HSBC's head honchos, chairman Douglas Flint and chief executive Stuart Gulliver, submitted themselves to humiliating self-criticism recently in Britain's parliament.
The two were summoned to the parliamentary commission on banking standards. HSBC's structure "was not fit for purpose for a modern world", Gulliver told the commission. "To be honest, our geographic footprint became very attractive to transnational criminal organisations, whether they are terrorist in origin or criminal in origin," he added.
HSBC was fined US$1.9 billion (HK$14.7 billion) for its lax money laundering controls in its US banking operations. The problem centred on Mexico, where its operations were liberally used by drug cartels. HSBC had bought a Mexican bank, but "there were things we were not aware of, standards we believed were being applied that were not", Flint told the commission.
Lai See recalls a senior HSBC banker saying much the same thing when asked how it was that HSBC got into such a mess with subprime lending in the US. "We had no idea what they were up to," the banker told us.