Too Big to Jail by Chris Blackhurst

Author:Chris Blackhurst
Language: eng
Format: epub
Publisher: Pan Macmillan

NINE

The whistleblower who wasn’t a whistleblower

Everett Stern had always wanted to join the Central Intelligence Agency. More specifically, since he was a teenager he had dreamed of being in the CIA’s National Clandestine Service, as a spy, collecting intelligence on enemies of the state. Stern was born in New York City, grew up in Florida and went to college at Florida Atlantic to study for an arts degree. A relationship ended, and he decided to fulfil his desire to serve his country, to travel, to nail those who wanted to do America harm, so he applied to become a spook. He was interviewed but failed to be accepted. It was a shattering blow, a life’s dream up in smoke, and instead he went on to complete an MBA at Stetson University in May 2010. After that, and stuck for something to do, he saw an online advert for a bank that was looking to boost its anti-money laundering programme. Intelligence gathering . . . money laundering, it had the similar whiff of intrigue and excitement. The bank was attractive, too: HSBC, which was global, substantial and clearly going places – a journey that he wanted to be a part of. He filled out the forms and was called for interview. To his delight, he was taken on, aged twenty-six, to start in the bank’s offices in New Castle, Delaware, in its expanded anti-money laundering push. HSBC had asked the consulting firm, Deloitte, how it should best deal with the growing litany of issues surrounding the bank and money laundering. The US authorities had been leaning on the bank to bring in external ‘independent’ experts to help and Deloitte, with revenues of $26.6 billion and 170,000 staff in 2010, was more than an auditor, its usual description as one of the ‘Big Four’ firms that audit accounts worldwide. It had several business arms, including Financial Advisory Services, or FAS, which covered compliance and money washing checks for clients. HSBC, which should have tackled anti-money laundering in-house many years earlier, had found itself, thanks to the authorities in Mexico and the US, crawling all over it asking awkward questions, needing to bring in outsiders for assistance. These experts were supposed to act objectively, not for the bank or in tandem with HSBC, which is something that the authorities were particularly insistent on.

Deloitte’s FAS unit was selected to assist HSBC because it had built up a nice business advising other banks in the same specialist and reputationally dangerous field of anti-money laundering. In 2004, FAS had been called in after the New York State Banking Department and the Federal Reserve Bank of New York had identified weaknesses in Standard Chartered’s anti-money laundering processes at its New York branch. Deloitte was meant to behave independently of Standard Chartered, but years later, it turned out they hadn’t. Subsequently, Deloitte were hit by a $10-million fine from the Superintendent of the New York State Department of Financial Services, Benjamin Lawsky, and he was so annoyed that

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