Courtesy of Pam Martens.
Yesterday, Lanny Breuer, the Assistant U.S. Attorney General for the criminal division of the Justice Department, appeared on CNBC to defend the deferred prosecution agreement with the global banking giant, HSBC – a deal which settled drug money laundering and other crimes for $1.9 billion without prosecuting any HSBC employee.
What Breuer was effectively defending was the five years that his former law partner, John Dugan, was HSBC’s primary banking regulator and did nothing to rein in the outrageously lawless behavior at the bank. Dugan headed the Office of the Comptroller of the Currency (OCC), which regulates all national banks, from August 4, 2005 through August 14, 2010. During that period, according to the Senate Permanent Subcommittee on Investigations, the OCC turned a blind eye to abuses at HSBC. In fact, it was not until Dugan left the OCC that a report was issued in September 2010, detailing five years of alarming conduct at HSBC that went unpunished.
U.S. Attorney General, Eric Holder, Assistant U.S. Attorney General, Lanny Breuer, and former OCC head, John Dugan, all hailed from the corporate law firm, Covington & Burling. When Dugan, who also functioned as a bank lobbyist prior to heading the OCC, stepped down from the Federal agency in 2010, he returned to Covington & Burling’s Washington, D.C. office and now chairs the firm’s Financial Institutions Group, providing legal counsel to many of the same banks he supervised badly for five years.
Covington & Burling did not always have such a tidy relationship with the U.S. Department of Justice. As we previously reported, the law firm was cited by a U.S. District Court, an Appellate Court and the U.S. Supreme Court as playing a central role in coordinating the illegal activity of Big Tobacco for four decades. Covington & Burling, sworn to uphold the law, effectively provided a front for Big Tobacco to lie about the deadly facts on smoking and second-hand smoke, according to U.S. Department of Justice tobacco documents.
In announcing the HSBC settlement yesterday, Breuer said HSBC had permitted “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.”
But according to the 330-page Senate Subcommittee report released on July 17, Dugan’s OCC was a big part of the problem by failing to supervise the rogue bank over a period of five years. The report found:
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