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Terrorism funding just one thing big banks are getting away with - whistleblower Everett Stern

January 20, 2014 08:30

Everett Stern (Reuters / Tim Shaffer)

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Banks say they are the pillar of the modern society – ruling the streams of money across the globe and keeping a tight grip on the world’s economy; What is going on in offices of top level management is kept in a most valuable secrets. Even governments are afraid to get in confrontation with the enormous financial giants. But today we talk to a man who single-handedly fought the corrupt banking system, with no one behind his back; Whistleblower Everett Stern is today’s guest on Sophie&Co.

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Sophie Shevardnadze: Our guest today is whistleblower Everett Stern, former employee of one of the world’s banking giants HSBC.

You’ve been very vocal about your experience with HSBC. Can you tell our viewers in a nutshell, in simple words, what it’s all about?

Everett Stern: Sure. This is not a normal banking scandal, I mean this is about a bank sponsoring terrorism and killing people, that’s what it is about, and it is about defending the US and defending the world as a whole against terrorism, and saying that “too big to jail” is not an OK policy for any government to have.

SS: These are actually huge words – what did actually happen? Let’s start from the beginning. You were hired by HSBC after you went to business school, right? And then what happened?

ES: Correct. First I was a candidate for the clandestine service and then, while I was in the business school and then I joined HSBC in October 2010, right after this Cease Order came into effect, and I was hired as anti-money-laundering compliance officer and put in charge as a specialist on Middle Eastern transactions, also I was part of anti-terrorism financing team there, but really while I was there I saw the blatant criminal actions that were occurring and just how HSBC defrauded the US government.

SS: I just would like to get to the point when you started detecting suspicious activities. I gather from your earlier interviews, you said it was basically a team of former debt collectors re-hired to become an anti-money-laundering unit. None of them was experienced in that unit, including yourself. Then how were you able to detect all of these suspicious activities, if you weren’t really sure what you’re doing?

ES: Ah, that’s a good question. So what happened was that when I joined, there were maybe 15 compliance officers in the entire department in Newcastle, Delaware. I knew immediately that I really had no idea of what I was doing, so I went to University of Delaware library, I checked out a whole bunch of books and I would spend mornings and nights reading and teaching myself about money laundering and terrorist financing. And then what happened, it was maybe about three weeks in, that’s when I saw a first suspicious activity with the company called Crossbar FX and I that was my first email to the CIA. It was on November, 12 of 2010.

So three weeks after I started, I started passing information to the CIA, I felt there was a national security risk. First, of course, I went to management of HSBC, which of course was nowhere, but what ended up subsequently happening was that HSBC had a huge credit card division in the same building and they needed to show the government that they improved the program by hiring all these anti-money-laundering compliance officers. So they fired all of their debt-collectors, they sold off the credit card division to capital one and then re-hired debt collectors and anti-money-laundering compliance officers. They’re still there now, approving transactions, it’s absolutely disgusting, and they have no idea what they are doing.

SS: But, technically, how did you detect it technically? How does it happen? How did you detect suspicious transaction that could be linked to terrorism or drug cartels?

ES: It was so obvious. It’s because I have two brain cells in my brain and can do simple internet Google searches. This was not rocket science. For instance OFEC has a list of companies that the US cannot do business with, an OFEC sanction list, and so, for instance, Caribe Supermarkets, Tajco, the Tajideen Brothers, which were all linked to Hezbollah. Caribe Supermarkets is a supermarket chain based out in Gambia, and they are owned by Tajco, which is owned by Tajideen Brothers, which are based out in Beirut, and are financiers of Hezbollah. There were transactions going through HSBC and I saw it.

What’s interesting is that it’s not that it was hard to find the transactions, it was very easy. The real disturbing part is how they were doing it because these transactions, that were supposed to be stopped in the wire filter, were actually going through. They were going through because what HSBC employees were doing was adding dots and dashes and different numeric codings to the actual payments. The FBI later called it “stripping the payments”. So the computer system…there wasn’t a match with the transactions and they would go through. It was just blatantly obvious what they were doing, it just took me I guess just little extra effort to see how they were criminally allowing the terrorist funds to go through.

SS: You said that it was very simple to actually detect what was going on. Were you the only one who was suspicious, or the others were just pretending not to see this?

ES: Yeah, they were either pretending not to see them, or, to be frank, too stupid. The debt collectors they hired weren’t the brightest bulbs in the sky… So they were just clearing transactions all day long. That was the culture at HSBC, to clear as many alerts or investigations as possible. They gave us a minimum of 72 a week to clear. It was a culture that was extremely perverted, that was geared towards defrauding of American people.

Also, what they did was that they hired one of the former heads of the counter-intelligence of the FBI to run a department, so he knew exactly how to manipulate the system. But again, it wasn’t rocket science for me to figure this out. I’m not a financial genius. I did teach myself, and I did teach myself to how analyze transactions and how to identify terrorist financing, but the stuff HSBC was doing was not very covert.

SS: But when you went to your seniors, when you went to your bosses, and said “Hey guys, I’m kind of clearing all these dubious transactions that could be linked to terrorist and drug cartels,” what did they say? “No Everett, you’re hallucinating, you’re not doing any of that,” or did they say, “We know but you have to kind of shut up about it?” What was their reaction?

ES: There’s an internal email that the FBI has and CIA has, and so does the US Congress, when I went to them about a month ago, called ‘Compliance error’, and I’m more than happy to send this email to you, I still have it. This ‘Compliance error’ email is an email from me to management, explaining how these debt-collectors are approving funds that are going into Gaza and are going to Hamas. What I was told is that Hamas is not a terrorist organization. Now, there are some people out there who believe that Hamas is not a terrorist organization, but according to myself and also to the US government OFEC, and also most of the democratic countries in the world, they are a terrorist organization.

They knew exactly what was going on, and they did not want anything…for instance we could not put the word ‘suspicious’ in any alert or investigation that we did and any write up. The word ‘suspicious’ could not be put in because that could alert a regulator, and they did not want that.

SS: What are you talking about, with the transactions linked to Hamas, Hezbollah, Al-Qaeda, what kind of money are we talking about? What kind of transactions were they and where was the cash coming from?

ES: Overall, we’re talking about billions of dollars. For instance a great example is the Caribe Supermarket example. You had these supermarkets operating out of Africa, they were selling regular groceries that people were going to buy and then Caribe Supermarkets would take that money and send it to Tajeco in Beirut, which was owned by Tajideen Brothers, and then they would send it off to Iran. And this still is going on. Caribe Supermarkets was named in the Reuters article that I did. They were named to the FBI and Caribe Supermarkets is literally still operating and sending money to Hezbollah at this exact time.

SS: If we abstract from the HSBC case, who is ultimately in charge of preventing money laundering in the US? Are they doing their job or does it have to be individuals like you who would actually step up?

ES: The Department of Justice is not doing their job. Eric Holder specifically said during Senate hearings that prosecuting these banks criminally could cause a financial crisis. My argument to Eric Holder is that if we allow this terrorist financing to continue, and then the next 9/11 gets financed, I guarantee the next 9/11 will cause a financial crisis.

What’s happening now is that these bankers and management of large banks such as JP Morgan, HSBC – they’re not being criminally accountable, so they can do whatever they want and they’ll just be fined. HSBC was fined $1.9 billion, which seems like a lot of money, but that’s actually only five weeks’ profit for them and their stock actually went up when the announcement came out. It’s really disgusting that the Department of Justice is not doing their job. If I were to donate $1 to Hamas or Hezbollah I would go to jail for life, and yet they’re donating billions and that’s okay. It doesn’t make any sense…

SS: It does sound like a lot of money, but is it really a lot of money for HSBC? It seems like they’ll be making that sum in couple of weeks…

ES: Yeah, I know. Its five weeks of profit, and again, their stock went up – they actually made that money back with their stock price increasing. There’s zero consequence for them doing what they did and that’s a problem. The whole point of the American justice system is equality under the law. What the Department of Justice has made very clear is that bankers are held to a different standard than the public, which doesn’t make any sense and I think that the government needs to stop being afraid of a financial crisis happening from criminal prosecutions.

I think the real threat is terrorists being financed and drug cartels too. We have 500,000 Americans dying a year from drugs and our banks are financing drug cartels and yet the US government is launching a drug war, with DEA agents getting killed left and right, and...it doesn’t make any sense! The whole system just doesn’t make sense.

SS: So you’re saying nothing really has changed in HSBC even after it was fined $19.9 billion, right?

ES: No, nothing and that’s why my attorneys – I’m not suing HSBC, there’s no litigation – what I have done is that I am asking for a new money-laundering probe to be issued and people to go jail. The thing is that the 1.9 billion covered transactions up until 2010. I started passing information to CIA and then I went to the FBI post-2010. So HSBC was never held accountable for those transactions of the Caribe Supermarkets to Hezbollah that I just talked to you about – they even were not held responsible for that, and so they need to prosecute them. If you murder somebody and you get caught five years later, you’re going to go to jail for that. The bank should be held responsible.

SS: You’re saying that no one was held responsible or criminally charged, the FBI and the CIA didn’t really follow up this case that you presented to them, governments are afraid to criminally prosecute banks like HSBC because of reasons linked to economic crisis – so could it be that they are complicit?

ES: Yeah…Believe me, I’m banging my head against the wall with this one. I have risked everything and tried my hardest to get these people in jail. Right now the former managers that were my bosses who were subsequently fired from HSBC are now the heads. One of them is the head of compliance for TD bank, the other one is the head for the Chinese bank. There’s no consequence there, these people are still doing the same thing in multiple organizations and that’s not what America is about and that’s not what justice is about.

I think what’s important here is that what American public hasn’t really understood is that this not a normal banking scandal and that these banks like HSBC have the blood of American soldiers on their hands. An IED going off in Afghanistan, killing and American or allied soldier – that is being financed through our banks. That’s a problem, that’s a huge problem.

SS: I want to talk a little bit globally about what is going on. If we look at the banks that are actually getting away with criminal activities likethese because governments are afraid that the economy could worsen if the banks are charged – doesthis mean that the banks could actually do whatever they want?

ES: Yeah, and they are doing whatever they want. That’s a problem right now, they are doing whatever they want to do, because they now the walk and that has to be stopped. I’ll tell you something: I don’t believe it’s going to cause a financial crisis if the bank is prosecuted. I believe that it will create more trust in the financial markets, because this way the justice will prevail.

Right now, letting there just be a free-for-all is not the way to go about it. Again, financial crises are also caused by terrorist attacks, political instability, money going into governments that shouldn’t be going to, and these banks are financing that. I’ll give you another example. There was millions of dollars moving from a company in Saudi Arabia, called Sharbatly Fruit. It’s a fruit company, and they were sending money to one of the leading members of Muslim Brotherhood in Yemen. So this is what HSBC is allowing, facilitating to happen here. That causes political instability in the region, and it’s treason and it’s financing our enemies.

What’s crazy about it is that HSBC admitted to the Department of Justice and to the world, they admitted the treason, financing the enemy. If you plead guilty to financing the enemy, I don’t think you should just walk with a fine. That’s not finable, that’s jail time.

SS: But Everett, can I play devil’s advocate for a second here – you don’t really know that if banks are charged, that wouldn’t cause the economic crisis. No one knows that. If there is this obvious connection link between major banks and economic prosperity - you personally, would you risk the global economy for the sake of bringing banks to justice?

ES: Yes, without hesitation, and I say that because yes, I don’t know for sure that prosecuting a bank would not cause a financial crisis, because it’s never happened before - I’m sorry, they have been prosecuted before [but] there was no one going to jail for it, they’ve just been fined - but if bank management actually went to jail and a financial crisis was caused…

I think you have to look at this from mitigating risk standpoint, and that is if we allow this to continue, there’s going to be another terrorist attack, either in the US, or overseas, innocent people are going to die. The way I look at it is, yeah, I’m willing to risk another financial crisis - bring it on. I’m more than happy to, because the way we’re going right now – if criminals, Russian mobsters, Hamas, Hezbollah – if they keep getting financed, the good guys are finished. If we allow this to continue there’s not going to be a financial economy to worry about, that’s what I’m saying. We have to do something.

SS: So it seems like a country that’s fighting a War on Terror is also financing it at the same time…

ES: Yes.

SS: Even though HSBC isn’t really an American bank, it is one of the largest banks that is operating on American soil. But HSBC is just one big bank that you specifically caught red-handed. Now the problem of money laundering is much wider. I know that you made a list of banks you believe are harming America. Tell our viewers which banks are these and what did they do to make the list?

ES: Sure. JP Morgan, they’ve been fined like crazy through even last couple of weeks; Standard Chartered Bank that’s been operating here, Bank of America – they’ve had numerous accounts with drug cartels. All of the big banks are involved with this in some way. Now, the argument can be raised – I’m playing now my own devil’s advocate – the argument can be raised that how can these banks always prevent terrorist financing? The thing is that there’s no 110 percent system that can always prevent it, but what’s happening now is a culture that’s being cultivated and facilitated to gear, lean towards, profiting off financing terrorism and drug cartels, so that they can make more money and their stock would go up. That’s the problem, it’s not a few isolated incidents, and it’s a whole culture of this.

SS: I’ve read that this whole case with HSBC left you emotionally drained, financially devastated. How are you now? How are you doing?

ES: I’m doing great; I’ve started my own company, Tactical Rabbit, which is an intelligence company. We became profitable five months ago, but it was extremely hard. I was working at PF Chang’s restaurant as a waiter after I left HSBC, because I had no money, I had nothing left, and I literately walked into PF Chang’s with the Rolling Stone article when I was featured in Rolling Stone, and I said to them “Look, I’m a whistleblower and I can’t get work. I need a job, I never waited tables before. I’ll do a good job for you guys,” and they hired me. They said “Look, we’ll give you a chance,” and I took all of that PF Chang’s money and I put it into Tactical Rabbit and that’s how I launched this very, very successful company now. We’re going to be a multimillion dollar company.

SS: Wow. So you’re a great example of someone who can actually stand up, whistleblow and still be very successful. There are a lot of people who are actually weighting pros and cons and saying “No, I’m not doing this because then my life is over.” But you are a great example of how you can whistleblow on dubious activities and still make it in life. Can I ask you something – except for that Rolling Stone piece that I’ve read, has other media showed any interest in you or in your story?

ES: It’s amazing – the answer is “No”. Yes and no. I did a 45-minute interview with Brian Ross at ABC studios, and I think you used to work for ABC. Brian had a 45-minute interview with me and he said he was going to air it in two weeks, and he never aired it. Other networks wouldn’t tape me because they were nervous because Brian Ross had it in. And Brian Ross said that his hands were tied, and I made it very clear to Mr. Ross that this was a national security issue and that the story has to get out. He just said it was “not news.” I have a problem with that, and I think that American people have problem with that, and I still think that Brian Ross should air that tape.

SS: Fighting big banks at frauds is like your life call right now, but would you say you have strong team of supporters around you and do you see any change coming as a result of your work and efforts, more importantly.

ES: Not from the media, and from the public I’m not getting it either, to be honest with you. And the reason is because I need the media – that’s why I’m so happy you’ve invited me to this show. I need the media to able to carry the message and let the public know what’s going on.

It appears to me that the American mainstream media for some reason here does not want to tell this story and to really show to American people what is going on. CNN, MSNBC – why they are not showing that you have the bank, HSBC, that has an anti-money-laundering facility in Newcastle, Delaware, that’s hiring and firing debt collectors to work. That’s a huge story, why it is not on the front pages of New York Times, that’s the problem.

SS: Within your community, within your friends and family, just people who know what you did, and people who read the Rolling Stone piece – do you feel like a hero? Does it feel like a hero? Or you are more of a loose cannon?

ES: I think, I’m more of a loose cannon. I don’t think I’m a hero. I think right now I’m a loose cannon turning into a guy on a corner, yelling crazy stuff about “Hey, here’s what’s going on with the banks!” It’s a problem that I’m analyzing right now, because I don’t know what else to do. I’m trying to strategize, because I don’t want to come off as loose cannon, but at the same time I keep knocking on doors to get people to pay attention to an issue, but the media won’t help me. It’s a very frustrating experience and, yeah, I hope I won’t come off as a nut, but unfortunately sometimes in order to get things done you can’t make an omelet without breaking some eggs.