HSBC slammed by Pompeo over support for HK security law

British bank HSBC has been rebuked by US secretary of state Mike Pompeo for supporting Hong Kong's controversial security law, calling it a “show of fealty”.

In a strongly-worded statement, Pompeo said the US would support its allies against China's “coercive bullying tactics” after Beijing reportedly threatened to punish HSBC and break its commitments to build nuclear power plants in the country if the UK did not allow the technology firm Huawei to build its 5G network.

“The Chinese Communist Party’s browbeating of HSBC, in particular, should serve as a cautionary tale,” he said.

Pompeo described a decision by the bank’s Asia-Pacific chief Peter Wong to sign a petition supporting the legislation as a “show of fealty seems to have earned HSBC little respect in Beijing, which continues to use the bank’s business in China as political leverage against London”.

Rival bank Standard Chartered was also lambasted elsewhere for supporting the legislation, which could see harsher penalties for criticism of Beijing.

Both banks were rebuked publicly by Aviva Investors, the asset management unit of insurer Aviva.

“We are uneasy at the decisions of HSBC and Standard Chartered to publicly support the proposed new national security law in Hong Kong without knowing the details of the law or how it will operate in practice,” said David Cumming, chief investment officer for equities at Aviva Investors.

“If companies make political statements, they must accept the corporate responsibilities that follow,” he added.

“Consequently, we expect both companies to confirm that they will also speak out publicly if there are any future abuses of democratic freedoms connected to this law”.

Pompeo added that Australia and Denmark, among other countries, had recently faced pressure from Beijing proving why countries should "avoid economic overreliance on China and ... guard their critical infrastructure from CCP influence".

HSBC is no stranger to controversy or flexing its political muscle. It threatened to move its headquarters in the UK in 2006 and 2015, complaining about the country's tax regime and what it saw as overzealous regulation, although both came to nothing.

In 2012 the bank paid a $1.9bn fine and entered into a five-year deal with the US Department of Justice (DoJ) for failing to prevent Mexican drug cartels from laundering almost $1bn.

Last year HSBC’s private bank was ordered to pay $192m in penalties and admit to helping US customers hide more than $1bn in assets from tax authorities as part of a deferred prosecution agreement with the DoJ.

The agreement was part of a probe into the Geneva-based bank’s activities between 2000 and 2010.

“HSBC Switzerland conspired with US account holders to conceal assets abroad and evade taxes that every American must pay,” the DoJ said at the time, adding that as of 2007, the private bank had $1.26bn in US client assets that had not been declared to the US tax authorities.

In 2018 HSBC agreed to pay $100m to end private US litigation accusing it of conspiring to manipulate the Libor benchmark interest rate.