In October 2008, at the very height of the global financial sector insolvency crisis, HSBC made a very strange decision: They made a massive £214.2 million loan to a company called IPGL.
To get an idea of what was more normal practice for banks during the insolvency crisis and the post-crisis recession, consider the behaviour of the (majority taxpayer-owned) bank RBS which deliberately withdrew loans or hiked repayment terms in order to drive thousands of British companies into financial difficulties, and then used their Global Restructuring Group to close down the businesses and asset strip them for their own profits.
The RBS Global Restructuring Group destroyed 12,000 businesses in this way in what executives referred to in leaked emails as “the dash for cash“. After the scandal was exposed by the hard work of people like Neil Mitchell they’ve now had to set aside a £400 million slush fund to compensate some of their victims.
Interestingly HSBC took a very different attitude towards the blatantly failing IPGL, which was being run at huge losses by the then Tory party chairman and massive Tory party donor Michael Spencer. Instead of attempting to shut it down and asset strip it, they pumped a massive £214.2 million loan into it at a time when getting loans out of a bank was like getting blood out of a stone.
Spencer then funnelled over four million in donations to the Tory party via IPLG including over £1 million for their 2010 general election fighting fund. IPLG donations also covered the cost of flying David Cameron, George Osborne and others to the Davos World Economic Forum just months before the 2010 General Election.
If HSBC propped up a failing business and that business then went on to pump millions into the Tory party to help them win the 2010 General Election, it’s easy to see how people might conclude that the failing business was used by HSBC to launder money into political donations.
HSBC, the Tory party, George Osborne’s office and IPGL were contacted by the investigative journalists who broke this story and offered the chance to comment. They all declined.
While this HSBC-IPGL-Tory party business was going on HSBC were also laundering hundreds of millions of pounds in drug money for Mexican drug cartels and funds for terrorist organisations.
After the Tories came to power in 2010 the conduct of George Osborne and David Cameron clearly continued to favour HSBC and Michael Spencer’s business interests. Their attempted favours towards Spencer continued even after their fall from grace over the spectacular failure of their EU referendum gamble in June 2016.
- In November 2010 The Tories made the HSBC Chairman Stephen Green an unelected peer in the House of Lords (where he still sits as a Tory peer).
- In January 2011 David Cameron appointed Green as Minister of State for Trade and Investment in the Tory/Lib-Dem coalition government.
- In 2012 George Osborne hampered the US investigation into the HSBC money laundering scandal and lobbied for them not to face criminal prosecutions claiming that such a move could lead to “financial contagion” because the bank was too big to fail.
- In March 2012 Spencer was named by the disgraced former Tory party co-treasurer Peter Cruddas as one of the millionaires to have benefited from the “cash for access scandal“.
- In March 2013 George Osborne was the only finance minister in the entire EU to oppose a policy of limiting bankers’ bonuses to 200% of their final salary. When it came to the vote he was defeated 26-1.
- In September 2013 Michael Spencer’s firm was fined £55 million for rigging the Libor rate. In the very same month David Cameron tried to make Spencer an unelected peer in the House of Lords but was foiled by the ethics committee.
- After the bankers’ bonus defeat Osborne wasted £50,000 of taxpayers’ money on fighting a futile legal challenge against the EU bankers’ pay cap, a battle he finally abandoned in December 2014.
- In January 2015 the Times editor Camilla Cavendish had a dinner with David Cameron and then spiked an investigative story about fraud at HSBC. She was soon appointed as Cameron’s adviser at the Number 10 Policy Unit.
- In 2015 George Osborne washed his hands of the HSBC Swiss accounts scandal, and repeatedly refused to confirm whether he had discussions about the bank’s collusion in tax evasion with Stephen Green before his appointment as a government minister.
- In January 2016 George Osborne delayed a Competition and Markets Authority report into reducing the dominance of the big four banks that was widely regarded as a move to placate HSBC.
- After resigning in disgrace after his EU referendum gamble failed David Cameron reportedly tried to make Spencer an unelected peer again in his resignation honours list, but was foiled a second time.
- Although Spencer didn’t make it into the unelected House of Lords in David Cameron’s resignation honours list Camilla Cavendish (the former Times editor who spiked the HSBC fraud story) did.
The £214 million HSBC loan to the failing IPGL and their subsequent donations to the Tory party have now been referred to the Electoral Commission by the SNP’s Roger Mullin, who is calling for an immediate investigation. The Labour MP John Mann has called for a public inquiry into what he called “the biggest party donor scandal ever”.
There are so many revolving doors between Westminster politics, the financial system, the financial regulators and the media that it seems unlikely anyone will ever be properly held to account.
The Canary and Move Your Money broke this story on April 28th, but 5 days later the mainstream media has yet to move on it, preferring instead to focus the public attention on “vital” issues like the Shadow Home Secretary getting her figures muddled up in a radio interview and then subsequently correcting them.
The whole thing reeks of corruption, but we all know by now how these things tend to play out. Even if the story does eventually get some limited mainstream media coverage it’ll doubtlessly all be brushed under the carpet again, and if anyone ever does end up getting the chop for it, it’ll almost certainly be some lowly minion who gets fed to the wolves, not any of the big players.
But at least you know some of the murky details now.
The investigative work into the HSBC-IPGL-Tory party money flow was done by Fionn Travers-Smith of Move Your Money. The story was publicised by Steve Topple of The Canary.
The SNP’s Roger Mullin deserves credit for publicly raising this issue with the Electoral Commission and Labour’s John Mann deserves some too for calling for a public inquiry.
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You should also follow the HSBC whistleblower Nicholas Wilson (Twitter) for more corruption coverage.