Too Big to Jail: HSBC and the Banking Scandal of the Century

If you live in the London area and read the Evening Standard newspaper, then you will likely know the author from his business articles and briefings that appear regularly in their Business section. His tracking of the history of HSBC through writing those columns seems to have been the genesis for this book. It covers how this global bank in pursuing growth at all costs between 2003 and 2010, lost its direction. Instead, it became the bank of choice for money laundering of their cash mountain by the rapidly growing Sinaloa drug cartel in Mexico under its ruthless head El Chapo.The story of how HSBC in making a bank acquisition in Mexico did not do its homework and took over a bank whose poor systems made it susceptible to the explosive growth of the need to move vast illegal narco-funds through US dollar markets was fatal enough. However, as the book covers numerous warning signs were visible but simply ignored by senior management if profits were generated for the bank. Add to this a bank culture where the use of tax havens was promoted to help conceal such funds and the subsequent growing interest by Mexican and USA authorities on what was happening, with the inevitable nemesis in major record-breaking financial fines being levied against the bank was inevitable.The book however makes clear, as its title implies, that this outcome was the direct result of meddling by UK government in protecting its major bank (George Osborne then the Chancellor of Exchequer does not come out well from this section). Most critically, the unwillingness to pursue criminal convictions by the various US agencies especially the Department of Justice who held all the evidence, meant that no prosecutions were ever instigated against any member of HSBC management despite all their failings.While the author gets all this story across well, the book’s main failing despite his depiction of duplicity and moral outrage against what the bank did, is to not address better the failings of the law in the prosecution of money laundering offences against delinquent senior management. Until that flaw in the law and its prosecution is addressed, the continuation of criminal acts being committed by financial institutions who if when caught only face financial fines is likely to continue.

I was engrossed in the almost unbelievable account of how this happened. Disturbing, but an education.

This is an outstanding book which tells the tale of HSBC’s facilitation of the Sinaloa drug cartel’s money laundering. The quantities of monies laundered and the scale of HSBC’s anti money laundering failures both beggar belief. We also get to hear about El Chapo and the brutality of the Sinaloa drugs ring.HSBC was eventually fined $1.9bn and signed a deferred prosecution agreement with the US department of justice, but avoided criminal prosecution. The author clearly believes HSBC got off lightly.While the author is scathing about HSBC management, and rightly so, he doesn’t explore in any great detail what really went wrong, beyond HSBC’s own banal explanation that the business grew too fast. Was the bank guilty of wilful neglect or an extraordinary level of incompetence? It’s probably the latter, but that begs other questions. Why had the bank been so highly regarded? Why weren’t there waves of sackings? Has the organisation become any more professional? Perhaps that’s a different book?

Well written, lucid and entertaining, albeit appalling. If this were a novel or a TV serial, the bad guys would eventually be brought to justice. Mr Blackhurst’s evident outrage that this has not been the case drives every page of this excellent book and elevates it somewhat above the general run of schadenfreude-laden business books about the incompetence and illegality of so much “big business”.

Anyone who is averse to economics or politics, or is worried that this book falls into Stephen Hawkins territory (i.e. looks impressive but is unreadable) can rest assured that Too Big To Jail is like a gripping thriller. People already familiar with Chris Blackhurst’s newspaper articles will know he is a very pragmatic and highly readable commentator on the financial and political world. He has that very rare ability to make economics interesting to the general reader. This is a book that deserves to become a film or docudrama. You will read this book slack jawed with amazement that first, the events took place at all, and that second, the guilty in the main escaped punishment. To put into context, think of any robbery or heist that has made the headlines. Even the very biggest of these involved the theft of well under one percent of the sums involved here. And the highest authorities in the land turned a blind eye. Not only that, they blocked the police from pursuing the matter. If I had to choose one book to illustrate what is rotten in our current economic world, this is it.

Part investigative journalism, part crime thriller, part moral parable for our times, this book is an absolute tour-de-force by experienced author, journalist and newspaper editor Chris Blackhurst. Meticulously-researched, Too Big to Jail is packed with enough compelling characters, shadowy deals and shocking revelations to keep you reading from the first page to the last.At the very heart of this book is a relationship between the ruthless Sinaloa Cartels, the shiny corporate world of HSBC and the grubbier end of British politics. It's a relationship that seems unlikely at first, until Blackhurst peels away the layers to demonstrate how dark money corrupts everything it touches.Like Mayer's 'Dark Money' or Michael Lewis' 'The Big Short', 'Too Big to Jail' seems destined to take pride of place in the pantheon of books that expose the sordid underbelly of corporate life. Blackhurst is a compelling writer with a highly readable style and the whole thing is just a thoroughly enjoyable read. I look forward to seeing what he does next!