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Beijing Puppet and British Treasury Boss George Osborne Threatened U.S. with Catastrophic Financial Warfare to Protect HSBC, UK’s Biggest Bank, from Criminal Charges of Money Laundering for Terrorists and Drug Cartels, Loss of U.S. Banking License

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Morning Briefing | Wednesday, July 13, 2016

China Rejects Verdict by U.N.’s Hague Court, Re-Affirms Intent to End Freedom of Navigation in Strategic South China Sea; Discredited and Aggressive Clique Around President Xi Negating Rights of Philippines, Taiwan, Vietnam, Indonesia, South Korea, Malaysia, Japan and Rest of World Who Use International Waterway


Map of South China Sea, the international waterway which President Xi and Premier Li of Beijing are trying to arrogate to as a means of compensating for their growing unpopularity at home due to pro-free market incompetence and failure in managing the economy. Note the 9-dash line reflecting Beijing’s exorbitant maritime claims.
George Osborne
British Chancellor of the Exchequer George Osborne, the main negotiator of the British-Chinese alliance against the United States. Osborne used shameless blackmail about a world financial panic to get Obama administration weaklings to back down from lodging criminal charges against the top UK bank HSBC (successor of the Hong Kong Shanghai Banking Corporation, the classic British drug money laundromat since the Opium Wars of the 1840s). Osborne will soon visit Beijing again to work out new post-Brexit plans for anti-US actions.

For those curious to see what the world will look like under the worldwide Chinese-British alliance, the last few days have brought some appalling revelations. First, a report prepared by Republican committee staff in the House of Representatives has revealed that the notoriously pro-Chinese British Chancellor of the Exchequer George Osborne used the threat of a worldwide financial panic, systemic crisis, and economic breakdown to coerce Obama administration officials into dropping their plans for criminal charges against Britain’s largest bank, the infamous HSBC, for the bank’s role in the money laundering for terrorists and drug cartels.1

These events occurred in 2012 when the US was represented by Treasury Secretary Geithner, Attorney General Eric Holder, and Chairman Ben Bernanke of the Federal Reserve System. These feckless officials were threatened by Osborne with a “financial calamity” and a “global financial disaster” in the eventuality that HSBC or its executives were to be hit by a criminal indictment. According to the London Guardian:

‘The US government decided not to pursue criminal charges against HSBC for allowing terrorists and drug dealers to launder millions of dollars after George Osborne and the UK banking regulator intervened to warn that prosecuting Britain’s biggest bank could lead to a “global financial disaster.” On Monday, a congressional report published letters and emails from Osborne and Financial Services Authority (FSA) officials to their US counterparts warning that launching criminal action against HSBC in 2012 could have sparked a “financial calamity”. The House financial services committee report said the UK interventions “played a significant role in ultimately persuading the DoJ [Department of Justice] not to prosecute HSBC”. Instead of pursuing a prosecution, the bank agreed to pay a record $1.92bn (£1.4bn) fine. The report revealed that Osborne wrote to Ben Bernanke, who was then the Federal Reserve chairman, and Timothy Geithner, the then treasury secretary, to warn that prosecuting a “systemically important financial institution” like HSBC “could lead to [financial] contagion” and pose “very serious implications for financial and economic stability, particularly in Europe and Asia.” … The 2012 settlement detailed how Mexico’s Sinaloa drug cartel and Colombia’s Norte del Valle cartel laundered $881 million through HSBC and a Mexican unit. In some cases, Mexican branches had widened tellers’ windows to allow big boxes of cash to be pushed across the counters..’2

According to the House Republican staff report on why financial executives were not held accountable for the 2008 derivatives panic:

‘… Osborne wrote to Ben Bernanke, who was then the Federal Reserve chairman, and Timothy Geithner, the then Treasury Secretary, to warn that prosecuting a “systemically important financial institution” like HSBC “could lead to [financial] contagion” and pose “very serious implications for financial and economic stability, particularly in Europe and Asia”….

“Treasury documents acquired by the Committee raise very serious concerns about DOJ’s … deal with HSBC in late 2012—not the least of which is that DOJ declined to prosecute anyone involved in a massive breach of U.S. anti-money laundering and sanctions laws due to HSBC’s large size and “systemic importance.” “A nation governed by the rule of law cannot have a two-tiered system of justice—one for the largest banks, and another for everyone else. Accordingly, inasmuch as DOJ continues to believe that certain financial institutions are too large to effectively prosecute, it is imperative that DOJ promptly inform the Congress of this fact, so that Congress can seek to address the problem of ‘too big to jail’ through its legislative function.”

We must stress that the matter of a world financial breakdown crisis to occur if HSBC were denied its claim of operating above the law and against the US public interest is not simply a dispassionate or detached forecast or prediction. Coming from a person like Osborne, the financial calamity must be seen as a direct threat, and part of a blackmail operation. Osborne’s letter essentially says that if the Americans refuse to let HSBC run wild, laundering money for terrorists and from drug transactions, the British Treasury and the City of London will make very sure that such a panic occurs, and occurs in such a way as to maximize the damage suffered by New York. This is intolerable blackmail, but something that will become habitual if the Anglo Chinese succeed in expanding their influence.

We want to hear from Senators Elizabeth Warren and Bernie Sanders, those famous stalwarts of the left wing of the Democratic Party, to make clear that “Wall Street” in the sense of rapacious financial oppressors is not limited to the island of Manhattan, but has another center of gravity in the City of London. They should make this matter an issue in the presidential campaign starting with the July 25 Democratic National Convention.

George Osborne is the British politician most closely associated with the British-Chinese alliance, which is emerging as one of the greatest threats to world peace and prosperity. It was Osborne’s visit to Beijing in September 2015 which set the stage for Xi’s triumphal state visit to London in mid-October of that same year. Upon arriving in Beijing, Osborne proclaimed himself as “China’s best friend,” a function which he has been ruthlessly carrying out ever since.

Osborne has attracted much hostility in his current role as Chinese Trojan horse inside the European Union, where he has fought hard to protect Beijing from attempts by European officials to block Chinese dumping, especially in the area of steel. Osborne was willing to kow-tow to Xi by banning any mention of Chinese human rights atrocities during the Xi extravaganza in London last October. In the same way, Osborne was eager to sacrifice some of the last British steel production (albeit already globalized into the hands of the Tata interests of India) in order to appease the dumpsters of the Middle Kingdom.

But other European officials have tried to fight back against the Sino-dumping:

‘China is not a market economy. It has chosen a dumping strategy that is ravaging European industry. The EU itself risks imploding if Europe persists with the error,” says Edouard Martin, a French MEP leading the revolt. A report by the Economic Policy Institute concludes that unilateral MES [market economy status] for China would endanger 3.5m jobs in EU industry by limiting anti-dumping tariffs. Almost all the EU’s 350,000 steel jobs would be a risk.

Ambrose Evans-Pritchard of the London Daily Telegraph noted that Osborne has been acquiring something of a reputation on the continent as a Chinese agent:

‘…the suspicion in Brussels is that he has become a Fifth Columnist for Beijing …because he is dancing to the tune of London bankers angling for the yuan trade,’3

On the second big point, the immaturity, incompetence, and demagogy of the Beijing leadership has been underlined by the Chinese Foreign Ministry’s response to a finding issued by the United Nations Permanent Tribunal in the Hague, Netherlands, in response to a complaint brought by the Philippines concerning Chinese encroachments in Philippine territorial waters and economic space.

The world is aware of the sweeping and baseless claims advanced by the Chinese government concerning its alleged right to control the entire South China Sea, which is an international waterway open to all nations. One of the classic principles of American foreign policy is the freedom of the seas, and it is time to refurbish this doctrine of the freedom of navigation in the interests of all states.

The crude Chinese claim to annex the South China Sea is about as outrageous as it would be for the United States to claim sole ownership of the Gulf of Mexico and the Caribbean down to the coast of Venezuela. And the South China Sea is a vital artery for Japan, South Korea, and others, carrying a total of $5 trillion in yearly trade.

Sailors assigned to Patrol Squadron (VP) 45 conduct flight operations aboard a P-8A Poseidon over the South China Sea. During the flight, the crew of the P-8A documented several warnings, issued by China’s People’s Liberation Army Navy (PLAN), to leave the area. The mission documented the continued expansion of reefs which have been turned into man-made islands with airport infrastructure in the South China Sea. VP-45 is on deployment supporting U.S. 7th Fleet operations in the Pacific. (U.S. Navy video/Released)

China has been building artificial islands in an attempt to buttress their inflationary claims to territorial waters. The Chinese have justified all this with a claim of “historic rights” to the South China Sea, but the Hague Tribunal pointed out that China forfeited any such claims in the moment when it signed the United Nations Convention on the Law of the Sea, to which the Philippines are also a signatory.

According to the Straits Times of Singapore:

‘In a landmark ruling on Tuesday (July 12), a UN-backed arbitral tribunal concluded that China has no legal basis to claim “historic rights” to resources in the South China Sea and it has violated the Philippines’ sovereign rights in the disputed waters. Manila, which lodged a case at the Permanent Court of Arbitration (PCA) in The Hague against Beijing in 2013, welcomed the ruling. But Chinese President Xi Jinping said while China is dedicated to maintaining peace and stability in the South China Sea, it will not accept any positions or actions based on the outcome of the arbitration case. In a 497-page ruling that overwhelmingly favors the Philippines, the five-member tribunal said Beijing “had no historic rights to resources in the waters of the South China Sea”4

The only documentation advanced by the Beijing regime was the unilateral “nine-dash line,” a crude map dating back to the late 1940s, when the new People’s Republic of China under Mao Tse-Tung was attempting to stake out its unilateral claims against waters previously controlled by Chiang Kai-Shek’s Republic of China, which was soon forced to fall back on Taiwan:

‘The nine-dash line, previously the “11-dash line”, is the demarcation line used initially by the government of the Republic of China (ROC / Taiwan) and subsequently also by the government of the People’s Republic of China (PRC), for their claims of the major part of the South China Sea. The contested area in the South China Sea includes the Paracel Islands, the Spratly Islands, and various other areas including the Pratas Islands, the Macclesfield Bank and the Scarborough Shoal. The claim encompasses the area of Chinese land reclamation known as the “great wall of sand”’5

The arrogant dismissal of the Hague ruling by the Chinese Foreign Ministry, combined with the jingoistic campaign of the controlled media, and the bombastic naval maneuvers called to coincide with the UN verdict, suggest that Southeast Asia may now be headed for troubled times. Some ocean areas claimed by China are also claimed by Japan, and this could trigger the US-Japanese mutual defense treaty. The United States also has a treaty with the Philippines, who as the successful litigant in the current Hague proceedings can expect to be targeted by Beijing, quite possibly by new harassments of fishermen and the like. Taiwan also enjoys an implicit US guarantee. South Korea is also a US treaty partner.

The Hague arbitration result also strengthens the claims of Vietnam to maintain its own territorial waters. Vietnam has been upgrading its military and naval cooperation with India, and therefore does not stand alone. Other countries, like Indonesia and Malaysia, will doubtless be heard from.

Observers will be carefully evaluating the Chinese response to judge to what extent the Anglo-Chinese alliance has already encouraged Beijing’s adventurism and aggressive tendencies. The government has made the rocks, reefs, and shoals of the South China Sea into a great national epic drama. Now Xi has lost face – always a paramount consideration in the politics of this region. Expect Xi to put on a maritime circus in the disputed zone as soon as he can.

Even so, the entire pathos is entirely needless, since no credible threat against the freedom of Chinese merchant and military vessels in the South China Sea has been advanced by anybody. The crisis is completely futile and manufactured, and responsibility goes to Beijing’s doorstep.

Why are President Xi and Premier Li so foolish as to go down this dangerous and profitless path? The political regime of the Chinese Communist Party has been suffering for decades from an acute crisis of legitimacy. Chinese leaders are co-opted by secret committees of party insiders, with elections playing no role. The political system is not much different from that of Saudi Arabia or North Korea. Over the medium to longer run, China will require a constitutional compromise that will allow a democratically elected representative government.

But this is what the Chinese Communist Party under the leadership of Xi and Li is determined not to permit. The short term solution developed by Beijing leaders in the post-Tien An Men period is to offer the Chinese population the following bargain: we will deliver increasing economic prosperity if you let us keep political power.

When Xi and Li assumed power some years back, their watchword was “No stimulus!” In other words, these self-styled Communists were about as backward in their economic thinking as the Republican Tea Party of the US House of Representatives. As a result of this stupidity, which may have already reflected British free market ideology, the Chinese stock market collapsed by 30%. Now, many industries are in trouble and are seeking to dump surplus production into foreign markets.

De Gaulle once wondered why the Soviet Union was so turbulent in foreign affairs, and his conclusion was that the leadership in the Kremlin was seeking to divert attention overseas in order to camouflage failures, tensions, and explosive contradictions on the home front. The unwise behavior of Xi and Li suggests that their bungling performance, combined with their attempt to use anticorruption demagogy to wipe out centers of domestic opposition to them, may be stoking a growing opposition both to them and to the oppression of unchecked Communist Party rule in general.

The Tax Wall Street Party calls on the Obama administration to reopen the case of HSBC money laundering, and to reject British pressure for the appeasement of malefactors of great wealth by launching criminal indictments against that bank and the executives who inevitably knew that the illegal money laundering was going on.

  1. “TOO BIG TO JAIL: INSIDE THE OBAMA JUSTICE DEPARTMENT’S DECISION NOT TO HOLD WALL STREET ACCOUNTABLE REPORT PREPARED BY THE REPUBLICAN STAFF OF THE COMMITTEE ON FINANCIAL SERVICES, U.S. HOUSE OF REPRESENTATIVES HON. JEB HENSARLING, CHAIRMAN 114TH CONGRESS, SECOND SESSION JULY 11, 2016,” http://financialservices.house.gov/uploadedfiles/07072016_oi_tbtj_sr.pdf
  2. https://www.theguardian.com/business/2016/jul/11/hsbc-us-money-launderin…
  3. http://www.telegraph.co.uk/business/2016/03/30/britain-sacrifices-steel-…
  4. http://www.straitstimes.com/asia/se-asia/no-legal-basis-for-china-to-cla…
  5. https://en.wikipedia.org/wiki/Nine-dash_line
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