HSBC did not face criminal prosecution in the US over a money laundering scandal because of concerns that it would spark a "global financial disaster", a report has revealed.
The bank was accused of allowing drug cartels to use US branches for money laundering purposes. HSBC paid a $1.92 billion (£1.48bn) settlement fee in 2012, but neither the bank nor its bosses faced any criminal charges.
A US Congressional report revealed that the UK "hampered" and "influenced" the decision. In particular, it references pressure from Chancellor George Osborne, who claimed the US would create turmoil in financial markets by pursuing criminal charges.
The report reads: "George Osborne, Chancellor of the Exchequer, the UK's chief financial minister, intervened in the HSBC matter by sending a letter to Federal Reserve Chairman Ben Bernanke... to express the UK's concerns regarding US enforcement actions against British banks."
In his letter, Mr Osborne said criminal charges against HSBC would have "very serious implications for financial and economic stability, particularly in Europe and Asia".
Peter Carr, spokesperson for the US Department of Justice, which made the decision not to prosecute, said there were a number of factors in its choice. He cited possible "adverse consequences for innocent third parties, such as employees, customers, investors, pension holders and the public" as one of the key contributors in its decision. Mr Carr also accused former US Attorney General Eric Holder of misleading Congress over the decision.
"Rather than lacking adequate evidence to prove HSBC's criminal conduct, internal Treasury documents show that DOJ leadership declined to pursue [the] recommendation to prosecute HSBC because senior DOJ leaders were concerned that prosecuting the bank 'could result in a global financial disaster'," the report said.
