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HSBC ‘Aided One of World’s Biggest Crackdowns on Democracy’, MPs Tell Banker

The British bank’s bosses struggled to defend its record of being complicit in China’s crackdown in Hong Kong, reports Steve Shaw

Protestors form a human chain in front of a HSBC bank in Hong Kong. Photo: Geovien So/SOPA Images/Sipa USA

HSBC ‘Aided One of World’s Biggest Crackdowns on Democracy’, MPs Tell Banker

The British bank’s bosses struggled to defend its record of being complicit in China’s crackdown in Hong Kong, reports Steve Shaw

HSBC struggled to defend freezing the accounts of pro-democracy protestors in Hong Kong when questioned by the UK’s parliamentary Foreign Affairs Committee.

The British-based bank has been engulfed in controversy after leading Hong Kong activists, including a former law-maker, spoke out about their accounts being frozen at the request of the Chinese Government.

Pro-democracy legislator Ted Hui and his family found that their accounts were frozen shortly after he fled the city and settled in the UK. He accused the bank of helping Beijing with what he called “political retaliation through economic oppression”.

Days later, similar concerns were raised by the Good Neighbour North District Church in Hong Kong, which revealed that accounts linked to the church as well as its pastor Roy Chan and his wife had all been frozen by HSBC. The church said that they were frozen “without any prior notification nor justification” but speculated that it was likely due to the church giving aid to protestors in 2019.

Noel Quinn, HSBC’s group chief executive, appeared before the UK’s cross-party Foreign Affairs Committee this week, where he faced accusations that the bank was “aiding and abetting one of the biggest crackdowns on democracy in the world”.

Quinn insisted to the committee that the bank’s decisions to freeze accounts in Hong Kong were based entirely on legal requests from the Hong Kong authorities and explained that failure to comply with them would have meant that the bank was committing a criminal offence.

“If we get a legal request from police anywhere in the world I have to comply with it,” he said. “If that is executed in the appropriate manner in compliance with the law, then we as any other international bank, as any other domestic bank, have to comply with it. I am not in a position as a banker to be able to judge the motives or validity of that request.”

But Labour MP Chris Bryant dismissed this, saying that HSBC has a record of choosing “which laws to obey”.

“You were fined $1.9 billion in the United States of America for money laundering and you continued to money launder after you’d been found guilty of that,” he told Quinn. “You choose to adopt a moral stance when it suits you but not when it doesn’t.”

Quinn said that changes had been made since the 2012 scandal when a US Senate investigation found that HSBC had acted as a channel for “drug kingpins and rogue nations”. The $1.9 billion fine was the largest ever paid in such a case.

“Do you understand how it might seem to a lot of British people who have bank accounts that you are effectively aiding and abetting one of the biggest crackdowns of democracy in the world?” Bryant asked.

When Quinn was pressed further on whether he would be willing to deny police requests on ethical grounds, he said that he would not: “If you’re asking am I willing to walk away from Hong Kong? The answer is no. We’re too committed through our history and heritage.”

In 1992, the Hong Kong and Shanghai Banking Corporation (HSBC) Holdings Plc acquired full ownership of the then Midland Bank – one of the largest acquisitions in banking history.

Hong Kong Needs to ‘Stabilise’

The day after Noel Quinn appeared before the committee, Reuters revealed that HSBC was among several banks accused of suppling the Hong Kong authorities with the bank records of pro-democracy activists without their consent.

It claims that the number of requests for customers’ financial records by Hong Kong Police had more than doubled over the past six months. An executive at a bank in Hong Kong said that the increase was due almost entirely to requests for information about pro-democracy activists.

The distribution of the bank records has been tied to HSBC and its Hang Seng Bank Ltd subsidiary, Citibank and Standard Chartered Plc, the report said.

Steve Tsang, director of the China Institute at London’s School of Oriental and African Studies, said that international banks have become caught in a crossfire and there is little that they can do.

“When the police come and ask for whatever, as long as it is in accordance with the laws of Hong Kong, they have to comply,” he told Reuters. “This can conflict with the expectations people have of their multinationals back in their home country.”

While HSBC may have little choice but to give up any information that is demanded by the Hong Kong authorities, the bank does have a record of endorsing the sweeping new National Security Law which is behind many of the politically-motivated arrests in the city. The law was thrust upon the city by Beijing as a way to bring “stability” following almost a year of pro-democracy protests.

However, Beijing’s idea of stability was a severe violation of the ‘one country, two systems’ framework which was created in a legally binding agreement between the UK and China prior to the city’s handover in 1997.

The National Security Law effectively handed China control of Hong Kong’s courts, allowed Chinese security services to operate on Hong Kong soil and introduced criminal prosecutions for acts such as flying a flag for Hong Kong independence.

In the months prior to the implementation of the law, the bank said that Peter Wong, chief executive of its Asian businesses, had signed a petition in support of the legislation. “We reiterate that we respect and support laws and regulations that will enable Hong Kong to recover and rebuild the economy and, at the same time, maintain the principle of ‘one country two systems’,” it said.

When the Foreign Affairs Committee questioned Quinn on why the bank had taken a political stance – something it has refrained from doing in the past including on the Brexit vote – he said it promised to “stabilise” the city.

“If I go back to where we were in the summer of 2020, Hong Kong had gone through 12 to 18 months of significant decline in its situation,” he said. “We at HSBC issued a statement at that point in time, along with a number of other companies in Hong Kong, that we wanted the security position. We believed it was appropriate to stabilise the security situation in Hong Kong.”

He added that the situation was at that point “damaging not only to the economy but to the people” and claimed that the bank wanted the economy and the communities of the city to “repair”.

Such comments bear a striking resemblance to those made in the Chinese state-controlled tabloid Global Times, which said that the National Security Law would “heal these fatal injuries to Hong Kong” and that “Hong Kong needs to step up to stabilise and refocus”.

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