HSBC: Impunity of the Oligarchs

In another shameful decision by the US Department of Justice, earlier this month federal prosecutors reached a deferred prosecution agreement (DPA) with UK banking giant HSBC, Europe's largest bank.

Shameful perhaps, but entirely predictable. After all, in an era characterized by economic collapse owing to gross criminality by leading financial actors, policy decisions and the legal environment framing those decisions have been shaped by oligarchs who quite literally have "captured" the state.

Founded in 1865 by flush-with-cash opium merchants after the British Crown seized Hong Kong from China in the aftermath of the First Opium War, HSBC has been a permanent fixture on the radar of US law enforcement and regulatory agencies for more than a decade.

Not that anything so trifling as terrorist financing or global narcotrafficking mattered much to the Obama administration.

As I previously reported, (here, here, here and here), when the Senate Permanent Subcommittee on Investigations issued their mammoth 335-page report, "U.S. Vulnerabilities to Money Laundering, Drugs, and Terrorist Financing: HSBC Case History," we learned that amongst the "services" offered by HSBC subsidiaries and correspondent banks were sweet deals, to the tune of hundreds of billions of dollars, with financial entities with ties to international terrorism and the grisly drug trade.

Charged with multiple violations of the Bank Secrecy Act for their role in laundering blood money for Mexican and Colombian drug cartels, as a sideline HSBC's Canary Wharf masters conducted a highly profitable business with the financiers of the 9/11 attacks who washed funds through Saudi Arabia's Al Rajhi Bank into accounts controlled by whomever controlled the hijackers.

While the media breathlessly reported that the DPA will levy fines totaling some $1.92 billion (£1.2bn) which includes $655 million (£408m) in civil penalties, the largest penalty of its kind ever levied against a bank, under terms of the agreement not a single senior officer will be criminally charged. In fact, those fines will be paid by shareholders which include municipal investors, pension funds and the public at large.

With some 7,200 offices in more than 80 countries and 2011 profits topping $22 billion (£13.6bn), Senate investigators found that HSBC's web of 1,200 correspondent banks provided drug traffickers, other organized crime groups and terrorists with "U.S. dollar services, including services to move funds, exchange currencies, cash monetary instruments, and carry out other financial transactions. Correspondent banking can become a major conduit for illicit money flows unless U.S. laws to prevent money laundering are followed." They weren't and as a result the bank's balance sheets were inflated with illicit proceeds from terrorists and drug gangsters.

Revelations of widespread institutional criminality are hardly a recent phenomenon. More than a decade ago journalist Stephen Bender published a Z Magazine piece which found that "99.9 percent of the laundered criminal money that is presented for deposit in the United States gets comfortably into secure accounts."

According to Bender: "The key institution in the enabling of money laundering is the 'private bank,' a subdivision of every major US financial institution. Private banks exclusively seek out a wealthy clientele, the threshold often being an annual income in excess of $1 million. With the prerogatives of wealth comes a certain regulatory deference."

Such "regulatory deference" in the era of "too big to fail" and its corollary, "too big to prosecute," is a signal characteristic as noted above, of state capture by criminal financial elites.

Indeed, HSBC's private banking arm, HSBC Private Bank is the principal private banking business of the HSBC Group. A holding company wholly owned by HSBC Bank Plc, its subsidiaries include HSBC Private Bank (Suisse) SA, HSBC Private Bank (UK) Limited, HSBC Private Bank (CI) Limited, HSBC Private Bank (Luxembourg) SA, HSBC Private Bank (Monaco) SA and HSBC Financial Services (Cayman) Limited. All of these entities featured prominently in money laundering and tax evasion schemes uncovered by the Senate Permanent Subcommittee in their report. Combined client assets have been estimated by regulators to top $352 billion (£217.68).

According to Senate investigators, HSBC Financial Services (Cayman) was the principle conduit through which drug money laundered through HSBC Mexico (HBMX) flowed. "This branch," Senate staff averred, "is a shell operation with no physical presence in the Caymans, and is managed by HBMX personnel in Mexico City who allow Cayman accounts to be opened by any HBMX branch across Mexico."

"Total assets in the Cayman accounts peaked at $2.1 billion in 2008. Internal documents show that the Cayman accounts had operated for years with deficient AML [anti-money laundering] and KYC [know your client] controls and information. An estimated 15% of the accounts had no KYC information at all, which meant that HBMX had no idea who was behind them, while other accounts were, in the words of one HBMX compliance officer, misused by 'organized crime'."

In fact, the "normal" business model employed by HSBC and other entities bailed out by Western governments fully conform to the "control fraud" model first described by financial crime expert William K. Black.

According to Black, a control fraud occurs when a CEO and other senior managers remove checks and balances that prevent criminal behaviors, thus subverting regulatory requirements that prevent things like money laundering, shortfalls due to bad investments or the sale of toxic financial instruments.

In The Best Way to Rob a Bank Is to Own One, Black informed us: "A control fraud is a company run by a criminal who uses it as a weapon and shield to defraud others and makes it difficult to detect and punish the fraud."

"Control frauds," Black reported, "are financial superpredators that cause vastly larger losses than blue-collar thieves. They cause catastrophic business failures. Control frauds can occur in waves that imperil the general economy. The savings and loan (S&L;) debacle was one such wave."

Indeed, "control frauds" like HSBC "create a 'fraud friendly' corporate culture by hiring yes-men. They combine excessive pay, ego strokes (e.g., calling the employees 'geniuses') and terror to get employees who will not cross the CEO." In such a "criminogenic" environment, the CEO (paging Lord Green!) "optimizes the firm as a fraud vehicle and can optimize the regulatory environment."

In their press release, the Department of Justice announced that HSBC Group "have agreed to forfeit $1.256 billion and enter into a deferred prosecution agreement with the Justice Department for HSBC's violations of the Bank Secrecy Act (BSA), the International Emergency Economic Powers Act (IEEPA) and the Trading with the Enemy Act (TWEA)."

"According to court documents," the DOJ's Office of Public Affairs informed us, "HSBC Bank USA violated the BSA by failing to maintain an effective anti-money laundering program and to conduct appropriate due diligence on its foreign correspondent account holders."

The DOJ goes on to state, "A four-count felony criminal information was filed today in federal court in the Eastern District of New York charging HSBC with willfully failing to maintain an effective anti-money laundering (AML) program, willfully failing to conduct due diligence on its foreign correspondent affiliates, violating IEEPA and violating TWEA."

However, "HSBC has waived federal indictment, agreed to the filing of the information, and has accepted responsibility for its criminal conduct and that of its employees."

In other words, because they accepted "responsibility" for acts that would land the average citizen in the slammer for decades, those guilty of "palling around with terrorists" or smoothing the way as billionaire drug traffickers hid their loot in the so-called "legitimate economy," got a free pass. In fact, under terms of the agreement DOJ's "deferred prosecution" will be "deferred" alright, like forever!

Why might that be the case?

The New York Times informed us that state and federal officials, eager beavers when it comes to protecting the integrity of a system lacking all integrity, "decided against indicting HSBC in a money-laundering case over concerns that criminal charges could jeopardize one of the world's largest banks and ultimately destabilize the global financial system."

Keep in mind this is a "system" which former United Nations Office of Drugs and Crime director Antonio Maria Costa told The Observer thrives on illicit money flows. In 2009, Costa told the London broadsheet that "in many instances, the money from drugs was the only liquid investment capital. In the second half of 2008, liquidity was the banking system's main problem and hence liquid capital became an important factor." Costa said that "a majority of the $352bn (£216bn) of drugs profits was absorbed into the economic system as a result."

Glossing over these facts, Times' stenographers Ben Protess and Jessica Silver-Greenberg, cautioned that "four years after the failure of Lehman Brothers nearly toppled the financial system," federal regulators "are still wary that a single institution could undermine the recovery of the industry and the economy."

"Given the extent of the evidence against HSBC, some prosecutors saw the charge as a healthy compromise between a settlement and a harsher money-laundering indictment. While the charge would most likely tarnish the bank's reputation, some officials argued that it would not set off a series of devastating consequences."

Devastating to whom one might ask? The 100,000 Mexicans brutally murdered by drug gangsters, corrupt police and Mexican Army soldiers whose scorched-earth campaign kills off the competition on behalf of Mexico's largest narcotics organization, the Sinaloa Cartel run by fugitive billionaire drug lord Chapo Guzmán?

"A money-laundering indictment, or a guilty plea over such charges," the Times averred, "would essentially be a death sentence for the bank. Such actions could cut off the bank from certain investors like pension funds and ultimately cost it its charter to operate in the United States, officials said."

Many of the same lame excuses for prosecutorial inaction were also prominent features in the British press.

The Daily Telegraph reported that the "largest banks have become too big to prosecute because of the impact criminal charges would have on confidence in them, Britain's most senior bank regulator has admitted."

"In a variant of the 'too big to fail' problem, Andrew Bailey, chief executive designate of the Prudential Regulation Authority, said bringing a legal action against a major financial institution raised 'very difficult questions'."

"'Because of the confidence issue with banks, a major criminal indictment, which we haven't seen and I'm not saying we are going to see… this is not an ordinary criminal indictment'," Bailey told the Telegraph.

Echoing Bailey, Assistant Attorney General Lanny Breuer said the decision not to prosecute HSBC was made because "in this day and age we have to evaluate that innocent people will face very big consequences if you make a decision."

This from an administration that continues to prosecute--and jail--low-level drug offenders at record rates!

"Breuer's argument is facially absurd," according to William K. Black. In a piece published by New Economic Perspectives, Black argues:

Prosecuting HSBC's fraudulent controlling managers would not harm anyone innocent other than their families--and virtually all prosecutions hurt some family members. Breuer claims that virtually all of HSBC's senior officers have been removed, so his argument is doubly absurd. Mostly, however, Breuer ignores all of the innocents harmed by the control frauds. SDIs [systemically dangerous institutions] that are control frauds are weapons of mass economic destruction that drive global crises and are the greatest enemy of 'free' markets. They are also the greatest threat to democracy, for they create crony capitalism. We are all innocent victims of these control frauds--and the Obama and Cameron governments are allowing them to commit their frauds with impunity from criminal prosecutions. The controlling officers get wealthy without fear of prosecution. The SDIs controlled by fraudulent officers have to purchase an indulgence, but the price of the indulgence is capped by the 'too big to prosecute' doctrine at a level that will not cause it any real distress. Breuer's and Bailey's embrace of too big to prosecute should have led to their immediate dismissals. Obama and Cameron should either fire them or announce that they stand with the criminal enterprises and their fraudulent controlling officers against their citizens.

As Rowan Bosworth-Davies, a former financial crimes specialist with London's Metropolitan Police observed on his web site, "When you get a bank which admits, like HSBC has just done, that it is nothing more than a low-life money launderer for Mexican drug kingpins, and when it serves powerful vested interests to get round internationally-ratified sanctions against rogue nations, what possible benefit is achieved by trying to pretend that they cannot be prosecuted and charged with criminal offences?"

"Oh, excuse me," Bosworth-Davies wrote, "it might impact the confidence they enjoy? Whose confidence, their Mexican drug traffickers, their international sanctions breakers, their global tax evaders, or the ordinary, law-abiding clients who are entitled to assume that their bank will obey the laws imposed on them and will provide a safe place of deposit?"

"Confidence," the former Met detective averred, "what bloody confidence can anyone have when they know their bank is an admitted criminal? When their money is deposited with a bank that breaks the criminal law at every possible opportunity, which cheats them at every turn, sells them fraudulent products, launders drug money, evades international sanctions, moves foreign oligarchs' tax evasion, safeguards the deposit accounts of Third World dictators and their families, then what is that confidence worth?"

Instead, as with the 2010 deal with Wachovia Bank, federal prosecutors cobbled together a DPA that levied a "fine" of $160 million (£99.2m) on laundered drug profits that topped $378 billion (£234.5bn).

Although top Justice Department officials charged that HSBC laundered upwards of $881 million (£546.5m) on behalf of the Sinaloa and Colombia's Norte del Valle drug cartels, federal prosecutors investigating the bank told Reuters in September that this was merely the "tip of the iceberg."

In fact, as Senate investigators discovered during their probe, the bank failed to monitor more than $670 billion (£415.6bn) in wire transfers from HSBC Mexico (HBMX) between 2006 and 2009, and failed to adequately monitor over $9.4 billion (£5.83bn) in purchases of physical U.S. dollars from HBMX during the same period.

Assistant Attorney General Lanny A. Breuer, said in prepared remarks announcing the DPA that "traffickers didn't have to try very hard" when it came to laundering drug cash. "They would sometimes deposit hundreds of thousands of dollars in cash, in a single day, into a single account," Breuer said, "using boxes designed to fit the precise dimensions of the teller windows in HSBC Mexico's branches."

While Breuer's dramatic account of the money laundering process may have offered a gullible financial press corps a breathless moment or two, a closer look at Breuer's CV offer hints as to why he chose not to criminally charge the bank.

A corporatist insider, after representing President Bill Clinton during ginned-up impeachment hearings, Breuer became a partner in the white shoe Washington, DC law firm Covington & Burling. From his perch, he represented Moody's Investor Service in the wake of Enron's ignominious collapse and Dick Cheney's old firm Halliburton/KBR during Bush regime scandals. Talk about "safe hands"!

Appointed as the head of the Justice Department's Criminal Division by Obama in 2009, Breuer presided over the prosecution/persecution of NSA whistleblower Thomas A. Drake on charges that he violated the Espionage Act of 1917 for disclosing massive contractor fraud at NSA to The Baltimore Sun.

More recently, along with 14 other officials Breuer was recommended for potential "disciplinary action" by the Justice Department's Office of the Inspector General over the Fast and Furious gun-walking scandal which put some 2,000 firearms into the hands of cartel killers in Mexico.

"A Justice official said Breuer has been 'admonished'" by U.S. Attorney General Eric Holder, "but will not be disciplined," The Washington Post reported.

Breuer had the temerity to claim that deferred prosecution agreements "have the same punitive, deterrent, and rehabilitative effect as a guilty plea."

"When a company enters into a deferred prosecution agreement with the government, or an non prosecution agreement for that matter," Breuer asserted, "it almost always must acknowledge wrongdoing, agree to cooperate with the government's investigation, pay a fine, agree to improve its compliance program, and agree to face prosecution if it fails to satisfy the terms of the agreement."

As is evident from this brief synopsis, when it came to holding HSBC to account, the fix was already in even before a single signature was affixed to the DPA.

Without batting an eyelash, Breuer informed us that HSBC has "committed" to undertake "enhanced AML and other compliance obligations and structural changes within its entire global operations to prevent a repeat of the conduct that led to this prosecution."

"HSBC has replaced almost all of its senior management, 'clawed back' deferred compensation bonuses given to its most senior AML and compliance officers, and has agreed to partially defer bonus compensation for its most senior executives--its group general managers and group managing directors--during the period of the five-year DPA."

Yes, you read that correctly. Despite charges that would land the average citizen in a federal gulag for decades, senior managers have "agreed" to "partially defer bonus compensation" for the length of the DPA!

As Rolling Stone financial journalist Matt Taibbi commented: "Wow. So the executives who spent a decade laundering billions of dollars will have to partially defer their bonuses during the five-year deferred prosecution agreement? Are you fucking kidding me? That's the punishment? The government's negotiators couldn't hold firm on forcing HSBC officials to completely wait to receive their ill-gotten bonuses? They had to settle on making them 'partially' wait? Every honest prosecutor in America has to be puking his guts out at such bargaining tactics. What was the Justice Department's opening offer--asking executives to restrict their Caribbean vacation time to nine weeks a year?"

"So you might ask," Taibbi writes, "what's the appropriate penalty for a bank in HSBC's position? Exactly how much money should one extract from a firm that has been shamelessly profiting from business with criminals for years and years? Remember, we're talking about a company that has admitted to a smorgasbord of serious banking crimes. If you're the prosecutor, you've got this bank by the balls. So how much money should you take?"

"How about all of it? How about every last dollar the bank has made since it started its illegal activity? How about you dive into every bank account of every single executive involved in this mess and take every last bonus dollar they've ever earned? Then take their houses, their cars, the paintings they bought at Sotheby's auctions, the clothes in their closets, the loose change in the jars on their kitchen counters, every last freaking thing. Take it all and don't think twice. And then throw them in jail."

But there's the rub and the proverbial fly in the ointment. The government can't and won't take such measures. Far from being impartial arbiters sworn to defend us from financial predators, speculators, drug lords, terrorists, warmongers and out-of-control corporate vultures hiding trillions of taxable dollars offshore, officials of this criminalized state are hand picked servants of a thoroughly debauched ruling class.

Writing for the World Socialist Web Site, Barry Grey observed: HSBC "was allowed to pay a token fine--less than 10 percent of its profits for 2011 and a fraction of the money it made laundering the drug bosses' blood money. Meanwhile, small-time drug dealers and users, often among the most impoverished and oppressed sections of the population, are routinely arrested and locked up for years in the American prison gulag."

"The financial parasites who keep the global drug trade churning and make the lion’s share of money from the social devastation it wreaks are above the law," Grey noted.

"Here, in a nutshell," Grey wrote, "is the modern-day aristocratic principle that prevails behind the threadbare trappings of 'democracy.' The financial robber barons of today are a law unto themselves. They can steal, plunder, even murder at will, without fear of being called to account. They devote a portion of their fabulous wealth to bribing politicians, regulators, judges and police--from the heights of power in Washington down to the local police precinct--to make sure their wealth is protected and they remain immune from criminal prosecution."

Regarding America's fraudulent "War on Drugs," researcher Oliver Villar, who with Drew Cottle coauthored the essential book, Cocaine, Death Squads, and the War on Terror: US Imperialism and Class Struggle in Colombia, told Asia Times Online, it is a "war" that the state and leading banks and financial institutions in the capitalist West have no interest whatsoever in "winning."

When queried why he argued that the "war on drugs is no failure at all, but a success," Villar noted: "I come to that conclusion because what do we know so far about the war on drugs? Well, the US has spent about US$1 trillion throughout the globe. Can we simply say it has failed? Has it failed the drug money-laundering banks? No. Has it failed the key Western financial centers? No. Has it failed the narco-bourgeoisie in Colombia--or in Afghanistan, where we can see similar patterns emerging? No. Is it a success in maintaining that political economy? Absolutely."

Equally important, what does the impunity shamelessly enjoyed by such loathsome parasites say about us?

Have we become so indifferent to officially sanctioned crime and corruption, the myriad petty tyrannies and tyrants, from the boardroom to the security checkpoint to the job, not to mention murderous state policies that have transformed so-called "advanced" democracies into hated and loathed pariah states, who we really are?

As the late author J. G. Ballard pointed out in his masterful novel Kingdom Come, "Consumer fascism provides its own ideology, no one needs to sit down and dictate Mein Kampf. Evil and psychopathy have been reconfigured into lifestyle statements."

Paranoid fantasy? Wake up and smell the corporatized police state.

Black Dossier: HSBC & Terrorist Finance

It's tough being the world's second largest bank.

HSBC, the London-based British multinational banking and financial services giant operates in 85 countries with 7,200 offices worldwide with assets totaling more than $2.6 trillion (£4.06tn).

They're also caught-up in serial scandals: the Libor interest rate-fixing scam, serious charges of drug money laundering as well as suspicions that bank officers "palled around" with terrorist financiers.

Founded in 1865 when the British Crown seized Hong Kong as a colony in the aftermath of the First Opium War, British merchants (today we'd call them drug lords) needed a bank to handle the brisk trade in the illicit substance and launched the Hongkong and Shanghai Banking Company Limited. Rebranded "HSBC" in 1991, the bank expanded at breakneck speed in the heady days after The Wall fell.

While some might call them a success story, exemplars of financial wizardry in tough economic times, more appropriately perhaps, we might borrow a term from Mafia lore to describe their preeminent position in the capitalist pantheon of corrupt institutions: juiced.

'Sorry, now Go Away'

Today, the "War on Drugs" rivals the "War on Terror" for top spot on the global hypocrisy index.

Moral equivalencies abound. After all, when American secret state agencies manage drug flows or direct terrorist proxies to attack official enemies it's not quite the same as battling terror or crime.

Pounding home that point, a new report by the Senate Permanent Subcommittee on Investigations accused HSBC of exposing "the U.S. financial system to a wide array of money laundering, drug trafficking, and terrorist financing risks due to poor anti-money laundering (AML) controls."

That 335-page report, "U.S. Vulnerabilities to Money Laundering, Drugs, and Terrorist Financing: HSBC Case History," (large pdf file available here) was issued after a year-long Senate investigation zeroed-in on the bank's U.S. affiliate, HSBC Bank USA, N.A., better known as HBUS.

Drilling down, we learned that amongst the "services" offered by HSBC subsidiaries and correspondent banks were sweet deals with financial entities with terrorist ties; the transportation of billions of dollars in cash by plane and armored car through their London Banknotes division; the clearing of sequentially-numbered travelers checks through dodgy Cayman Islands accounts for Mexican drug lords and Russian mafiosi.

From richly-appointed suites at Canary Wharf, London, the bank's "smartest guys in the room" handed some of the most violent gangsters on earth the financial wherewithal to organize their respective industries: global crime.

A case in point. In 2008 alone the Senate revealed that the bank's Cayman Islands branch handled some 50,000 client accounts (all without benefit of offices or staff on Grand Cayman, mind you), yet still managed to ship some $7 billion (£10.9bn) in cash from Mexico into the U.S. Now that's creative accounting!

Playing fast and loose with U.S. banking rules, Subcommittee Chairman Carl Levin (D-MI) said that by exploiting the bank's "poor AML controls, HBUS exposed the United States to Mexican drug money, suspicious travelers cheques, bearer share corporations, and rogue jurisdictions."

Describing a "compliance culture" that was "pervasively polluted for a long time," Levin said it "will take more than words for the bank to change course."

Yet weasel words and butt-covering were all that were proffered to the American people even before Senate hearings began. Bank spokesman Robert Sherman said in an emailed statement that HSBC "will acknowledge that, in the past, we have sometimes failed to meet the standards that regulators and customers expect. We will apologize, acknowledge these mistakes, answer for our actions and give our absolute commitment to fixing what went wrong."

Right on cue, chief compliance officer David Bagley dramatically fell on his sword during those hearings and resigned on camera. It was quite a performance even by Washington's tawdry standards.

Appearing contrite, Bagley told the panel: "Despite the best efforts and intentions of many dedicated professionals, HSBC has fallen short of our own expectations and the expectations of our regulators. ... I recommended to the group that now is the appropriate time for me and for the bank, for someone new to serve as the head of group compliance."

While there's no word yet just how big Bagley's golden parachute will be, it's a sure bet he won't spend a day in jail, nor for that matter will Lord Stephen Green, HSBC's former Chairman and Chief Executive Officer.

Between 2003-2010, Green tilled the helm after serial stints directing The Bank of Bermuda Ltd., HSBC Mexico, SA, HSBC Private Banking Holdings (Suisse) SA and HSBC North American Holdings Inc.; units which feature prominently in the scandal. Sensing perhaps that the jig was up, last year he joined David Cameron's Conservative government as Minister of State for Trade and Investment.

Unlike Pappy Bush who claimed to be "out of the loop" during the Iran-Contra guns-for-drugs affair, Green was fully apprised of bank shenanigans and the Senate published emails which prove it.

Cheekily however, while underlings take the fall, Green told The Daily Telegraph, "I do not believe that I have a case to answer other than in the important sense that as chairman and chief executive I was responsible for what the company did. HSBC has expressed regret for the failures. I share that regret."

The Telegraph noted that Green has not considered resigning from Cameron's government, saying he was "very engaged" with his current plum post.

Ironically enough, the current Baron of Hurstpierpoint is an ordained priest in the Church of England and the author of an inspirational tome, Good Value: Reflections on Money, Morality and an Uncertain World. And no, you can't make this stuff up!

The top spot is now occupied by Stuart Gulliver who, quicker than you can say "we're sorry," admonished employees to "do better" and expressed remorse over his firm's "unacceptable behavior." Never mind that before ascending the throne, Gulliver was director of HBUS, HSBC Latin American Holdings Ltd., and HSBC Bank Middle East Ltd., divisions that have raised more than an eyebrow or two amongst Subcommittee investigators.

Topping Bagley's Kabuki-lite performance with her own rendition of clown car camp, Irene Dorner, HBUS's President and CEO told the Senate: "We deeply regret and apologize for the fact that HSBC did not live up to the expectations of our regulators, our customers, our employees, and the general public. HSBC's compliance history, as examined today, is unacceptable. ... We've worked hard to foster a new culture that values and rewards effective compliance, and that starts at the top."

Bathos aside, it was a polite way of saying "let's move on" and get back to the business of lining our pockets; after all, it's what we do best.

'The past is never dead. It's not even past'

Years before hijackers slammed passenger planes into the World Trade Center and the Pentagon killing nearly 3,000 people, secret state agencies began to exploit the fraternal links between Osama bin Laden's Afghan-Arab database of disposable Western intelligence assets, also known as al Qaeda, and prominent financial institutions.

In his 1999 book, Dollars for Terror, journalist Richard Labévière relates how a former CIA analyst explained: "The policy of guiding the evolution of Islam and helping them against our adversaries worked marvelously well in Afghanistan against the Red Army. The same doctrines can still be used to destabilize what remains of Russian power, and especially to counter the Chinese influence in Central Asia."

Was a new Cold War dawning?

No. In fact, it was the same Cold War. Only this time it was tricked-out in seductive finery by denizens of Western think-tanks and on-the-make NGOs. In the age of spin and endless news cycles, they'd hit upon a splendid formula to pour the "old" imperialist wine into new bottles: "humanitarian intervention" and a "responsibility to protect."

It was a brilliant script. In the blink of an eye our media-saavy masters could "enhance democracy" and "reform markets," magically transforming publicly-owned resources into privately-held assets controlled by banks! That terrorist proxies would serve as walk-ons and help drive the final nail into the coffin of national sovereignty wasn't considered proper conversation in polite company.

Labévière wondered whether "the new forms of terrorism actually embody the highest stage of capitalism?" They did, and "the straw men of the bin Laden Organization's subsidiaries [were] very well received by the business lawyers of Wall Street and the Bahamas, by the wealth managers of Geneva, Zurich and Lugano, and in the hushed salons of the City of London."

Not so curiously perhaps, "the privatization of violence and the privatization of the economy has become paradigmatic." In fact, "apart from any religious purpose," Labévière wrote, "the 'Jihad' is gaining ground as a profitable activity. It becomes liable to all the mafioso devolutions, and sinks into pure banditry. In many cases, Islamist ideology is used as a wonder worker to paper over banditry in all its forms."

Bin Laden as a Mafia capo di tutti capi? It certainly was a novel reading of geopolitical machinations!

More to the point, if an "army marches on its stomach," who then are the money men who put food in their bellies and kalashnikovs in their hands?

Bankrolled by Saudi and Gulf banks with a wink, a nod and logistical support from their old friends, the CIA and the Pentagon, today's Green condottieri once again are on the march, wrecking havoc and sowing chaos, with particular attention paid to states targeted as official enemies by the Global Godfather. Just ask the Iraqis, Libyans and Syrians.

While the Senate report may have disclosed that HSBC turned a blind eye to terrorist financing among it correspondent banks, the Riyadh-based Al Rajhi Bank for one, Saudi Arabia's largest privately-held financial institution, such arrangements hardly flourished in a vacuum.

With assets totaling $59 billion (£92.5bn), the Al Rajhi's are amongst the wealthiest families in the Kingdom. Investigators found that after 9/11 "evidence began to emerge that Al Rajhi Bank and some of its owners had links to organizations associated with financing terrorism, including that one of the bank's founders was an early financial benefactor of al Qaeda."

While the Al Rajhi family deny any role in financing terrorism, they have declined "to address specific allegations made in American intelligence and law-enforcement records, citing client confidentiality," The Wall Street Journal reported back in 2007.

Journalist Glenn R. Simpson averred that "a 2003 CIA report claims that a year after Sept. 11, with a spotlight on Islamic charities, Mr. Al Rajhi ordered Al Rajhi Bank's board 'to explore financial instruments that would allow the bank's charitable contributions to avoid official Saudi scrutiny'."

"A few weeks earlier," the Journal disclosed, the Agency said that "Mr. Al Rajhi 'transferred $1.1 billion to offshore accounts--using commodity swaps and two Lebanese banks--citing a concern that U.S. and Saudi authorities might freeze his assets.' The report was titled 'Al Rajhi Bank: Conduit for Extremist Finance'."

Although U.S. law enforcement and secret state agencies "acknowledge it is possible that extremists use the bank's far-flung branches and money-transfer services without bank officials' knowledge," the Journal noted that CIA analysts had concluded that "senior Al Rajhi family members have long supported Islamic extremists and probably know that terrorists use their bank."

It goes without saying that one should always approach CIA reports with a healthy dose of skepticism, especially in light of the Agency's well-documented history of employing cut-outs such as al Qaeda as terrorist cats' paws.

Such reports however, lay a trail of bread crumbs that policy makers can either act upon or more likely, ignore. That senior Bush and Obama administration officials did nothing with this information, never mind the regulatory agencies charged to enforce anti-money laundering laws, is testament to the corrupt, bipartisan nature of American policy as a whole.

It also beggars belief that Lord Green or the bank's compliance officers were unaware of CIA allegations or that Britain's own foreign intelligence arm, MI6, hadn't apprised top officials of the risks involved. In fact, as we'll see below, HSBC's own internal documents prove otherwise.

Osama's 'Golden Chain'

There were certainly plenty of red flags flying which should have alerted bank officials.

In March 2002, al Qaeda's list of financial benefactors surfaced when computers were seized in Sarajevo at the Bosnian headquarters of the Benevolence International Foundation, "a Saudi based nonprofit organization which was also designated a terrorist organization by the Treasury Department."

Osama bin Laden, who held a Bosnian passport issued by the breakaway government fronted by Western "liberal interventionist" darling Alija Izetbegović during NATO's dismemberment of socialist Yugoslavia, was a supporter of the Nazi SS Handschar Division during World War II. Bin Laden referred to this group of financial angels as his "Golden Chain."

Additional evidence also emerged in 2002 during Operation Green Quest, a Treasury Department effort to "disrupt terrorist financing in the United States."

In March of that year, law enforcement officials raided the Herndon, Virginia offices of the SAAR Foundation "an Al Rajhi-related entity." Indeed, the name "SAAR" was an acronym for the organization's founder, Sulaiman Abdul Aziz Al Rajhi, the controlling partner of the Al Rajhi Bank.

Subcommittee investigators commented that "one of the 20 handwritten names in the Golden Chain document identifying al Qaeda's early key financial benefactors is Sulaiman bin Abdul Aziz Al Rajhi, one of Al Rajhi Bank's key founders and most senior officials."

An affidavit supporting the search warrants "detailed numerous connections between the targeted entities and Al Rajhi family members and related ventures. The affidavit stated that over 100 active and defunct nonprofit and business ventures in Virginia were part of what it described as the 'Safa Group,' which the United States had reasonable cause to believe was 'engaged in the money laundering tactic of 'layering' to hide from law enforcement authorities the trail of its support for terrorists."

Green Quest investigators were particularly keen on unraveling links between the SAAR Foundation and the Swiss Al Taqwa Bank, incorporated in the Bahamas in 1988 for "tax purposes."

Founded by Swiss Nazi sympathizer and convert to Islam, Albert Armand (Achmed) Huber, who professed admiration for both Adolph Hitler and Osama bin Laden, the bank was accused by U.S. officials in helping al Qaeda launder funds. Although the Treasury Department froze its assets in 2001, the investigation was shut down by the Bush administration before deeper linkages could be fully uncovered.

In 2011, a lawsuit was filed by insurance giant Lloyd's of London against Saudi Arabia which sought to recover pay outs to victims of the 9/11 attacks. The suit noted "that two individuals who were former executives at Bank al Taqwa, Ibrahim Hassabella and Samir Salah, were also associated with the SAAR Foundation."

At the time, The Independent reported that the legal claim suggested that defendants "'knowingly' provided resources, including funding, to al-Qa'ida in the years before the attack and encouraged anti-Western sentiment which increased support for the terror group."

According to court briefs, "Absent the sponsorship of al-Qa'ida's material sponsors and supporters, including the defendants named therein, al-Qa'ida would not have possessed the capacity to conceive, plan and execute the 11 September attacks. The success of al-Qa'ida's agenda, including the 11 September attacks themselves, has been made possible by the lavish sponsorship al-Qa'ida has received from its material sponsors and supporters over more than a decade leading up to 11 September 2001."

Senate investigators, citing Green Quest and Lloyd's case files, noted that "Mr. Hassabella was a former secretary of al Taqwa Bank and a shareholder of SAAR Foundation Inc. Mr. Saleh was a former director and treasurer of the Bahamas branch of al Taqwa Bank, and president of the Piedmont Trading Corporation which was part of the SAAR network. The U.S. Treasury Department has stated: 'The Al Taqwa group has long acted as financial advisers to al Qaeda, with offices in Switzerland, Liechtenstein, Italy and the Caribbean.' Regarding Akida Bank, the lawsuit complaint alleged that Sulaiman bin Abdul Aziz Al Rajhi was 'on the board of directors of Akida Bank in the Bahamas' and that 'Akida Bank was run by Youssef Nada, a noted terrorist financier'."

The report went on to state that "HSBC was fully aware of the suspicions that Al Rajhi Bank and its owners were associated with terrorist financing, describing many of the alleged links in the Al Rajhi Bank client profile."

As icing on the cake, a 2007 study published by the Congressional Research Service (CRS) also found that "Saudi individuals and other financiers associated with the Golden Chain enabled bin Laden and Al Qaeda to replace lost financial assets and establish a base in Afghanistan following their abrupt departure from Sudan in 1996."

Assets I might add, that were used to bankroll the 9/11 attacks.

'Keen to maintain the relationships'

HSBC's dubious links to the Al Rajhi Bank didn't end with information discovered in the "Golden Chain" files; it fact, they were the tip of the proverbial iceberg.

After 9/11, the FBI reported that three of the hijackers, Hani Hanjour, Nawaf Alhazmi and Abdulaziz Alomari cashed thousands of dollars in travelers checks and received wire transfers from an unnamed individual drawn on accounts at the Al Rajhi Bank.

As researcher Kevin Fenton pointed out in Disconnecting the Dots, links among most of the hijackers were discovered through their banking transactions. "In this context," Fenton wrote, "it is worth noting that Global Objectives, a British banking compliance company, identified fifteen of the nineteen hijackers as high-risk individuals and established database profiles for them before the attacks. ... The list of high-risk people maintained by Global Objectives was available to dozens of banks," a list that presumably also included HSBC.

While there is no evidence that HSBC, or for that matter the Al Rajhi Bank, had prior knowledge of the 2001 atrocity, the gross indifference exhibited by these institutions through their violation of "know your client" (KYC) rules governing financial transactions reveal a callous disdain for elemental norms as they raced to inflate their balance sheets come hell or high water.

Privileged communications amongst senior staff revealed they were well aware of the issues and risks involved, yet did worse than nothing, they lobbied that HSBC continue their arrangements with the Al Rajhi Bank.

Suspicions were such that senior staff "classified Al Rajhi Bank as a 'Special Category of Client' (SCC), its highest risk designation." This was done, Senate investigators noted, because the Kingdom was considered a "high risk country" and due to the fact Al Rajhi's largest shareholder, Sulaiman bin Abdul Aziz Al Rajhi was considered "a Politically Exposed Person (PEP)."

Internal HSBC documents also revealed that in 2002, that is, after the 9/11 provocation, "the International Private Banking Department asked to transfer [several] accounts to HSBC's Institutional Banking Department in Delaware which had superior ability to monitor account activity."

In fact, transferring Al Rajhi accounts to the bank's Delaware division would have just the opposite effect and bank officials knew it.

As journalist Nicholas Shaxson noted in his exposé of offshore banking, Treasure Islands, "Delaware is the biggest state provider of offshore corporate secrecy." Shaxson pointed out that Delaware's Chancery Court has a "'business judgement rule' under which courts should not second-guess corporate managers," thereby "granting corporate bosses extraordinary freedoms from bothersome stockholders, judicial review, and even public opinion."

So much for any alleged "superior ability to monitor account activity"!

HBUS's Joseph Harpster wrote an email, stating: "The most recent concern arose when three wire transfers for small amounts ($50k, $3k and $1.5k) were transferred through the account for names that closely resembled names, not exact matches, of the terrorists involved in the 9/11 World Trade Center attack. ... The profile of the main account reflects a doubling of wire transfer volume since 9/01, a large number of travelers checks but with relatively low value and some check/cash deposits. According to the account officer, traffic increased because they have chosen to send us more business due to their relationship with Saudi British Bank and the added strength of HBC versus Republic. ... Maintaining our business with this name is strongly supported by David Hodghinson of [Saudi British Bank] and Andre Dixon, Deputy Chairman of [HSBC Bank Middle East]. Niall Booker and Alba Khoury [of HBUS] also support."

Aside from adverse publicity, the "low value" of the transactions seemed not to have troubled Harpster or his associates in the least. After all, the total "cost" of murdering 3,000 human beings were certainly small compared to the price of a vacation home in the Hamptons or a new Maserati.

Anxious there might be increased scrutiny from regulators (no worries there!), Harpster's email was forwarded by Douglas Stolberg, the head of Commercial and Institutional Banking to Alexander Flockhart, then a senior executive in Retail and Commercial Banking at HBUS. Stolberg noted: "As we discussed previously, Compliance has raised some concerns regarding the ongoing maintenance of operating/clearing accounts for Al Rajhi group." He forwarded recommendations on how to handle the account: "Retain [International Private Banking] as the relationship manager domicile for continuity purposes, and as we understand there is interest in further developing private banking business with family members. ... Domicile the actual accounts with Delaware where HBUS's most robust account screening capabilities reside."

"Screening capabilities" which could be shielded from nosy regulators due to Delaware's strict bank secrecy laws.

Stolberg went on to state: "[T]his has become a fairly high profile situation. Compliance’s concerns relate to the possibility that Al Rajhi's account may have been used by terrorists. If true, this could potentially open HBUS up to public scrutiny and/or regulatory criticism. SABB [Saudi British Bank] are understandably keen to maintain the relationships. As this matter concerns primarily reputational and compliance risks, we felt it appropriate for SMC [Senior Management Committee] members to be briefed ... so that they may opine on the acceptability of the plan. Please advise how you would prefer us to proceed." (emphasis added)

According to Senate staff, "Mr. Harpster reported a week later that Mr. Flockhart had decided to transfer the accounts to HBUS in the Delaware office."

But HSBC weren't the only entities hoping to curry favor with the Kingdom. A 2009 Government Accountability Office (GAO) report went on to note that "certain performance targets set by the State Department had been dropped in 2009, such as the establishment of a Saudi Commission on Charities to oversee actions taken by Saudi charities abroad as well as certain regulations of cash couriers."

Although GAO "recommended that the United States reinstate the dropped performance targets to prevent the flow of funds from Saudi Arabia 'through mechanisms such as cash couriers, to terrorists and extremists outside Saudi Arabia,' the State Department's "most recent annual International Narcotics Control Strategy Report contains no information about Saudi Arabia's anti-money laundering or terrorist financing efforts."

One reason why the State Department's report contains "no information" just might be the Obama administration's policy of supporting Saudi-backed Salafi terrorists soon to come online in Libya and Syria, financed through "Saudi charities abroad" or more directly through "cash couriers."

'You'd better be making lots of money!'

The Senate disclosed that HSBC "provided Al Rajhi Bank with a wide range of banking services, including wire transfers, foreign exchange, trade financing, and asset management services."

"In the United States," investigators learned that "a key service was supplying Al Rajhi Bank with large amounts of physical U.S. dollars, through the HBUS U.S. Banknotes Department."

"The physical delivery of U.S. dollars to Al Rajhi Bank was carried out primarily through the London branch of HBUS, often referred to internally as 'London Banknotes'."

Indeed, "HBUS records indicate that the London Banknotes office had been supplying U.S. dollars to Al Rajhi Bank for '25+ years.' In addition to the London branch, HBUS headquarters in New York opened a banknotes account for Al Rajhi Bank in January 2001. The U.S. dollars were physically delivered to Al Rajhi Bank in Saudi Arabia."

"On one occasion in 2008," Senate staff reported, the head of HSBC Global Banknotes Department told a colleague: 'In case you don't know, no other banknotes counterparty has received so much attention in the last 8 years than Alrajhi.' Despite, in the words of the KYC client profile, a 'multitude' of allegations, HSBC chose to provide Al Rajhi bank with banking services on a global basis."

Even though the Al Rajhi Bank "had not been indicted, designated a terrorist financier, or sanctioned," HSBC's Group Compliance section recommended that affiliates should sever their ties.

After that initial decision however, "HSBC affiliates disregarded the recommendation and continued to do business with the bank, while others terminated their relationships but protested HSBC's decision and urged HSBC to reverse it."

Complaints by lower level staff continued, disregarded by higher-ups, even though a U.S. indictment was issued in February 2005 for two individuals "accused among other matters, of cashing $130,000 in U.S. travelers cheques at Al Rajhi Bank in Saudi Arabia" and then smuggling the cash to CIA-backed terrorists in Chechnya.

Although internal bank documents showed that officials decided to cut their ties to the Saudi financial institution, they reversed themselves when pressure was brought to bear by Al Rajhi officials. Between 2006 and 2010, Al Rajhi received shipments totaling more than $1 billion in physical cash in the lucrative banknotes business from HSBC's U.S. affiliate according to investigators. Officials at the Saudi bank "had threatened to pull all of its business from HSBC if the U.S. banknotes business were not restored."

Senate staff reported that on January 4, 2005, "HBUS AML Compliance head Ms. Pesce sent an email to Daniel Jack, an HBUS AML Compliance Officer who often dealt with the London Banknotes office, instructing him to: '[p]lease communicate that Group Compliance will be recommending terminating the Al Rajhi relationship.' Mr. Jack inquired as to when that recommendation would be made. She responded: 'I expect to see an email from Susan Wright today. She tells me that HBME [HSBC Bank Middle East] does not agree with Compliance and will not be terminating the relationship from the Middle East, but she/David B[agley] recommend that in light of US scrutiny, climate, and interest by law enforcement, we in the US sever the relationship from here'."

At the time, Susan Wright was "the Chief Money Laundering Control Officer for the entire HSBC Group. She reported to David Bagley, head of the HSBC Group's overall Compliance Department."

Senate investigators noted that the "documents do not explain why HSBC Middle East disagreed with the decision or why it was allowed to continue its relationship with Al Rajhi Bank, when HSBC's Group Compliance had decided to sever the relationship between the bank and other HSBC affiliates due to terrorist financing concerns."

It soon became clear however, that "HSBC Group Compliance began to narrow its scope." Shortly thereafter a trader in the Banknotes department wrote, "for us is business as usual." Alan Ketley, HBUS AML Compliance Officer commented on the decision not to include Al Rajhi Trading in their earlier decision to sever all ties: "Looks like you're fine to continue dealing with Al Rajhi. You'd better be making lots of money!"

Meanwhile, "Al Rajhi Bank communicated the threat to 'pull any new business with HSBC' unless given a 'satisfactory explanation' why HSBC had stopped supplying it with U.S. dollars via its relationship managers," the Senate disclosed.

In short order, it was business as usual.

Despite continuing allegations of terrorist financing swirling around Al Rajhi Bank, HBUS "continued to supply, through its London branch, hundreds of millions of U.S. dollars to Al Rajhi Bank in Saudi Arabia. In addition, at Al Rajhi Bank's request, HBUS expanded the relationship in January 2009, by authorizing its Hong Kong branch to supply Al Rajhi Bank with non-U.S. currencies, including the Thai bat, Indian rupee, and Hong Kong dollar." (emphasis added)

When concerns were raised internally once again, Christopher Lok, the head of HSBC's Global Banknotes Department in New York fired back: "This is an on-going debate that will never go away. My stance remains the same, i.e. until it[']s proved we cannot simply rely on the Wall Street Journal['s] reports and unconfirmed allegations and 'punish’ the client'."

Needless to say, Hong Kong's "arrangement" with Al Rajhi went forward.

Despite "troubling information" which should have led to HSBC's quick exit from the banknotes market, the Senate reported that "HBUS continued to supply U.S. dollars to the bank, and even expanded its business, until 2010, when HSBC decided, on a global basis, to exit the U.S. banknotes business."

• • •

In conclusion, one needn't be a "conspiracy buff" to posit a link from HSBC to Al Rajhi to "cash couriers" operating across the Middle East in support of a multitude of U.S.-Saudi-backed "regime change" gambits in play today; policies which "worked marvelously well in Afghanistan against the Red Army."

As investigative journalist Ed Vulliamy pointed out in The Observer, the issues involved here are wider than drug money laundering or terrorist finance. "It is about where banks, law enforcement officers and the regulators--and politics and society generally--want to draw the line between the criminal and supposed 'legal' economies."

Commenting on the HSBC scandal, Robert Mazur, a former Customs Department deep-cover specialist and author of The Infiltrator, who penetrated Medellín cartel money laundering operations during the prosecution and collapse of BCCI in 1991, told The Observer that "the only thing that will make the banks properly vigilant to what is happening is when they hear the rattle of handcuffs in the boardroom."

"The stark truth is," Vulliamy wrote, "the notion of any dichotomy between the global criminal economy and the 'legal' one is fantasy. Worse, it is a lie. They are seamless, mutually interdependent--one and the same."

U.S. Militarism & the Drug Trade: the Afghan Dossier

In The Politics of Heroin: CIA Complicity in the Global Drug Trade, whose 1972 edition the CIA tried to suppress, Alfred W. McCoy writes,

Although the drug pandemic of the 1980s had complex causes, the growth in global heroin supply could be traced, in large part, to two key aspects of U.S. policy: the failure of the DEA's interdiction efforts and the CIA's covert operations. By attacking heroin trafficking in separate sectors of Asia's extended opium zone in isolation, the DEA simply diverted heroin exports from America to Europe and shifted opium production from southern Asia to Southeast Asia and back again--raising both global consumption and production with each move. Moreover, the increasing opium harvest in Burma and Afghanistan, America's major suppliers were largely the product of CIA covert operations. [Alfred W. McCoy, The Politics of Heroin: CIA Complicity in the Global Drug Trade, Brooklyn, NY: Lawrence Hill Books, 1991 edition, p. 440]

Fast-forward 30 years. Writing in today's Guardian, Patrick Wintour informs us:

Afghanistan's opium economy will take up to 20 years to eradicate and require a £1bn investment from world leaders, according to a government study published yesterday. ... Its conclusions came as the UN produced fresh figures on the opium trade. The UN's Office on Drugs and Crime (UNODC) believes this year's crop will be similar to, or slightly lower than, last year's record harvest. ... In 2007 Afghanistan had more land growing drugs than Colombia, Bolivia and Peru combined.

This is the sad face of the "new" Afghanistan, "liberated" from the ISI-linked Taliban and hailed by the toxic Bush regime as the first "success" of its ballyhooed (and malign) "war on terror." Preoccupied with stoning uppity women, applying sharia "law" (fully the "moral equivalent" of Blackwater Christian Crusaders), censoring journalists or padding Dubai bank accounts with assets looted from the Afghan people, the puppet Karzai regime -- like the Taliban before it, and now -- have a limitless source of "product" on hand to fuel their rapacious appetite for boodle.

UNODC's chief, Antonio Maria Costa, commenting on the report warns, "Europe and other major heroin markets should brace themselves for the health and security consequences."

These consequences won't be long in coming.

The 102-page précis, compiled by the Department of International Development and the World Bank (dubious sources, to be sure), suggest what is needed to stem the flow of illicit drugs from the world's number one narco state are not more guns -- or U.S. Apache helicopter gunships -- but a concerted effort to rebuild Afghanistan's shattered economy.

But the likelihood of this happening any time soon, given America's propensity for shady alliances with far-right drug- and warlords, say in Colombia or Kosovo just for kicks, is virtually nil.

One might reasonably ask, what has become of the billions of dollars in "development" aid doled out by U.S., Asian and European taxpayers?

According to Anthony Fontenot and Ajmal Maiwandi, just about what one would expect from an American military and CIA "liberation" racket:

Amid the ruined mud-bricked buildings of a city that has been devastated by war and neglect, divided into sinister, heavily fortified, military compounds, and occupied by armed local and foreign mercenaries, stand randomly dispersed extravaganzas of glass-and-tile palaces: symbols of the plunder that currently provides the economic base for the "reborn" Kabul. One result of the so-called War on Terror in Afghanistan is that vast amounts of money are now pouring into luxury real estate. ["Capitol of Chaos: The New Afghanistan of Warlords and Infidels," in Evil Paradises, New York: The New Press, 2007, p. 69]

Yes, "luxury real estate." As if Kabul were a deranged subdivision in southern California, Afghan warlords and the local equivalent of the "Real Housewives of Orange County" loll in sumptuary excess. No matter that the masses of impoverished Afghan farmers and proletarians literally starve to death, their assets (such as they are in a society devastated by decades of war fought on behalf of foreign masters) expropriated by criminal gangs dressed to kill in Armani suits.

Fontenot and Maiwandi report:

As in many parts of the world dominated by chaos and the naked struggle for power, the eccentric Afghan aesthetic forged by businessmen, militia commanders, drug barons, and warlords represents the first signs of an emerging postwar order and pathology. ... a collage of generic international products fused with kitsch samplings of Afghan vernacular architecture and textile patterns, all of which reflect the schizophrenic psyche of a war-torn society. [op. cit. p. 75]

Such is the terminal logic of U.S. militarism, where CIA "specialists" and corporate mercenaries are the shock troops of a predatory capitalism gone wild. Like marauding Borg threatening to "assimilate" the entire planet to a cultural wasteland of shopping malls, the international drug traffic fuels an endless cycle of violence, where, in the immortal words of robber-baroness Leona Helmsley, "the little people" always pay the price.

Blowback in Karachi

Today's Asia Times Online reports that Pakistan's al-Qaeda affiliate is stepping up attacks against the regime of U.S.-allied dictator/president Pervez Musharraf. AToL's Pakistan Bureau Chief, Syed Saleem Shahzad writes:

Tuesday afternoon's fierce gun battle in this port city [Karachi] is stark evidence that al-Qaeda-linked sleeper cells have been activated against the Pakistani state.

At least three members of Jundullah (Army of God) were killed in the clash with police and paramilitary forces. Two policemen also died. One of the dead militants was the suspected leader of the cell, Qasim Toori, who was wanted in connection with previous deadly attacks in Pakistan.

Attentive readers will recall that Jundullah, led by Baitullah Mehsud and Islamic Movement of Uzbekistan chief, Tahir Yuldashev, have conveniently been accused of orchestrating Benazir Bhutto's assassination last year, on December 27. Both groups are affiliated with bin Laden and Zawahiri's Afghan-Arab database, al-Qaeda.

While the authorship of the assassination remains unclear, left-wing Pakistani sources believe Bhutto's murder was ghostwritten by far-right Islamist elements within Pakistani state security, notably the infamous Inter-Services Intelligence (ISI) and the shadowy Intelligence Bureau (IB).

According to Shahzad,

In recent weeks, Jundullah has become estranged from the main Taliban movement led by Mullah Omar, who insists that militant activities should be confined to Afghanistan, and not directed against Pakistan.

This might be plausible given that Pakistan's quest for "strategic depth" against its regional adversaries, notably India, Russia and Iran, banks on a long-range project to install a pliant regime in Kabul. The Afghan Taliban is loath to bite the hand that feeds it, and Omar, the semi-illiterate one-eyed jihadi commander has demanded that his "brothers" attack only U.S.-led NATO forces and refrain waging war on the Pakistani state itself.

In an interview with a Taliban spokesperson, AToL's Bureau Chief informs us,

Afghan Taliban spokesman Zabihullah Mujahid said that when the Pakistani Taliban began fighting against the United States and other allied forces who had occupied Afghanistan, they were united. But subsequently, he said, Baitullah and other Pakistani militants had started fighting the Pakistani military and "we have cut all ties with them and openly disown them".

The Pakistani Taliban in North Waziristan have already agreed on a ceasefire with Pakistan, and are expected to make an announcement to this effect within a few days.

By stoking ethnic and regional tensions, Pakistan hopes to bend the Afghan jihadis in their direction thus undercutting al-Qaeda. This is hardly a new policy, and like earlier schemes cooked-up by Islamabad is likely to fail. According to author Michael Griffin's incisive study, Reaping the Whirlwind: Afghanistan, Al Qa'ida and the Holy War [London: Pluto Press, 2003]:

The hands of Pakistan and, to a lesser extent, the US and Saudi Arabia in the formation of the first post-Soviet government was, in effect, to guarantee that it would fold. ... But despite a decade of Pakistan and US planning, there was no government-in-waiting to fill the vacuum left by the PDPA [People's Democratic Party of Afghanistan]. It had to be created from scratch, supervised by the ISI, the CIA and Saudi intelligence service from political elements initially selected for funding and fighting on the basis that they served the best interests of Pakistan, not Afghanistan. [p. 21.]

Since the U.S./Pakistan/Saudi orchestrated intervention against the leftist PDPA Afghan government thirty years ago, Islamabad has gambled it can control the far-right über Islamist forces they have set in motion. Clearly, they have badly miscalculated. With the United States demanding military access to the semi-autonomous federal tribal regions, the prospect of permitting U.S. Special Forces and CIA paramilitary operatives leeway to launch attacks independent of Pakistani government control has boxed-in the Musharraf regime between the devil and the deep, blue sea.

Now, it appears, al-Qaeda aligned militants are stepping-up their campaign for a regressive "caliphate" inside the Pakistani heartland itself. Shahzad writes,

The police were tipped off about the presence of a group in the eastern part of the city called Landhi which had been involved in a large bank robbery. The police launched a raid against what they thought was a bunch of criminals, and to their horror were fired on by light machine guns.

Clearly, these were no ordinary robbers, as their weapons and fighting skills quickly demonstrated. After three hours, the paramilitary Rangers were called in, but by then two policemen had been killed.

Though only a small skirmish in a wider war, Tuesday's gun battle with police is an ominous sign of things to come. Whether or not al-Qaeda will tip the balance against the Pakistani state remains to be seen. Much of the Pakistani population despise bin Laden's medieval hordes and have demonstrated time and again they have little patience for an autocratic, priest-ridden regime, especially one backed up by Washington and the armed-fist of the capitalist state.

In the short term, however, Pakistan's disastrous alliance with the U.S. and Saudi Arabia against its own people has already led to an effective split within the ranks of the Army and its various intelligence arms, with an unknown proportion of officers and security operatives dead set against rolling-up the criminal and terrorist networks they had launched.

Shortly before his brutal torture and execution by the Taliban, former PDPA leader Najibullah told an American reporter,

We have a common task -- Afghanistan, the USA and the civilised world -- to launch a joint struggle against fundamentalism. If fundamentalism comes to Afghanistan, war will continue for many years. Afghanistan will turn into a centre of world smuggling for narcotic drugs. Afghanistan will be turned into a centre for terrorism. [Griffin, p. 4.]

The proverbial chickens, with careful guidance from Washington, have now come home to roost not only, however, in Afghanistan...