In the 21st century, HSBC again became infamous for many crimes, especially for managing covert cash flows for narcotics cartels.

HSBC’s leaders pulled together crucial pieces of the apparatus used in this later criminal phase by purchasing other institutions from 1999 to 2002.

In May 1999, HSBC announced it would acquire the offshore-vectored interests of billionaire Edmond Safra — the Republic National Bank of New York, and the Swiss bank, Safra Republic Holdings — for $10.3 billion. Safra’s banks concentrated on placing the money of his wealthy clients beyond the reach of tax authorities and of law enforcers inquiring into the money’s sources.

Safra also specialized in Russian operations. When the Soviet Union collapsed, U.K. Prime Minister Margaret Thatcher and U.S. President George H.W. Bush had helped open up Russia to raw-materials looting and other gangsterism. Safra’s Republic National Bank of New York bought new $100 bills from the New York Federal Reserve Bank and shipped as much as a ton or more of them every night on a flight to Moscow.

Investigative reporter Robert I. Friedman wrote, “Russian banks…have purchased the $100 bills on behalf of clients, who typically pay for the cash with wire transfers from London bank accounts…. Federal authorities estimate more than $40 billion – all in uncirculated $100 bills…was shipped to Russia [from January 1994 to January, 1996] that far exceeds the total value of all the Russian rubles in circulation….” The cash “is used to finance the Russian mob’s vast and growing international crime syndicate…. The hundreds are also being used to fuel the Russian mob’s flourishing dollar-based global drug trade, as well as to buy the requisite villas in Monaco and Cannes…. More than a dozen Russian bankers have been killed since 1994 — one for simply refusing a loan.”

Safra’s $25 million seed money had established the Hermitage Capital Management company. It was to run complex financial investments in Moscow, under the direction of William Browder, grandson of the former head of the U.S. Communist Party, Earl Browder. Safra’s firm, through Browder, took billions out of Russia via offshore conduits.

In this period, the post-Soviet economy collapsed under Anglo-American-imposed austerity, and by the financial crimes of looters such as Safra. As a result, Russians suffered a sharp population decline.

The 1999 HSBC acquisition deal was put on hold as Republic National Bank of New York was investigated for bilking Japanese investors through complex offshore instruments and accounting tricks. Edmond Safra agreed to take a $450 million smaller personal share in HSBC’s buyout, to cover potential payments to regulators and ruined Japanese investors.

Edmond Safra was murdered in his fortified Monaco dwelling on December 3, 1999, the day after New York state regulators approved HSBC’s acquisition of Safra’s banks. His dozen machine-gun-armed former Mossad bodyguards had not protected him. Initially, police and media reported that two hooded intruders, suspected to be Russian mafia hit men, had set the fire that killed him. The story was later changed to blame Safra’s male nurse and to paint Safra as a whistleblower.

The Federal Reserve approved HSBC’s acquisition of Safra’s banks on December 6, 1999, three days after his murder.

The deal doubled HSBC’s private banking business to about 55,000 international private banking clients with $120 billion of funds under management.

Through HSBC’s offshore units in Guernsey and the Cayman Islands, HSBC now controls Hermitage Capital Management. Their Hermitage subsidiary was managed by its Moscow-based founder, William Browder, who was born in the U.S. but became a British citizen (the UK doesn’t tax offshore profits).

Hermitage became by far the largest foreign-owned investment fund in Russia, with (officially) $4 billion under management. Through it, HSBC siphoned billions out of that bleeding country.

HSBC had also taken over Republic National Bank’s client relationship with the Al Rajhi Bank of Saudi Arabia. Al Rajhi was a central part of the support structure for Osama bin Laden and the al Qaeda terror network, whose 9/11 terror attacks were then a year and a half in the future (see details in Part 2 of this story).

Another part of the deal was the Republic National Bank of New York’s unit in Mexico, which would give HSBC the beginning of a connection to the underground economy in that country.

HSBC moved swiftly to gain a dominant position in Mexico, and the British government acted as its enforcer, just as Lord Palmerston had done with his two 19th-century opium wars in China. In August 2001, Prime Minister Tony Blair visited Mexico as an advance party for HSBC. Blair and President Vicente Fox discussed promising investment possibilities and Mexico’s new role in the world.

Under pressure applied through the Mexican government, the bank Grupo Financiero Bital sold itself to HSBC Holdings a year later. The HSBC deal and earlier transactions by Citigroup and two Spanish banks put essentially the entire Mexican banking system under foreign control.

It should be noted that, like the old East India Company, HSBC is no mere private corporation. UK government bank regulators and watchdogs over terror financing served simultaneously as HSBC officers.

According to the U.S. Senate’s subsequent investigation, HSBC’s leaders checked beforehand to make sure they could readily use Bital for large-scale criminal money-laundering: “HSBC purchased a Mexican bank known as Bital in 2002. A pre-purchase review disclosed that the bank had no functioning [anti-money-laundering] compliance program, despite operating in a country confronting both drug trafficking and money laundering.”

One week after this ominous acquisition, Denise Holt presented her credentials as the new UK ambassador to Mexico. She later served (2011-2021) as a director of HSBC Bank PLC (UK) and as chairman of the HSBC subsidiary, M&S Bank.

Through Bital and its six million depositors, HSBC now controlled the nerve centers of Mexico’s financial system and its underground economy.

With these arrangements in place, hyper-violent Mexican narcotics cartels would use “Mexican and U.S. financial institutions to launder as much as $39 billion each year.”

HSBC would be the leading bank in this crime, through its New York offices and its Mexican branches (including Bital’s shell company in the Cayman Islands).

In November 2002, HSBC agreed to pay $16 billion to acquire predatory subprime mortgage lender Household International, the largest U.S. company specializing in bleeding borrowers with poor credit history.

Just one month before HSBC bought it, Household had agreed to refund $484 million to hundreds of thousands of its victims to settle charges that it deceived borrowers into paying mortgages at up to twice the promised interest rates.

Crime has been central to HSBC’s existence. The bank’s overall profits for the first half of 2003 increased by $651 million due to revenue through its new predatory lending unit, Household International, and by $272 million from its new money-laundering unit in Mexico. It was a total profit increase of 25% over the previous period, instead of less than 5% without these two acquisitions.

Through this pivotal acquisition, HSBC gave its blessing to the securitization of subprime mortgages in the USA. This type of mortgage scam took off to the stratosphere after the HSBC buy-in, helping inflate the speculative bubble that crashed the world economy five years later.

In November 2005, Russian authorities revoked HSBC’s Moscow manager William Browder’s visa, sent him back to London, and denied him future entry in the interest of “ensuring the security of the State, public order or public health.”

In the first 18 months after Edmond Safra started up Hermitage Capital Management, the fund had grown 800% to $1 billion. Its value collapsed in the late 1990s with Russia’s general economic disaster. But under HSBC’s offshore management, the fund ballooned so that someone putting in $10 million in 1996 would have $230 million by the time Browder was kicked out of Russia. The firm was charged with tax evasion.

Stephen Green, HSBC’s chief executive since 2003, and Jack Straw, Tony Blair’s Foreign Secretary, lobbied Russia’s government to restore Browder’s lofty status, to no avail. Green was promoted to chairman of HSBC in 2006 and would lead the bank through four more years of criminal money-laundering and management of the covert funds of the world’s wealthy. So, UK Prime Minister David Cameron ennobled him as Baron Green of Hurstpierpoint and appointed him as UK Minister of State for Trade and Investment.

In September 2008, the U.S. Department of Justice launched an investigation of HSBC’s Swiss private banking unit for helping wealthy Americans evade U.S. taxes – hiding $10 billion in offshore accounts undeclared to the Internal Revenue Service.

In the two years before the Senate Report came out, HSBC was fined for knowingly selling $1 billion in worthless securities to their unsophisticated customers; sued (for $9 billion) for pumping billions through offshore funnels into Bernard Madoff’s looting scheme; slapped with a restraining order to stop arranging customers’ tax-evading offshore transactions, and compelled to turn over the names of those they did it for; and fined and ordered to compensate the survivors after selling unwary residents of nursing homes securities that were calculated to pay off only after they died.