HSBC’s apology reads like admission of sleeping management

Despite scoring high on soundbites, the bank chiefs’ statements on money laundering mistakes lacked insight about slowness

HSBC’s apology scored well on length and soundbites. Chairman Douglas Flint devoted most of his three-and-a-half-page statement to “the mistakes of the past” and what the bank has learned, especially in Mexico, where the money laundering controls were most lax. Chief executive Stuart Gulliver followed up with a liberal sprinkling of words such as “shameful” and “embarrassing” and a pledge that the bank “gets it”.

How about insight? Are we wiser about how HSBC could come to be accused by a US senate committee of having a “pervasively polluted” culture? That’s harder to say since one part of the official explanation is that the bank had the wrong structure. The loose federation, we are told, meant too many national fiefdoms were tolerated and the central function was baffled by complexity. Hold on, though, HSBC had been run as a federation since 1865. What caused the system to go wrong after 140 years?

One ingredient may have been the slowness of the bank – or banks, since HSBC is not alone here – in recognising that US authorities, in their effort to combat drug-trafficking, would expect big players in the financial system to play their part. That seemed to be the meaning of Flint’s statement that “as those who seek to exploit the financial system constantly adapt their approach we need to be tireless and more innovative in our own efforts to stop them”.

But, viewed in the context of the money-laundering revelations that ran from 2004-10, that reads like an admission that management was asleep for years. It’s not just that HSBC had the wrong structure – it’s also that the board took an age to wake up to the problem. Flint and Gulliver, both long-serving senior officers of the bank, would have done better to spell that out. After a provision of $700m (and perhaps more to come), investors had a right to expect a more substantial account of where and when mistakes could have been spotted earlier by the board. That was the missing element in HSBC’s apology. © 2012 Guardian News and Media Limited or its affiliated companies. All rights reserved. | Use of this content is subject to our Terms & Conditions | More Feeds

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