THE NAMING of David Hodgkinson, the AIB chairman, and Mike Geoghegan, one of the Government advisers on the National Asset Management Agency, in a highly critical US Senate report on HSBC bank’s involvement in money laundering, does not affect their current roles, according to the Minister for Finance.
Both men are former employees of HSBC and were aware of the practices.
Mr Hodgkinson was a senior executive and Mr Geoghan is the former chief executive.
Mr Noonan said the Central Bank tests the fitness and probity of bankers and they had “brought nothing to my attention which would change the view on AIB”.
The Minister said he was “quite comfortable” with Mr Geoghegan’s advice on Nama, which he provides on a “pro-bono basis”.
“I am quite comfortable that he should continue in that role and there is nothing in that report in the United States that would make me change that position,” said Mr Noonan, who was speaking at the launch of the National Treasury Management Agency’s report for 2011.
In the report, HSBC was found to have “systematically” concealed thousands of US dollar transactions involving Iranian banks that should have been automatically flagged and subsequently scrutinised, to gauge whether they complied with US law.
This was done by “stripping information from wire-transfer documentation to conceal the participation of a prohibited person or country”, or by altering documents to make the so-called “U-turn” transactions look like transfers between banks in approved jurisdictions.
By doing this, HSBC ensured the transactions flew under the radar of US authorities and were thus processed without delay.
The transactions were dubbed U-turns because funds (for example, from the sale of Iranian oil) were transferred to a US bank and instantly turned back as dollars to a European bank.
The US has had sanctions in place against Iran for more than 30 years.
The US Senate report outlines how these practices occurred over a six-year period up to 2007, even though senior executives – including Hodgkinson and Geoghegan – were made aware of their questionable legality.
“From at least 2001 to 2007, two HSBC affiliates, HSBC Europe and HSBC Middle East, repeatedly sent U-turn transactions through HBUS without disclosing links to Iran, even though they knew HBUS required full transparency to process U-turns,” the report, released earlier this week, said.
Mr Hodgkinson served as deputy chairman at HSBC’s operation in the Middle East at the time, and corresponded with Mr Geoghegan – then chief executive – in relation to the bank’s Iranian business.
On one such occasion, in June 2004, Mr Hodgkinson emailed Mr Geoghegan asking for his “intervention and support” in “positively resolving the long-standing issue”, while noting Iran’s “significant strategic importance” to the bank.
