HSBC - drugs, arms and money

by Brian Durrans

Capitalist profit motivates the most stupendous system of theft the world has ever known. As Marx revealed, profit is the surplus of the value of work done for an employer over the cost of maintaining the workers.

That maintenance covers not just wages to individual employees but also employers’ contribution to the ‘social wage’, in the form of national insurance and pension payments, health and safety provision, etc. - concessions won by the struggle of workers themselves and, as experience teaches, vulnerable to erosion and reversal in times of austerity and diminished unionisation.

Because it is legal, such mega-theft, the extraction of this surplus value by a few from the labour of the many – in a word, exploitation –appears an acceptable or ‘natural’ way of running an economy.


It’s also perfectly legal for a company to share some of its always ill-gotten profit among its owners or shareholders; to augment its reserves against future uncertainty or opportunity; and to expand or modify its business, which includes helping shape conditions it considers favourable to future profitability.

This applies to all for-profit enterprises under capitalism, whether manufacturers or service-providers, including advertisers, banks, brokers, speculators, gambling companies and insurers, all of which, however far removed from the source, anywhere in the world, of producing anything tangible, depend on the surplus value originating from such production and increased by the subsequent labour of others.


Firms try to maximise their profits, by increasing productivity, buying cheap and selling dear, reducing labour costs by driving down wages, increasing hours, encouraging shift-work, imposing ‘zero hour’ contracts, and the like, mostly done legally. How best to ensure a profitable future always involves a degree of guesswork or hedging bets – as with the donations Sainsbury’s used to make to the Conservative, Labour and Liberal Democrat parties.

Most companies tend to favour, for example, minimal regulation of their own conduct, and many actively resist such regulation, whether by funding its political opponents, discrediting its advocates or using representation on regulatory bodies themselves to mitigate their influence. Quite often the actions taken by firms opposed to hindrances to making profits break those regulations and even the law.   


This article looks at how one corporation, HSBC, has been able – so far, at least - to shape favourable conditions for itself, despite its own repeated misconduct and consequent damage to its reputation.

The following considers three instances in which HSBC has provoked criticism: two in the past, and one in the present. For reasons of space, many other instances have been omitted, from offshore banking and profiteering from the 2008 financial crisis to complicity in environmental degradation.  The article ends with some suggestions as to how current actions targeting this and other companies could develop in the future.


  1. Nineteenth-century drug-dealing

Hong Kong was established as a British Crown Colony in 1842, followed by Kowloon in 1860, signalling respectively the end of the first (1839-1842) and second Opium Wars (1856-1860), during which Britain won the lucrative right to force opium on the Chinese people. Two of the foremost private beneficiaries of this shameful abuse in the nineteenth century are still going strong in the twenty-first.  One, the trading firm of Jardine Matheson & Co. (now Jardine Matheson Holdings), was established in Hong Kong in 1844.

The other, the Hongkong and Shanghai Bank, which helped finance Jardine Matheson and similar companies, was founded in March 1865, also in Hong Kong; its Shanghai branch opened a month later.  The bank grew out of the wealth and trading opportunities made possible by the victory of British imperialism over the Qing Chinese monarchy, and above all by the opium trade which British – and, under their wing, French and US – capitalists imposed on the Chinese people by military force. From the start, the bank marched in lockstep with British imperialism, and still does so. Its makeover in 1991 as HSBC Holdings plc, and moving its head office from Hong Kong to London, anticipated the scheduled reversion of Hong Kong to China in 1997. Following a re-brand in 1998, HSBC’s four initials and red and white hexagon logo have become familiar around the world. [1]

Given its origins in the opium trade, it might seem surprising that the company didn’t use this makeover to signal a break with past abuses by changing its name entirely. That, however, would be expecting too much, for the Chinese characters used to transliterate its name are ‘auspicious, and can be understood to mean gathering wealth’, and at least on the trading floor if not on social media, that so far counts for more than a company’s dubious past. [2] Like the devil, the truth is in the detail, and the company’s own origin myth - “HSBC was born from one simple idea – a local bank serving international needs” [3] smothers it in euphemism. Despite or perhaps because of its shameful history, HSBC refuses to acknowledge it at all: 

 “Our values define who we are as an organisation and what makes us distinctive. We believe in acting with courageous integrity.” (HSBC website).

  1. Money-laundering for drug cartels

Perhaps HSBC’s official company history is silent on its origin in the opium trade (see note [3]), because the company is embarrassed not to have learned from its past mistakes (though its silence might equally mean that it doesn’t recognise having profited from the lethal opium trade as a mistake at all).

But HSBC has not yet put such behaviour behind it. In 2012 the company faced possible criminal charges for laundering over $881 million through US banks for Mexican (Sinaloa) and Colombian drug cartels. US federal investigators are also reported to have uncovered evidence that senior bank officials were involved in the illegal transfer of funds for Saudi banks with links to groups that included the Palestinian Hamas party and the pro-Palestinian Lebanese Hezbollah organisation, both of which the US proscribes as terrorist. Support either in the US and you could face a long prison sentence. Another organisation which HSBC was reported to have negligently supported was Al-Qaeda, which was also (and still is) on the US proscribed list, despite enjoying covert US support in some operational contexts.

According to the Wall Street Journal in 2016 the US Justice Department under Eric Holder, President Obama’s Attorney General, allowed HSBC to pay $1.9 billion, and promise to mend its ways, in exchange for a ‘deferred prosecution agreement’ concerning the drug-money laundering issue. That deal expired at the end of 2017 and closed the case. HSBC ended up selling-off its US operation.

The $1.9 billion HSBC paid to evade the courts was almost certainly preferable to the fine threatened by a successful prosecution, but the risk of toxic publicity might have been an even stronger incentive to settle.  It’s therefore ironic that the critic who remarked that “[t]he fine [HSBC] received was equivalent to approximately [only] five weeks of their yearly profit” was Kristi Jacobson, director of Cartel Bank, a hard-hitting documentary about HSBC in a Netflix series of exposés of boardroom shenanigans called Dirty Money. The programme was released on 26 January 2018 to enthusiastic reviews. Jacobson wondered how HSBC got away with its illegal behaviour:

“I was shocked by the corporate malfeasance and the multiple times they were caught breaking the law […] It wasn’t just HSBC’s money laundering crimes over many years for the most notorious drug cartels. It was their admission of it and then their audacity to continue to commit those crimes […] “

She also described this scandal in class terms, making a contrast with the subject of another of her documentaries Solidarity, broadcast on the HBO channel in 2017, about working-class inmates of a state prison in Virginia:

“That experience reflected what I think is the American way — to overpunish in terms of sentences for poor people, people of color, people who are powerless. HSBC was underpunished. A kid busted for marijuana possession can’t get away with saying, ‘I haven’t done a good job and I’ll change my behavior,’ as HSBC was allowed to […] These are two different sides of the same problem”. [4]

  1. Arms-dealing

Some of those affronted by how lightly HSBC was punished for complicity with drug cartels (not even counting its origins in the Opium Wars) argued that, by virtue of helping finance gangsters, the bank also bears some responsibility for deaths, in the hundreds or the thousands, among both their rival cartels and users of their product.

The case for holding HSBC responsible for the human and material destruction resulting from the use of weapons – a flourishing trade which the company helps finance – is even stronger in the sense that, unlike drugs, weapons are expressly designed to cause death or injury to those at the receiving end, and that their use can help escalate a minor conflict into a major one, producing not only an arithmetic increase in fatalities but the even greater threat of larger-scale destabilisation.

The actions of HSBC help buttress some of the most reactionary governments in the world with abysmal records of disregard for international law.  In the UK, the Palestine Solidarity Campaign, the charity War on Want and others have joined forces to highlight HSBC’s complicity in this respect, with particular reference to the UK’s arms trade with Israel. As with other major campaigns under the banner of Boycott, Divestment and Sanctions, this one follows the lead of the Palestinian National Boycott Committee, which in 2011 called for a worldwide embargo on Israeli arms, a call renewed this year in response to the massacre of protesters in Gaza during the Great March of Return. HSBC is selected as a campaign target not just because its record of complicity in this respect but because the company’s wider predicament is thought to offer a good prospect of persuading it to bring this particular complicity to an end. As a global player, HSBC could easily get by without dirtying its hands in Israeli apartheid. As a serial offender in even more respects than those highlighted in this article, it already attracts global hostility from which its shareholders might agree it could do with a break. Here’s its opportunity. Refusing that, HSBC will deserve all that campaigners can throw at it.   

According to War on Want, HSBC owns shares in companies that sell weapons and equipment to Israel worth £831 million, including:

  • £180 million of shares in BAE Systems, a key company involved in manufacturing components for the F-16 fighter jets used by Israel to attack Palestinians in Gaza;
  • £102 million of shares in Boeing, the company that provides Israel with Apache helicopters and Hellfire missiles;
  • £99 million of shares in Caterpillar, whose specially modified bulldozers are used to demolish Palestinian homes and have been used as a weapon of war against Palestinians in Gaza; and
  • £69 million of shares in Raytheon, whose “bunker buster” bombs were used by Israel to target civilian homes during its 2014 assault on Gaza.

When asked for further information, HSBC avoided answering questions about its investments and loans. It referred instead to its Defence Equipment Sector Policy, which states that it doesn’t provide financial services to weapons companies. This however seems nonsense. 

  • Loans it has given to several companies that clearly fall into this category directly contradicts it;
  • HSBC restrictively defines weapons companies as ones that “solely or primarily manufacture…weapons”. Yet as most modern companies in this sector also have non-military clients and products, HSBC uses this as a loophole to provide services and investments to companies that are nonetheless thoroughly part of the arms and military industry; and
  • although HSBC said that the shares it has in arms companies are usually held on behalf of clients, its refusal to say which of the investments referred to in the War on Want list above are held directly and which are held on behalf of its clients strongly suggests it does indeed invest in such companies on its own behalf.

Yet even if HSBC thinks it can get away with such half-baked responses to its critics, the consequences could be not at all to its liking.  For even where it holds shares on behalf of clients, HSBC still facilitates investment in arms companies, which the UN Guiding Principles on Business and Human Rights regards as potentially a direct contribution to the abuse of human rights.

As currently formulated, HSBC’s Defence Policy is not only riddled with loopholes but also deeply flawed in practice as it is not accompanied by due diligence, reporting and enforcing mechanisms. Properly applied, these would prevent the corporation from profiting from violations of international law. In a review of 45 banks conducted in 2016, BankTrack identified HSBC as a “laggard” when it comes to these standards, falling into the lowest category of all the banks reviewed.

The Stop Arming Israel Campaign, seeking to hold HSBC accountable for its role in the UK/Israel arms trade, was launched with 18 actions across the UK in June 2017.  As War on Want remarks, “As long as HSBC continues to hold shares in and facilitate loans to companies arming Israel, its role in the oppression of Palestinians will continue to raise alarm and generate protest.”

The Palestine Solidarity Campaign (PSC) says: “The campaign is twofold: first, it asks the UK government to implement a two-way arms embargo with Israel, as long as it does not abide by international law and respect Palestinian rights. Second, the campaign aims to tackle corporate complicity by calling on HSBC to cut ties with companies trading weapons with Israel.” [5]

And PSC Director Ben Jamal adds: “HSBC claims it has a commitment to upholding human rights. If this commitment is sincere, it must end its complicity in the arms trade with Israel. In recent weeks, the world has witnessed just how shamelessly Israel uses lethal force against Palestinian civilians. We join concerned citizens across the UK in telling HSBC to live up to its responsibilities and stop making a killing from Israel’s daily and systematic violence against Palestinians.” [6]


The case against the company can’t, however, be limited to its misconduct or even to its record of evading, deflecting or accepting criticism only to offend again, though any or all of these are grounds enough for public concern and pressure to hold the company to account. Ultimately, even a regulated company remains a capitalist one, and must still out-compete its rivals if it is not to go under.

Suppose that co-ordinated popular, parliamentary and governmental pressure led to a strengthened regulatory framework that curbed the worst examples of unethical behaviour that HSBC and other companies currently get away with. Although this wouldn’t correct the countless other injustices for which capitalism is responsible, it would still be worth achieving, both for its own sake and if achieving it could began to shape conditions favourable not to capitalism but to socialism. Saving humanity from war and environmental catastrophe are priorities to be worked for now; they won’t wait in the wings while we move towards a sustainable socialism that would make them redundant.

For this to happen, involvement of the organised working class and labour movement would be essential and would at least question the illusion that a policy of corporate social responsibility (CSR), proclaimed by any or, just conceivably, by all companies, would mean that class struggle was now redundant.

A more realistic possibility is that, while building up pressure against the resistance of reactionary interests, campaigners would be alerted to connections between different aspects of the struggle (‘intersectionality’) and perhaps come to understand that even the best CSR policy stops short of the ultimate act of social responsibility: ending exploitation altogether to meet the basic interest of the working class. At any rate, people involved in shared struggle, whether on the picket-line or on social media, are better able to learn about such things than the politically inactive. [7] 

The core of the class struggle remains that between employers and workers, played out on an increasingly global scale; but a growing global network of citizens and organisations, concerned about corporate malpractice or about particular examples of it, could be a powerful ally against capitalism. Some single-issue campaigns are already collaborating, learning from each other and recognising their own targets are not separate but share a basis in capitalism. Links are also developing, locally and globally, with the unions and cross-sector political organisations. 


The author of the article cited in note [4] may be obliged to quote an HSBC spokesperson thus: “In response to the scandal, HSBC has significantly strengthened its compliance programs and appointed an external corporate monitor” but, to hold someone to a higher standard, it may be more effective to remind them of their promise than to dismiss it out of hand. Successfully to rein-in misbehaving firms, it’s helpful to win over at least some complacent people who give respectable-seeming companies the benefit of the doubt and possibly also a few loyal shareholders whose first instinct is to support the Board.

For this purpose, a simplistic or sloganising approach is unlikely to help.  It’s more productive to monitor how companies respond to criticism in practice, or in defiance of it, and to expose further wrong-doing or take stronger action when this is merited.  When we cry wolf, we want people to pay attention, especially when they’re well-placed to help change things for the better.  CSR policies may be, so far, an inadequate response to public opinion but they nonetheless reflect its growing power as the internet makes most companies’ behaviour easier to track and publicise than ever before and capitalism’s growing crises drive ever more people to do so.  

It bears repeating that the problem is not this or that company but, ultimately, capitalism itself. HSBC accounts for only part of the problem. Since the 2007-2008 financial crisis, for example, HSBC’s portion amounted less than 2% of the fines levied on the banking sector as a whole ($4.5 bn out of a total of $243 bn). Yet if calling out HSBC hardly amounts to challenging capitalism in its entirety, or even just its finance capital component, it’s nevertheless a start; and what works in one case can be tried or adapted in another.

Targeting transnational lawbreakers has real potential for building coalitions and winning interim victories. If these can help strengthen opposition to capitalism and keep Armageddon at bay, then global socialism could be back on the agenda.    

Notes (all websites referred to in this article were accessed in mid-to-late July 2018)

 [1] HSBC is the biggest bank in Europe and the sixth biggest company in the world. A good source on its role in Britain’s opium trade with China and its more recent history is Jean-Louis Conne, ‘HSBC: Chinese for making money’, Le Monde Diplomatique, February 2010 (

[2] Conne 2010, cited above.

[3] In the 36-page document, Our History, downloadable from HSNC’s website, the word ‘opium’ is nowhere to be found.

[4] The source of these remarks, and of other above-mentioned details of this case, is Tom Teodorczuk, ‘Netflix documentary re-examines HSBC’s $881 million money-laundering scandal’, Market Watch, 24 February 2018 (

[5] This quote and the above information about HSBC and the arms trade is taken from the War on Want document Deadly Investments: UK Bank complicity in Israel’s crimes against the Palestinian people. London, 2017 (p.12); the full document can be downloaded from the WoW website The PSC quote is from its website:


 [7] For a discussion of how ‘intersectionality’ and ‘social reproduction’ relate to each other – and the downside of each - see, in which the main conclusion is close to that  argued here, on building alliances to help the working class overcome capitalism.

HSBC Covent Garden London

Anglo-French forces defeated those of Qing China in one of the last battles of the Second Opium War (1856-1860). The Convention of Beijing ended the war and legalised the opium trade.

Eric holder, former US Attorney General (2009-2015), Democratic National Convention, Philadelphia, 26th July 2016

Palestinians in Gaza participating in the "Great March of Return" call for a military embargo against Israel. The Stop Armin Israel campaign in the UK is an organised response to that call, adapted to local conditions and opportunities