The Dope Trade and the Crown: A Very-British Wealth of Nations

By Cynthia Chung

The following is from my newly published book “The Empire on Which the Black Sun Never Set.”

BCCI would not keep its title of “the largest bank fraud in world financial history” for very long.

2012 was a record-breaking year for bank fraud. Not only did HSBC pay the largest fine ever paid under the Bank Secrecy Act of $1.9 billion (USD) but the LIBOR scandal would occur a little over a week after. The Swiss bank UBS had to acknowledge its key role in perhaps the biggest antitrust/price-fixing case in history, the LIBOR scandal, a massive interest-rate­rigging conspiracy involving hundreds of trillion of dollars in financial products. As journalist Matt Taibi described it, the “LIBOR scandal, which is at the heart of the UBS settlement, makes Enron look like a parking violation.” Both HSBC’s and UBS’s settlements tied for the gold medal in “the biggest financial scam of all time.”

HSBC is a 19^th century British opium bank that was created with its headquarters in Hongkong-Shanghai, as part of the British conquest of China after it lost both Opium Wars, created to facilitate Britain’s trade in opium, something that it continues to be implicated in to this day. HSBC began to make unfavourable headlines when, in 2003, it was ordered by U.S. regulators to strengthen its anti-money-laundering practices and agreed to fix these problems. Instead, HSBC took part in one of the most notorious episodes in money laundering history.^[1] As the Mexican drug war metastasized in the mid-2000s, HSBC provided essential U.S. dollar-denominated accounts to narco-gangs who needed to clean hundreds of millions of dollars in drug earnings.

Again in 2010, HSBC was given a cease-and-desist court order by its primary regulator, the U.S. Office of the Comptroller of the Currency (OCC). HSBC again promised to make good on its anti-money laundering systems.^[2]

In the summer of 2012, the U.S. Senate investigative panel released its 339-page report^[3] on HSBC’s work with Mexican narco-gangs and its role in terrorist financing. The Justice Department and HSBC reached their deferred-prosecution agreement at the end of that year. In December 2012, HSBC was penalised $1.9 billion (USD), the largest fine under the Bank Secrecy Act, for violating four U.S. laws designed to protect the U.S. financial system.^[4] HSBC had allegedly laundered at least $881 million in drugs proceeds through the U.S. financial system for international cartels, as well as processing an additional $660 million for banks in U.S. sanctioned countries. According to the report, “The U.S. bank subsidiary [also] failed to monitor more than $670 billion in wire transfers and more than $9.4 billion in purchases of physical dollars from its Mexico unit.”^[5]

In a controversial decision, prosecutors declined to seek an indictment of HSBC but instead allowed it to pay a $1.9 billion settlement. Lanny Breuer, assistant attorney general at the time, stated: “HSBC is being held accountable for stunning failures of oversight – and worse…that led the bank to permit narcotics traffickers and others to launder hundreds of millions of dollars through HSBC subsidiaries and to facilitate hundreds of millions more in transactions with sanctioned countries.”[6]

HSBC agreed with the DoJ (Department of Justice) that it would serve five years of probation during which its efforts to prevent money laundering would be monitored by a court-appointed watchdog. The court named a former top New York state financial crimes prosecutor, Michael Cherkasky.^[7]

Both HSBC and U.S. authorities have vigorously fought to keep Cherkasky’s monitoring reports secret.^[8] In 2019, BuzzFeed News sued for the release of Cherkasky’s final report, arguing that the public’s interest in understanding the government’s handling of the HSBC case demands that it be unsealed. Spencer Woodman wrote for the International Consortium of Investigative Journalists in 2019 that “The Justice Department continues to fight to keep the Cherkasky report sealed and has sought repeatedly to delay preliminary hearings, citing the coronavirus pandemic. The suit is pending.”^[9]

It was later revealed that George Osborne, the former chancellor of the Exchequer^[10], had intervened to persuade the U.S. government not to pursue criminal charges against HSBC for allowing terrorists and Mexican drug dealers to launder millions of dollars. A congressional report published letters and emails from Osborne and Financial Services Authority (FSA) officials to their U.S. counterparts warning that launching criminal action against HSBC in 2012 could have sparked a “financial calamity”.^[11] The House financial services committee report said the UK interventions “played a significant role in ultimately persuading the DoJ not to prosecute HSBC”. Instead of pursuing a prosecution, the bank agreed to pay a record $1.92bn (£1.4bn) fine.^[12]

During the prosecution trial, HSBC acknowledged that for years it had ignored warning signs that drug cartels in Mexico were using its branches to launder millions of dollars. A December 2012 CNNMoney article compared the 1.9 billion dollars fine to HSBC's profit “last year” (in 2011) of 16.8 billion.^[13]

Leopoldo Barroso, a former HSBC anti-money-laundering director, told company officials in an exit interview that he was concerned about civil and criminal sanctions and that there were “allegations of 60 percent to 70 percent of laundered proceeds in Mexico” going through HSBC’s affiliate, according to the U.S. Senate report.^[14]

It was also discovered that HSBC had “ignored links to terrorist financing among its customer banks, including Riyadh, Saudi Arabia-based Al Rajhi Bank, which had ties to terror groups through its owners, according to the [Senate] report. Internal documents show HSBC decided to cut ties with the bank before reversing itself under pressure from Al Rajhi, which received shipments of $1 billion in cash from HSBC’s U.S. operation from 2006 to 2010, according to the [Senate] report.”^[15] HSBC’s U.S. unit “offers a gateway for terrorists to gain access to U.S. dollars and the U.S. financial system,” according to the Senate report. “HSBC has a legal obligation to take reasonable steps to ensure it is not dealing with banks that may have links to or facilitate terrorist financing.”[16]

Despite HSBS’s links as a facilitator of terrorist financing connected with Saudi banks, in February 2006 the Office of the Comptroller of the Currency (OCC) under President George Bush Jr. suddenly decided to release HSBC from its cease-and-desist order. In other words, HSBC had basically violated its parole 30 times and got off anyway. The bank was, to use the street term, “off paper” – and free to let the Al Rajhis of the world come rushing back.^[17]

Journalist Matt Taibi writes for Rolling Stone Magazine:^[18]

“After HSBC fully restored its relationship with the apparently terrorist-friendly Al Rajhi Bank in Saudi Arabia, it supplied the bank with nearly 1 billion U.S. dollars. When asked by HSBC what it needed all its American cash for, Al Rajhi explained that people in Saudi Arabia need dollars for all sorts of reasons. ‘During summer time,’ the bank wrote, ‘we have a high demand from tourists traveling for their vacations’.”

As already mentioned, the HSBC’s ‘too big to jail’ prosecution agreement with the U.S. Justice Department wasn’t the only big news to happen in 2012.

Matt Taibi writes:^[19]

“But the Justice Department wasn’t finished handing out Christmas goodies. A little over a week later, [Lanny] Breuer [who was the assistant attorney general for the HSBC 2012 case as well] was back in front of the press, giving a cushy deal to another huge international firm, the Swiss bank UBS, which had just admitted to a key role in perhaps the biggest antitrust/price-fixing case in history, the so-called LIBOR scandal, a massive interest-rate­rigging conspiracy involving hundreds of trillions…of dollars in financial products. While two minor players did face charges, Breuer and the Justice Department worried aloud about global stability as they explained why no criminal charges were being filed against the parent company.”^[20]

On December 19^th, 2012, the Justice Department essentially let the Swiss banking giant UBS off the hook for its part in what is likely the biggest financial scam of all time.

Matt Taibi writes:^[21]

“The so-called LIBOR scandal, which is at the heart of the UBS settlement, makes Enron look like a parking violation. Many of the world’s biggest banks, including Switzerland’s UBS, Britain’s Barclays and the Royal Bank of Scotland, got together and secretly conspired to manipulate the London Interbank Offered Rate, or LIBOR, which measures the rate at which banks lend to each other. Many, if not most, interest rates are pegged to LIBOR. The prices of hundreds of trillions of dollars of financial products are tied to LIBOR, everything from commercial loans to credit cards to mortgages to municipal bonds to swaps and currencies…These are the world’s biggest banks getting together every morning to essentially fix the price of money. Low LIBOR rates are an indicator that banks are strong and healthy. These banks were faking the results of their daily physicals. In banking terms, they were juicing.”

The U.S. Commodity Futures Trading Commission (CFTC) issued five Orders filing and settling charges against Citibank N.A. (Citibank), HSBC Bank plc (HSBC), JPMorgan Chase Bank N.A. (JPMorgan), The Royal Bank of Scotland plc (RBS) and UBS AG (UBS) (collectively known as ‘the Banks’ or ‘the Cartel’) for attempted manipulation of, and for aiding and abetting other banks’ attempts to manipulate, global foreign exchange (FX) benchmark rates to benefit the positions of certain traders. The Orders collectively imposed over $1.4 billion in civil monetary penalties, specifically: $310 million each for Citibank and JPMorgan, $290 million each for RBS and UBS, and $275 million for HSBC, which is peanuts compared to the annual profits of these banks.^[22]

In July 2016, the United States Department of Justice charged two executives (both British citizens) from HSBC Bank over an alleged $3.5 billion currency scheme which defrauded HSBC clients and “manipulated the foreign exchange market to benefit themselves and their bank”.^[23] Mark Johnson, a senior British banker of HSBC, was arrested at a New York City airport for currency benchmark rigging.^[24] He was later convicted of nine counts of wire fraud and conspiracy to defraud related to front running the currency trades of HSBC clients and sentenced to a mere two years in federal prison.^{[25] [26]}He was released after serving just three months in prison and was rather inexplicably allowed to return home to the U.K. while he pursued an appeal. November 2020 the U.S. Supreme Court declined to hear an appeal of his 2017 conviction, which was previously upheld by the United States Court of Appeals for the Second Circuit. It meant he would have to return to the U.S. to serve his sentence.^[27] In February 2021 a judge ruled that Johnson would not need to report to prison until he is vaccinated against COVID-19.^[28] It appears thus far that Mark Johnson has not had to return to prison since his initial release after just three months of incarceration.

Stuart Scott, who was HSBC's European head of foreign exchange trading in London until December 2014, was accused of the same crimes as Mark Johnson. A warrant was issued for Scott's arrest, but he successfully fled to Britain. In July 2018 the High Court of Justice ruled against extraditing him to the United States since most of the alleged crimes took place in Britain and because Scott has no significant connection to the United States. It appears Stuart Scott has avoided incarceration all together and that Britain has no desire to proceed with an investigation of their own.

In 2015, the UK Financial Conduct Authority (FCA) had fined five banks £1.1bn – the biggest penalty in the history of the City of London at the time – for failing to stop their traders manipulating the market.^[29]

In November 2012, it was reported that HSBC had set up offshore accounts in Jersey for suspected drug-dealers and other criminals, and that HM Revenue and Customs had launched an investigation following a whistle blower leaking details of £700 million allegedly held in HSBC accounts in the Crown dependency.^[30]

In 2013 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 $1.9 billion to settle the 2012 money-laundering probe. The Senate committee said that lax oversight by top HSBC executives gave terrorist and drug cartels access to the U.S. financial system.^[31] Comey was a non-executive director at HSBC from March to September 2013.[32] 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.^[33] (James Comey would resign from this position six months later to become the Director of the FBI from September 2013 to May 2017.)

Leaked records show HSBC processed at least $31 million between 2014 and 2015 for companies later revealed to have moved stolen government funds from Brazil; and more than $292 million between 2010 and 2016 for a Panama-based organization branded by U.S. authorities as a major money launderer for drug cartels.^[34]

In 2015, HSBC has been ordered to pay a record 40m Swiss francs (£28m) and been given a final warning by the Geneva authorities for “organisational deficiencies” which allowed money laundering to take place in the bank’s Swiss subsidiary. The settlement meant the Swiss would not prosecute HSBC or publish the findings of their investigation into alleged aggravated money laundering. Announcing the biggest financial penalty ever imposed by the Geneva authorities, Jornot launched a stinging attack on his own country’s financial laws, adding his voice to a growing a number of Swiss politicians and campaigners calling for reform of the country’s secretive banking system. The Geneva authorities said the payment, which was described as “compensation” rather than a fine, reflected the harm done to the city and the profits obtained by HSBC from processing illicit funds. Bank accounts back in Switzerland were manipulated to reimburse the drug dealers.

Explaining the decision not to bring HSBC to court, Jornot said Swiss law demanded a high standard of proof. Those laundering money had to be shown to be doing so deliberately, not accidentally, and the money had to be demonstrably obtained from criminal acts, not simply deposited by a known criminal! To fine the bank, prosecutors would also have needed to show organisational failure caused the money to be laundered.^[35] Although we have seen thus far, even if the bank were to be prosecuted, it would simply be asked to pay a relatively small fine (in comparison to its profit), since these banks were essentially ‘too big to jail’. At the end of the day you could have an airtight case proven culpability all the way to the top of the bank’s organizational structure, and it wouldn’t make any difference to how that bank would continue to operate the very next day.

In January 2018, HSBC Holdings Plc agreed to pay $101.5 million to settle a U.S. criminal probe into the rigging of currency transactions, which had already led to the conviction of one of its former bankers.^[36]

In 2018 South Africa's central bank fined HSBC's HSBA.L local business 15 million rand (844,927 pounds) for weaknesses in its processes meant to detect money laundering and terrorism financing, and ordered the bank to fix the problems.^[37]

In 2020, HSBC told AUSTRAC that it may have broken Australia's anti-money laundering and counter-terrorism laws after allegedly failing to report thousands of transactions to AUSTRAC.^[38]

In December 2021, HSBC (HSBA.L) had been fined 64 million pounds ($85 million) by British regulators for failings in its anti-money laundering processes spanning eight years. The Financial Conduct Authority (FCA) said it had found that three key parts of HSBC's transaction monitoring systems in Britain showed serious weaknesses over a period from March 31, 2010 to March 31, 2018.^[39] The FCA said HSBC had made a string of failings, including inadequate monitoring of money laundering and terrorist financing scenarios until 2014, and poor risk assessment of “new scenarios” after 2016.

And the list goes on and on and on…

But ‘alleged’ money laundering for terrorists and drug cartels, and benchmark rigging was not all HSBC was up to.

HSBC had announced in 1999 that it would purchase the Republic National Bank of New York for $10.3 billion cash, the biggest foreign takeover deal for an American banking company.^[40]

The New York Times writes:^[41]

“The purchase of the Republic New York Corporation…by HSBC…would double the size of HSBC's private-banking business. It would also give HSBC the third-biggest retail branch network in the New York region…

Banking industry analysts said the deal largely reflected HSBC's efforts to expand its highly profitable private-banking operations, which serve very wealthy clients. ‘Strategically it fits,’ said James Johnson, an analyst with Credit Lyonnais Securities. ‘It complements them in an area they have been pushing: wealth management’.

…Under the $72-a-share agreement, HSBC is buying the Republic New York Corporation and an affiliated company, Safra Republic Holdings S.A., the parent of banks that serve clients in havens like Switzerland, Luxembourg and Monaco.

HSBC has grown aggressively out of its roots in the colonial Hongkong and Shanghai Bank. It is now a major competitor in the business of managing money for the wealthy, a profitable business that helps offset the risks in such other operations as loans to emerging-market countries of Asia.

The deal would surpass the previous record for a foreign takeover of an American bank, the $10.1 billion purchase of Bankers Trust by Deutsche Bank announced late last year. It would also be HSBC's biggest purchase since it acquired Marine Midland Bank…for $6.1 billion...

…John Bond, HSBC's chairman, said: ‘The acquisitions we have announced today will bring together two complementary private banking franchises. At the stroke of a pen, it doubles the size of our consumer-banking operations in the United States, and it doubles the size of our private-banking business around the world’.”

As mentioned in The New York Times article, the purchase of the Republic New York Corporation which is the holding company for the Republic National Bank of New York, Safra Republic Holdings and Safra Republic Bank by HSBC was the largest since their acquirement of the New York Marine Midland Bank.

In fact, HSBC was attempting to acquire the Marine Midland bank as early as 1979, but the New York regulatory body refused to permit the transaction since it would be the largest foreign takeover in American banking history. “The [New York State’s banking] superintendent, Muriel Siebert, demanded detailed accounting of the HongShang’s [HSBC] hidden profits, silent subsidiaries, and other paraphernalia of money laundering, and refused the application when the Hong Kong institution predictably refused. HongShang was compelled to employ a subterfuge – ultimately sanctioned by Paul Volcker’s Federal Reserve Board – in order to consummate the takeover: it arranged for Marine Midland Bank, one of America’s largest, to change its status from a state-chartered to a nationally-chartered bank, in order to circumvent the regulatory powers of New York State. The Federal Reserve threw out the rule books and accepted the takeover of Marine Midland in early 1980, preferring to ignore the law and the banking regulator of American’s financial center, New York State, rather than jeopardize the plans of Dope, Inc.”[42] HSBC acquired 51% share of the holding company, Marine Midland Banks, Inc. in 1980 and full ownership by 1987. Marine Midland Bank was renamed HSBC Bank USA in 1999.

HSBC’s purchase of the Republic New York Corporation was also not free of controversy. The company was controlled by the billionaire Edmond Safra who was killed in a fire in his Monte Carlo home, some say by his nurse Ted Maher.[43]

The story gets much more eerie when looking into the background of Ted Maher. As a young man Maher needed the Army to pay for college, he did well in the military from Fort Bragg to Special Forces to the Green Berets.[44] Ted was a medic in the Special Forces and after the Army decided to return to school to become a nurse. Safra had employed a full staff of bodyguards who were highly trained officers from the Mossad, as per NBC News. As Maher’s version of the story goes, he was attacked by two masked men, sliced and stabbed with a knife, went unconscious but somehow was able to still warn Safra and his other nurse Vivan when he came to, that there were intruders, how did he reach them before the intruders is a bit of a mystery. Safra and Vivan locked themselves in a panic room, while Maher left and went straight to the hospital to be treated for his wounds, no mention of calling the police. The mansion was set on fire and Safra and Vivian along with it.[45]

HSBC acquired the Republic New York Corporation bank immediately after the death of Safra, sold for 40% below what the bank was worth.  

HSBC would go on to make record-breaking massive bank acquisitions throughout the late 1990s early 2000s, in France,^[46] Turkey,^[47] Mexico,^[48] China,^[49] Poland,^[50] Iraq,^[51] Taiwan,^[52] and Brazil.^[53] This list is by no means complete.

In 2006 HSBC “signed an agreement with Banca Nazionale del Lavoro SpA to acquire the latter's banking operations in Argentina, Banca Nazionale del Lavoro S.A. (BNL), for a consideration of US$155 million, to be met from internal resources within Argentina. HSBC Bank Argentina SA has 58 branches throughout the country providing a full range of banking and financial products and services, including commercial, consumer and corporate banking, to over 512,000 customers.”^[54]

Despite HSBC being based in the City of London, to this day, HSBC reserves the right to print Hong Kong money. Only two other agencies are also given this right, the Bank of China and Standard Chartered Bank (which is also a British multinational banking and financial services company headquartered in London).

The Bank of China is the only one of the three agencies that is a Chinese-owned bank.^[55] It is noteworthy that in September 2020, HSBC stocks plummeted when the Chinese government announced that the dope bank HSBC and Standard Charter would likely find themselves on the ‘Unreliable Foreign Entity List.’[56]

The London based Standard Chartered Bank has also been implicated in money laundering, where officers from HSBC and Standard Chartered Bank were caught in a 2013 sting operation going so far as “offering to launder money.”[57]

Hong Kong was only returned back to China in 1997, and HSBC up until that point had always been run under British economic policy. In fact, it largely continues to be run by Britain to this day. Thus, Hong Kong as one of the center points in the international trade of opium has been created and managed by British foreign policy and banking institutions. You can appreciate how over 150 years of British colonial dope pushing in Hong Kong institutions including its financial center will not be easy for China to shake Hong Kong out of.

The Dope Trade and the Crown: A Very-British Wealth of Nations

“We have no eternal allies, and we have no perpetual enemies. Our interests are eternal and perpetual, and those interests it is our duty to follow.”

-          Henry John Temple, aka Lord Palmerston (Britain’s Prime Minister from 1855-1858, 1859-1865), oversaw Britain’s First Opium War (1839-1842) as Head of Britain’s Foreign Office and the Second Opium War (1856-1860) as Britain’s Prime Minister against China.

The Hongkong and Shanghai Banking Corporation (HSBC) was established by London, as an outcome of Britain’s colonial acquirement of Hong Kong and Shanghai after the Second Opium War (1856-1860). Its headquarters had remained in Hong Kong until they were officially moved to London in 1993, just four years before Hong Kong was returned to China in 1997 at the end of its 99-year lease to Britain. That is, Hong Kong was the equivalent of a British colony for over 150 years.

In fact, Hong Kong and Shanghai had been in the possession of the British since 1842 after China lost the First Opium War (1839-1842). HSBC was created in 1865 to service the opium trade as a consequence of Britain winning the two Opium Wars against China which were fought over Britain’s desire to enforce the free trade of opium on the Chinese people, after Britain had destroyed India’s textile industry and forced it into a raw opium producer. India in turn would have no means of purchasing its required textiles from Britain, who now had a world monopoly on the textile and cotton trade, except from selling opium to China. India paid for its imported cloth and railway cars to carry the cloth and other British goods with the proceeds of Bengali opium exports to China. Without the final demand of Chinese opium sales, the entire world structure of British trade would have collapsed.

The British Empire had made a move towards a free trade system in the 1840s, modelled off on Adam Smith’s The Wealth of Nations. In this new system of trade it was believed that if there is a demand for a product, a country had no right to intervene in its transaction. Protectionism, which had been practiced by Britain up until that point, had now been deemed unfit by…Britain, and all other countries were naturally to follow along according to the ‘new rules’ chosen for them, excluding Britain of course, who continued to practice protectionism.

Created in 1600 with a Royal Charter from Queen Elizabeth I, the East India Company was from its inception indistinguishable from the British Empire itself, rising to account for half of the world’s trade. As is aptly said by Lord Macaulay in his speech to the House of Commons in July 1833, since the beginning, the East India Company had always been involved in both trade and politics, just as its French and Dutch counterparts had been.

In other words, the East India Company was to facilitate the geopolitical chess game that the British Empire wished to see played out. Not only the trade contracts it received but whole colonised territories won by the British Empire were handed over to this company to manage, along with a large sized private military, all under the decree of the Crown. This would be most evidently seen in the freedom it was given to control opium production in British India and to then facilitate its trade within Hong Kong and other colonised parts of Southeast Asia.

In the case of China, the trade of opium was ultimately banned by the Chinese, and severe punishments were to be delivered to those involved in smuggling the product into the country, which included British merchants. The British Empire considered this a direct threat to its ‘security’ and its new enforcement of free trade, thus when China did not back down, the First Opium war was waged. The result was the forced signing of the Nanking Treaty in 1842. This treaty, known as the first of the unequal treatises, ceded the territory of Hong Kong to Britain and allowed British merchants to not only trade at Guangzhou but were now also permitted to trade with five additional “treaty ports” and with whomever they pleased. In addition, Shanghai would also be largely taken over with the formation of the Shanghai International Settlement, which allowed for British settlements as well as the establishment of a British banking center.

Adam Smith wrote in his The Wealth of Nations:

“The servants of the company have upon several occasions attempted to establish in their own favour the monopoly of some of the most important branches, not only of the foreign, but of the inland trade of the country…In the course of a century or two, the policy of the English company would in this manner have probably proved as destructive as that of the Dutch…Nothing, however, can be more directly contrary to the real interest of those companies considered as the sovereigns of the countries which they have conquered…It is in [the sovereign’s] interest, therefore, to increase as much as possible that annual produce. But if this is the interest of every sovereign, it is peculiarly so of one whose revenue, like that of the sovereign of Bengal, arises chiefly from a land rent. That rent must necessarily be in proportion to the quantity and value of the produce, and both one and the other must depend upon the extent of the market.”

In the minds of British grand strategists of the 19^th century, the “produce” was opium.

To Lord Palmerston the arguments of Adam Smith about the virtues of free trade not only corresponded with Britain’s real interest but were intellectually unanswerable, that is, they were formed on ‘firm logic’ that simply could not be argued with. Showcasing this ‘grip on economic reality,’ Lord Palmerston wrote to Lord Auckland in January 1841 to explain why he was pushing China into war:

“The rivalship of European manufactures is fast excluding our productions from the markets of Europe, and we must unremittingly endeavour to find in other parts of the world new vents for our industry…if we succeed in our China expedition, Abyssinia, Arabia, the countries of the Indus and the new markets of China will at no distant period give us a most important extension to the range of our foreign commerce.”[58]

As Palmerston saw it, this was what was to shape British policy to save their slowly sinking empire from financial bankruptcy. It is what empires do best, to suck the life out of others.

Under direct sponsorship now of the Crown, Jardine Matheson and others fostered an epidemic of opium-trafficking into China. By the year of 1830, the number of chests of opium brought into China increased fourfold, to 18,956 chests. In 1836, the figure exceeded 30,000 chests. In financial terms, trade figures made available by the British and Chines governments showed that between 1829 and 1840, a total of 7 million silver dollars entered China, while 56 million silver dollars were sucked out by soaring rise in opium trade.[59] By 1830, opium was the largest commodity in world trade.[60]

In 1840, the Chinese Emperor, confronted with a drug addiction crisis that was destroying the Mandarin class and the nation, tried to restrict the British trading companies. Britain’s answer was war.

Out of the Second Opium War, HSBC was founded in 1865. A British-friendly bank needed to be created to facilitate trade in the region, connecting the Empire’s newly acquired treasures Shanghai and Hong Kong with British India (the major world producer of opium) along with the rest of the British Empire and Europe. This bank was not only meant to facilitate foreign trade within China however it deemed fit, but in addition was created namely to trade in the product of opium. It is important to note that although the founder of HSBC is credited as Thomas Sutherland of the Peninsular and Oriental Steam Navigation Company, a Scottish merchant who wanted the bank to operate under “sound Scottish banking principles”, the bank had been created from the start to facilitate trade on behalf of the British Empire.

DOPE Inc. writes: “The Southern cotton and slave trade were run to a significant degree by the same Scottish based families that also ran the opium trade in the Orient. The Sutherland family which was one of the largest cotton and opium traders in the South was first cousin to the Matheson family of Jardine Matheson. The Barings, who founded the Peninsular and Orient Steam Navigation Company that carried dope had been the largest investors in U.S. clipper shipping from the time of the American Revolution. The Rothschild family as well as their later ‘Our Crowd’ New York banking cousins the Lehmans and Lehman Brothers all made their initial entry into the United States through the pre-Civil War cotton and slave trade.”[61]

As Prime Minister Lord Palmerston fanned the flames for a second Opium War, The Times trumpeted their war cry:

“England, with France, or England without France if necessary…shall teach a lesson to these perfidious hordes that the name of Europe will hereafter be a passport of fear, if it cannot be of love throughout their land.”[62]

Barings[63] brothers was the premier merchant bank of the opium traffic from 1783 to recent years. Boston families were created out of the British opium trade such as the Cabots,[64] Lodes, Forbes, Cunninghams, Appletons, Bacons, Russells, Coolidges, Parkmans, Shaws, Codmans, Boylstons and Runnewells.[65]

DOPE Inc. writes: “[This] group’s leading banker became, at the close of the nineteenth century, the House of Morgan - which also took its cut in the Eastern opium traffic. Thomas Nelson Perkins, a descendant of the opium-and-slaves shipping magnate who founded Russell and Company, became the Morgan Bank’s chief Boston agent, through Perkins’s First National Bank of Boston…Morgan’s Far Eastern operations were the officially conducted British opium traffic. Exemplary is the case of Morgan partner Willard Straight, who spent the years 1901-12 in China as assistant to the notorious Sir Robert Hart, chief of the Imperial Chinese Customs Service, and hence the leading British official in charge of conducting opium traffic. Afterwards he became head of Morgan bank’s Far Eastern operations…Morgan’s case deserves special scrutiny from American police and regulatory agencies, for the intimate associations of Morgan Guaranty Trust with the identified leadership of the British dope banks. Jardine Matheson’s current chairman [in 1992] David Newbigging, the most powerful man today in Hong Kong, is a member of Morgan’s international advisory board. The chairman of Morgan et Cie., the bank’s international division, sits on the Council of the Royal Institute of International Affairs [aka Chatham House]. The chairman of Morgan Grenfell, in which Morgan Guaranty Trust has a 40 percent stake, - Lord Catto of Cairncatto, sits on the ‘London Committee’ of the Hongkong and Shanghai Bank.”[66]

Just as America’s wars on drugs and terror which ultimately was about dope pushing, Britain’s opium war on China would prove no different. Opium addiction entered the United States during the 19^th century as a direct consequence of Britain’s foreign policy. Adding to the opium addiction, British pharmaceutical houses had begun commercial production of morphine in the years leading up to the American Civil War and made large quantities available to both armies. The British firms misrepresented the morphine as a ‘nonaddictive’ painkiller and even had the audacity to push it as a cure for opium addiction.[67]

In 1911, an international conference on the narcotics problem was held at The Hague. The conference participants agreed to regulate the narcotics trade, with the goal in mind of eventual total suppression. The conference was a major step forward; in the early days of the dope trade, neither opium nor morphine were considered illegal drugs, and heroin would not be outlawed as a prescription drug until 1924. But this conference and subsequent efforts to stem the opium plague ran up against Britain’s open diplomatic posture on behalf of its unrestricted profiteering from a commodity known to destroy its consumers.[68]

Britain was able to avoid the Hague’s decision by evading dealing with China directly, and instead sending their opium to their extraterritorial bases, Hong Kong and Shanghai (which Britain considered not part of China but rather their colonial possessions). “Opium dens in the [British] Shanghai International Settlement jumped from 87 licensed dens in 1911 at the time of the Hague convention to 663 dens in 1914! In addition to the trafficking internal to Shanghai, the Triads and related British sponsored organized crime networks within China redoubled smuggling operations – conveniently based out of the warehouses of Shanghai. If anything, British profiteering from the opium trade jumped as the result of the reversion to a totally black-market production-distribution cycle.”[69]

DOPE Inc. continues: “It is obvious by now that an operation of this scope could not exist without the political approval of the British government nor without the gigantic supporting facilities of the world’s offshore credit markets, the world’s gold and diamonds trade, and ‘hands-on’ management of the retail distribution, or organized crime aspects of the operation. The Hongkong and Shanghai Bank’s governing body, the London Committee is the British oligarchy’s delegated group assigned to the Far East drug traffic…More specifically it is an economic warfare operation. Two of its directors J.H. Keswick - of the family that founded Jardine Matheson in 1828 to trade opium - and J.K. Swire - of the Swire family of hereditary opium traders - were senior officials in Britain’s Ministry of Economic Warfare during WWII. Another senior official of that ministry is Sir Mark Turner, the chairman of Rio Tinto Zinc the Hong Shang’s partner in numerous fields, including gold operations.  Turner is now a key figure [in 1992] in the Royal Institute of International Affairs, founded by Lord Alfred Milner, an earlier chairman of Rio Tinto Zinc.”[70]

The Royal Institute of International Affairs (RIIA) and its leading personnel control not only the Far Eastern drug traffic but every important dirty money operation on the surface of the globe. DOPE Inc. writes “…a concise summary of the RIIA’s purposes appears in its de facto founding document, Cecil Rhodes’s’ 1877 bequest. Rhodes, who founded both the gold and diamond mining empire that still dominates world markets under the aegis of Anglo-American and De Beers, and also founded the dope-trading Standard Bank (the African partner of the Asian-based Chartered Bank, since merged), is the starting point for the present form of the disease. Rhodes left his wealth to the Rhodes Trust, administered by Lord Milner. Milner’s collection of Oxford trainees, called the ‘Milner Kindergarten,’ made up most of the 1916 Lloyd George government, and formed the RIIA at a meeting in Versailles on May 30^th, 1919.”[71]

Rhodes’s 1877 will was:

“To establish a trust, to and for the establishment and promotion and development of a secret society, the true aim and object whereof shall be the extension of British rule throughout the world, the perfecting of a system of emigration from the Untied Kingdom and the colonization by British subjects of all islands wherein the means of livelihood are attainable by energy, labor, and enterprise, and especially the occupation by British settlers of the entire continent of Africa, the Holy Land, the valley of the Euphrates, the islands of Cyprus and Candia, the whole of South America, the islands of the Pacific not heretofore possessed by Great Britain, the whole of the Malay Archipelago, the seaboard of China and Japan, the ultimate recovery of the United States of America as an integral part of the British Empire, the consolidation of the whole Empire, the inauguration of a system of colonial representation in the Imperial Parliament which may tend to weld together the disjointed members of the Empire, and finally, the foundation of so great a power as to hereafter render wars impossible and promote the best interests of humanity.”[72]

The secret society concept was passed on by Milner, Rhodes’s successor as high commissioner in South Arica, through Milner’s trainees Lionel Curtis (of the Roundtable group) and Lord Robert Cecil [originator of the League of Nations]. Curtis and Cecil both participated in the May 1919 meeting at Versailles that founded the RIIA.

The Royal Institute of International Affairs is the secret society Cecil Rhodes had called for.

‘Hell is a city much like London’

“Hell is a city much like London”

– Percy Bysshe Shelley

Although Wall Street has contributed greatly to this sad situation, this banking hub of America is best understood as the spawn of the City of London.

The City of London is over 800 years old, it is arguably older than England herself, and for over 400 years it has been the financial center of the world.

During the medieval period the City of London, otherwise known as the Square Mile or simply the City, was divided into 25 ancient wards headed each by an alderman. This continues today. In addition, there existed the ominously titled City of London Corporation, or simply the Corporation, which is the municipal governing body of the City. This also still continues today.

Though the Corporation’s origins cannot be specifically dated, since there was never a ‘surviving’ charter found establishing its ‘legal’ basis, it has kept its functions to this day based on the Magna Carta. The Magna Carta is a charter of rights agreed to by King John in 1215, which states that “the City of London shall have/enjoy its ancient liberties”. In other words, the legal function of the Corporation has never been questioned, reviewed, re-evaluated EVER but rather it has been left to legally function as in accordance with their “ancient liberties”, which is a very grey description of function. In other words, they are free to do as they deem fit.

And it gets worse. The Corporation is not actually under the jurisdiction of the British government. That is, the British government presently does not have the authority to undermine how the Corporation of the City chooses to govern the largest financial center in the world. The City has a separate voting system that allows for, well, corporations to vote on how their separate ‘government’ should run. It also has its own private police force and system of private courts.

The Corporation is not just limited to functioning within the City. The City Remembrancer, which sounds more like a warped version of the ghost of Christmas past, has the role of acting as a channel of communication between the Corporation and the Sovereign (the Queen/King of Britain), the Royal Household and Parliament. The Remembrancer thus acts as a ‘reminder’, some would even say ‘enforcer’, of the will of the Corporation. This position has been held by Paul Double since 2003, it is not clear who bestows this non-elected position.

Mr. Double has the right to act as an official lobbyist in the House of Commons, and sits to the right of the Speaker’s chair, with the purpose of scrutinising and influencing any legislation he deems affects the interests of the Corporation. He also appears to have the right to review any piece of legislation as it is being drafted and can even comment on it affecting its final outcome. He is the only non-elected person allowed into the House of Commons.

According to the Memorandum from the City of London Corporation,^[73] the reason why the City has a separate voting system is because:

“The City is the only area in the country in which the number of workers significantly outnumbers the residents and therefore, to be truly representative of its population, offers a vote to City organisations so they can have their say on the way the City is run.”

However, the workers have absolutely no say. The City’s organisations they work for have a certain size vote based on the number of workers they employ, but they do not consult these workers, and many of them are not even aware that such elections take place.

If you feel like you have just walked through Alice’s Looking Glass, you’re not alone, but what appears to be an absurd level of madness is what has been running the largest financial center in the world since the 1600s, under the machinations of the British Empire.

Therefore, the question is, if the City of London has kept its “ancient liberties” and has upheld its global financial power, is the British Empire truly gone?

Offshore Banking: Adam Smith’s Invisible Hand?

Contrary to popular naïve belief, the empire on which the sun never sets (some say “because God wouldn’t trust them in the dark”) never went away.

After WWII, colonisation was meant to be done away with, and many thought, so too with the British Empire. Countries were reclaiming their sovereignty, governments were being set up by the people, the system of looting and pillaging had come to an end.

It is a nice story but could not be further from the truth.

In the 1950s, to ‘adapt’ to the changing global financial climate, the City of London set up what are called ‘secrecy jurisdictions’. These were to operate within the last remnants of Britain’s small territories/colonies. Of Britain’s 14 oversea territories, 7 are bona fide tax havens or ‘secrecy jurisdictions’. A separate international financial market was also created to facilitate the flow of this offshore money, the Eurodollar market. Since this market has its banks outside of the UK and U.S., they are not under the jurisdiction of either country.

By 1997, nearly 90% of all international loans were made through this market.

What is often misunderstood is that the City of London’s offshore finances are not contained in a system of banking secrecy but rather of trusts. The difference being that a trust ultimately plays with the concept of ownership. The idea is that you hand over your assets to a trustee and at that point, legally those assets are no longer yours anymore and you are not responsible for accounting for them. Your connection to said assets is completely hidden.

In addition, within Britain’s offshore jurisdictions, there is no qualification required for who can become a trustee: anyone can set up a trust and anyone can become a trustee. There is also no registry of trusts in these territories. Thus, the only ones who know about this arrangement are the trustee and the settler.

John Christensen, an investigative economist, estimates that this capital that legally belongs to nobody could amount to as high as $50 trillion within these British territories. Not only is this not being taxed, but a significant portion of it has been stolen from sectors of the real economy.

So how does this affect ‘formerly’ colonised countries?

There lies the rub for most developing nations. According to John Christensen, the combined external debts of Sub-Saharan African countries was $177 billion in 2008. However, the wealth that these countries’ elites moved offshore, between 1970-2008, is estimated at $944 billion, 5X their foreign debt! This is not only dirty money, this is also STOLEN money from the resources and productivity of these economies. Thus, as Christensen states, “Far from being a net debtor to the world, Sub-Saharan Africa is a net creditor” to offshore finance.

Put in this context, the so-called ‘backwardness’ of Africa is not due to its incapability to produce, but rather that it has been experiencing uninterrupted looting since these regions were first colonised.

These African countries then need to borrow money, which is happily given to them at high interest-rates and accrues a level of debt that could never be repaid. These countries are thus looted twice over, leaving no money left to invest in their future, let alone to put food on the table.

Offshore havens are what make this sort of activity ‘legal’ and rampant.

And it doesn’t stop there. Worldwide, it is estimated that developing countries lose $1 trillion every year in capital flight and tax evasion. Most of this wealth goes back into the UK and U.S. through these offshore havens and allows their currencies to stay strong whilst developing nations’ currencies are kept weak. However, developing nations are not the only ones to have suffered from this system of looting. The very economies of the UK and U.S. have also been gutted. In the 1960s and onward, the UK and U.S., to compensate for the increase in money flow out of their countries decided that it was a good idea to open their domestic markets to the trillions of dollars passing through its offshore havens.

However, such banks are not interested in putting their money into industry and manufacturing, they put their money into real estate speculation, financial speculation and foreign currency trade. And thus, the financialization of British and American economies resulted, and the real jobs coming from the real economy decreased or disappeared.

Although many economists try to claim differently, the desperation has boiled over and movements like the yellow vests are reflections of the true consequences of these economic policies.

We have reached a point now where every Western first world country is struggling with a much higher unemployment rate and a lower standard of living than 40 years ago. Along with increased poverty has followed increased drug use, increased suicide and increased crime.

A ‘Stable’ Economy based on Freedom or Slavery?

According to the European Monitoring Centre for Drugs and Drug Addiction (EMCDDA) report in 2017,^[74] the UK has by far the highest rate of drug overdose in all of Europe at 31% followed by Germany at 15%. That is, the UK consists of 1/3 drug overdoses that occur in all of Europe.

The average family income in the UK is presently around £28, 400. The poverty rate within the UK is ~20%. The average family income of what was once the epicentre of world industrialisation, Detroit, has an average family income of $26, 249. The poverty rate of Detroit is ~34.5%. What is the solution?

Reverse Margaret Thatcher’s 1986 Big Bang deregulation of the banking system that destroyed the separation of commercial banking, investment banking, trusts and insurance for starters. A similar restoration of Glass-Steagall[75] in the USA should follow suit, not only to break up the ‘Too Big to Fail’ banking system but to restore the authority of nation states over private finance once more. If these emergency measures were done before the markets collapse, and they will collapse, then the industrial-infrastructure revival throughout trans-Atlantic nations can still occur.

Let us hearken to the words of Clement Attlee, UK Prime Minister from 1945-1951:

“Over and over again we have seen that there is another power than that which has its seat at Westminster. The City of London, a convenient term for a collection of financial interests, is able to assert itself against the government of the country. Those who control money can pursue a policy at home and abroad contrary to that which is being decided by the people.”

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Cynthia Chung is the President of the Rising Tide Foundation and a writer at Strategic Culture Foundation, consider supporting her work by making a donation and subscribing to her substack page.

Footnotes: [for the footnotes please refer to Cynthia Chung’s Substack page below].

HSBC Never Left the Dope Trade Nor the Crown