AIB, Nama adviser linked to HSBC row
The Department of Finance refused to comment on Mr Geoghegan’s involvement in the Senate investigation of HSBC, but admitted it had been unaware that any investigation had been under way.
A spokesperson for AIB said while Mr Hodgkinson was mentioned in the report he was not a under any suspicion.
“David Hodgkinson is not a person of interest in this inquiry,” a spokesperson for the bank said.
The report by the US Senate’s permanent subcommittee of investigations laid out details of HSBC’s subsidiaries transporting billions of dollars of cash in armoured vehicles, clearing travellers’ cheques worth billions, and allowing Mexican drug lords buy planes with laundered money.
HSBC also moved money from Iran, Syria and other countries on US sanctions lists and concealed the payments.
Both Mr Hodgkinson and Mr Geoghegan are mentioned in relation to the HSBC’s operations in Iran.
The Senate drew inference from correspondence between Mr Hodgkinson and group HSBC compliance officer David Bagley that the bank was aware of ongoing concealing of payments even after they had been warned by the US Treasury under-secretary for counter terrorist financing and sanctions, Stuart Levey to cease trading.
The Senate subcommittee said that correspondence between Mr Bagley and Mr Geoghegan that mentioned Mr Hodgkinson revealed the bank had known of problems with at least one client.
In the communications Mr Geoghegan, who was the CEO of HSBC at the time, said he ordered all except contractually committed relationships to be ceased with the unnamed Iranian institution.
“This is not clear to me because some time ago I said to close this relationship other than for previously contractually committed export finance commitments,” Mr Geoghegan said.
The report said: “Mr Bagley also wrote that he had discussed the matter with David Hodgkinson, and they agreed that HSBC “should immediately withdraw from [redacted] and also withdraw from all Iranian bank relationships in a co-ordinated manner.”
From this correspondence, the Senate committee concluded that the bank was aware of problems with a client and continued to trade with them until after a US government warning.
“These communications indicate that HSBC officials had previously known about problems with one particular Iranian client but that it did not end the relationship until after a warning from the US government,” the Senate report stated.
Mr Bagley had in fact raised the issue with David Hodgkinson three years earlier in 2004 when Mr Hodgkinson was deputy chairman of HSBC Middle East Bank.
The Senate subcommittee found documents that showed HSBC continued to process Iranian transactions using cover payments and deleting any references to Iran in the payment instructions after a deadline to do so had passed to end the practice on New Year’s Eve 2003.
The report stated that Mr Bagley “confronted” David Hodgkinson about ongoing Iranian payments in 2004.
The report stated: “David Bagley confronted HBME deputy chairman David Hodgkinson about the need to change how HBME was handling US dollar clearing activity for Iranian banks.
“Mr Bagley wrote that he was ‘uncomfortable with this activity in its current form’, and ‘the amount of revenue may not justify’ the ‘additional work and investment’ required, ‘nor would it justify ru[n]ning the reputational and regulatory risk in the US’.
“He expressed his willingness to discuss the issue further, but suggested ‘that any such conversation take place over the telephone, as we are seeking to avoid correspondence with HBUS on this sensitive issue other than through lawyers so as to preserve privilege’.”
Fianna Fáil’s spokesperson on Finance, Michael McGrath, said: “I believe the Minister for Finance, Michael Noonan, should have the report carefully examined to see if it has any implications for the two senior executives, Mr Geoghegan and David Hodgkinson, who now occupy crucial roles in the Irish financial services sector.”
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