In January it was revealed that HSBC will pay £4m in compensation to victims of illegal debt collection practices. This announcement follows a 13-year campaign to bring legal proceedings against HSBC headed by whistleblower Nicholas Wilson. But considering HSBC is accused of up to £1bn of consumer fraud affecting 600,000 customers, justice is still far from being met. The statement that HSBC is acting ‘voluntarily’ in offering this compensation, coupled with the decision of the Financial Conduct Authority (FCA) to make this announcement on the same day as Donald Trump’s headline-grabbing inauguration, suggest that protecting HSBC’s interests were paramount in this sweetheart deal. However, whilst this cosy relationship between the FCA and HSBC is undoubtedly cause for concern, the lack of media coverage throughout the scandal suggests the bank possesses a much wider ability to protect its own interests through media subversion.
HSBC’s ability to influence its own depiction in the press came to light with the resignation of veteran journalist Peter Oborne from The Telegraph in early 2015. Upon resignation, Oborne claimed the newspaper had censored several stories reporting various illegal activities involving HSBC for fear of losing lucrative advertising revenue from the bank. Since then, both whistleblower Wilson and journalist Nafeez Ahmed have exposed a conspiracy of silence around HSBC’s illegal activities within the wider media for fear of losing the bank’s advertising revenue. This silence has extended to the BBC, which has also been accused of censorship following the eyebrow-raising appointment of HSBC director Rona Fairhead as chair of the BBC’s board of trustees.
Quiet politics and business power.
Public opinion is important to corporations such as HSBC as they need to attract customers. However, the real value of media subversion is in political influence. The concepts of ‘quiet politics’ and ‘noisy politics’ developed by American sociologist Pepper Culpepper to demonstrate how ‘political salience’ is key to political outcomes offer a useful framework through which to examine the influence of HSBC.
Culpepper’s comparative study of state policy reactions to hostile takeovers found that lobbying and financial contributions from business groups had a limited effect when it came to influencing policy if the outcome the business groups desired faced opposition from the electorate – after all, politicians need votes to maintain power. Business groups are more likely to achieve their desired political outcomes on issues of ‘low salience’ to which the electorate are largely indifferent to or unaware of (quiet politics). In contrast, business groups are less likely to achieve their desired outcomes on issues of ‘high salience’ which generate intensified scrutiny and unpopularity among voters, causing politicians to adjust their positions to maintain electoral success (noisy politics). Utilizing these concepts, we can see how HSBC’s relationship with both the government and the media has determined its capacity to achieve favourable policy outcomes.
From ‘Big Bang’ to ‘light touch’ to financial crisis.
HSBC has enjoyed good relations with state actors since it moved its headquarters to London in 1991 following the Thatcher government’s ‘Big Bang’ regulatory revolution designed to attract big global banks to the City. This relationship was nurtured by the successive Labour governments’ ‘light touch’ regulatory approach, which allowed banks to indulge in risky investment techniques so long as economic growth was steady. This cosy relationship was typified by then chancellor Ed Balls’ address to the British Bankers’ Association in 2006, in which he asked: “What more can I do […] to support and enhance the critical role that the banking industry plays in our economy?”
Unfortunately for both parties, all good things must come to an end, and this relationship hit the rocks after the 2008 financial crisis. Public outrage at banks’ reckless investment practices and government bailouts fueled anti-bank populism, and a ‘tough on banks’ rhetoric was utilized by all political parties in their 2010 general election campaigns. But once the Conservative-led coalition government took office, it soon became clear where their allegiances lay.
Intensified media scrutiny saw widespread coverage of a succession of scandals involving HSBC (such as the Libor and money laundering scandals). Yet despite tough talk from the government, punitive action was minimal. The ineffectiveness of Cameron’s austerity government in combatting tax evasion brought their motives and relationship with HSBC under increasing scrutiny, and further revelations that HSBC’s Swiss branch was intentionally advising customers on tax avoidance increased the pressure on the government to take action against the bank.
A conspiracy of silence.
The debt collection scandal that Wilson had been trying to expose could have been the scandal that broke Cameron’s back. If Wilson’s claims are true, then this scandal could amount to the biggest case of banking fraud in British history. If the government were found to be complicit in this, they would have lost all legitimacy, with potentially disastrous electoral consequences.
Yet the media remained silent. Wilson accuses Cameron of being personally involved in this media subversion, not least for his role in electing Rona Fairhead to the BBC board of trustees. Since she joined the board, the BBC has not reported any news relating to HSBC’s fraudulent activity that has not already been reported elsewhere. Wilson also suggests that close personal ties between Cameron, Fairhead and the assistant editor at The Times were responsible for a story regarding this scandal being spiked at the last minute without explanation (with Cameron later granting said editor a peerage).
The integrity of The Guardian, who led the way in reporting the Swiss Tax scandal, has also been called into question after it failed to report on the debt collection scandal. Revelations in early 2015 that the newspaper had become the biggest recipient of HSBC’s digital advertising revenue suggested the paper’s motives had been compromised.
Of course, most of this evidence could be dismissed as circumstantial, but this media blackout, whether coincidental or manufactured, helped HSBC weather the storm. Moreover, both Cameron and former chancellor George Osborne’s resignations after the Brexit referendum have taken some of the heat off scrutiny over HSBC’s interactions with the government. Without sustained media scrutiny, HSBC can once again operate within the arena of ‘quiet politics’, where it can make plum deals such as the paltry compensation package agreed with the FCA.
Capitalism and the state.
Obviously, HSBC’s actions are motivated by profits and shareholder value, but why is the government so keen to protect the bank’s interests? Close relationships between the FCA regulators and the banking industry are typical of revolving door politics, and Osborne’s recent venture into a cushy financial job suggests that forging good relationships with banks whilst in office is a sensible career move.
Whilst it would be naive to suggest this kind of corruption is not influential in shaping policy outcomes, the influence of corporations such as HSBC is also contingent upon institutionally embedded ideational beliefs that big banks are good for us. Ralph Miliband famously argued in Capitalism and the State that business groups hold a privileged position in the capitalist state because governments are reliant upon their investment in the economy to create the jobs and growth governments need to get re-elected. As such, businesses will enjoy favourable outcomes when it comes to shaping policy.
As Britain’s biggest bank, HSBC has huge structural significance for the British economy – as an employer, a money lender, and holder of huge capital assets – and therefore enjoys a privileged position when it comes to influencing government policy. Moreover, HSBC has been known to weaponise this structural position to lobby government by threatening relocation.
So long as state actors retain institutionally embedded ideational beliefs that big banks are integral to the economy and are beneficial to society, then banks such as HSBC will continue to hold considerable power. But as this power is somewhat contingent upon public opinion, building a media independent from corporate and government influence is of fundamental importance in holding corporations and state actors to account.