HSBC Hires Tax, Anti-Terror Chiefs for Controls Panel

HSBC Holdings Plc appointed former U.S. Deputy Attorney General James Comey and ex-U.K. tax chief Dave Hartnett to a panel to combat financial crime after the bank paid $1.92 billion to settle money-laundering probes.

Comey, who will be a non-executive director at HSBC, joins Bill Hughes, 62, ex-head of the Britain’s Serious Organised Crime Agency; Juan Zarate, a former George W. Bush administration counter-terrorism adviser, and former U.K. diplomat Nick Fishwick, 54, in providing advice, London-based HSBC said in a statement today.

Chief Executive Officer Stuart Gulliver’s attempts to reduce costs and improve profitability have been hurt by U.S. probes and by compensation claims from U.K. clients. A Senate committee said in July that lax oversight by top HSBC executives gave terrorists and drug cartels access to the U.S. financial system. The December settlement by Europe’s biggest bank by market value to end investigations into money laundering is the largest of its type reached in the U.S.

The financial system vulnerabilities committee “will provide invaluable guidance and advice as we strengthen our capabilities,” Gulliver, 53, said in the statement. “The caliber, status and experience of the individuals reinforce once more how seriously we are taking this.”

Drug Financing

The HSBC committee will provide guidance on anti-money laundering systems and controls, tax transparency, preventing terrorist financing and drug financing, the bank said.

Hartnett, 61, who was the top official at Her Majesty’s Revenue and Customs, told parliamentarians in October 2011 he “made a mistake” in agreeing to forgive Goldman Sachs Group Inc. of as much as 20 million pounds ($31.6 million) in taxes. The deal resulted in Goldman Sachs paying back taxes it owed on National Insurance payments for bankers’ bonuses, while forgoing interest payments.

Leonard Schrank, CEO of Swift, the bank-owned money-transfer service, from 1992 to 2007 will also advise the committee. In 2006, Swift was found by European Union privacy regulators to have broken privacy rules by giving records to U.S. counter-terrorism investigators.

Earlier this month, HSBC hired Ruth Horgan from KPMG LLP as global head of regulatory compliance after David Bagley quit in July over the lender’s failure to guard against money laundering.

Bagley was among HSBC executives who testified before the Senate’s Permanent Subcommittee on Investigations after the panel released a 335-page report describing a decade of compliance failures by the bank. A day before the settlement, HSBC appointed Robert Werner, previously head of the U.S. Treasury Department’s Office of Foreign Assets Control and Financial Crimes Enforcement Network, as head of group financial crime compliance and group money laundering reporting officer.

-- Editors: Jon Menon, Steve Bailey

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