news.goldseek.com / By David Galland / January 9, 2013
Every nation-state has a body of laws woven into the fabric of society. As Peruvian economist Hernando de Soto has commented on extensively, the stronger the rule of law, the stronger the economy.
And by “stronger” laws, I mean laws that are impervious to tampering for personal or political gains. The connection between a sound judiciary and economic health is readily comprehensible, except maybe to a politician… businesses and individuals are far more likely to invest capital in a country with understandable laws that are impartially and universally enforced than if the opposite condition exists.
That’s because the lack of a consistent body of law breeds uncertainty and adds a huge element of risk for entrepreneurs. That is the case here in Argentina, where hardly a week goes by without La Presidenta and her meddlesome comrades cooking up some new hurdle for businesses to overcome.
Which brings me back to the matter at hand – American justice on a slippery slope.
Few recent cases make the contention clearer than the announcement last week by the US Justice Department that it had settled its case against HSBC for acting as the bag men for Colombian and Mexican drug cartels. The fine, $1.9 billion, amounts to about five weeks of revenue for the bank.
And that was pretty much it.
Matt Taibbi of Rolling Stone magazine, who can run hot or cold when it comes to reporting, in my opinion, nails his column on the verdict, which you can read here.
The basic setup is that for years, at the highest levels of HSBC, the bank worked hand in glove with the drug cartels to launder their money. So smooth was their relationship that the drug gangs used special cardboard boxes for them to fill with cash – boxes that were designed to fit easily through the teller windows of the HSBC branches in Mexico.