Former Arizona State Senator Karen Johnson
September 14, 2012
Profits Over Patriotism
Every night, drug smugglers gather at the border between Arizona and Mexico waiting for nightfall so they can sneak into the U.S. with their loads of methamphetamines and cocaine. This is the doorway to heaven for the drug lords. Arizona is the drug highway by which 60 percent of illegal drugs enter the U.S., eventually earning billions in profits for the drug cartels. Now comes the news that the cartels and terrorists have not only penetrated the border but have also infiltrated our banks and spread their corruption into the financial system. A few months ago, author Jerome Corsi broke the story that the U.S. office of a London-based international bank (HSBC) was being investigated for money laundering for international drug cartels and terrorists. HSBC, one of the largest banks in the world, has about 7,500 offices in more than 80 countries and territories in Europe, North and South America, the Asia Pacific region, the Middle East, and Africa. Their U.S. headquarters is in New York.
On July 17, the Senate Permanent Subcommittee on Investigations issued its findings on HSBC. Among other things, the bank was accused of “facilitating transactions that hinder U.S. efforts to stop terrorists, drug traffickers, rogue jurisdictions, and others from using the U.S. financial system” and “providing U.S. correspondent services to banks with links to terrorism.” (“Correspondent services” are financial services that are provided to foreign banks.)
Here’s how it works. The drug cartels and terrorists funnel their dirty money through foreign banks with lax standards. Then those banks transfer the funds into U.S. banks through shell companies and other phony bank accounts. Camouflaged in multiple layers of false transactions, the dirty money is difficult to trace back to the crimes from which it came. After moving through several disguised accounts, the dirty cash looks clean.
HSBC’s operation in the United States is called HSBC Bank of the U.S. (HBUS), and it is one of the largest U.S. processors of transactions for foreign financial institutions. Over a period of several years, bank regulators in the Department of the Treasury repeatedly cited HBUS for money-laundering violations. HBUS executives responded by dutifully drawing up new policies to correct the violations. Then the bank simply ignored the new policies and continued to operate in violation of the law. When the next audit was performed, the regulators discovered the continuing violations and issued new citations. The bank responded with new written policies, and then continued with business as usual, ignoring its own policies. The game was played out dozens of times with citations, new policies, and ongoing money laundering activities that were never corrected. The outlaw bank seemed immune to law enforcement.
Now pause for a moment and go back in time to August 15, 1914. That’s the date of the opening of the Panama Canal – one of the great wonders of the modern world and a tribute to American ingenuity and perseverance. A massive series of interconnected locks and dams allows ships to be raised 85 feet above sea level over the isthmus of Panama and then lowered again to the sea on the other side by raising and lowering water levels in the various locks.
Until 1914, all previous attempts to build a canal across the isthmus had failed. Between 1881 and 1889, 20,000 employees of the French Canal Company died from malaria, yellow fever, and other tropical diseases. After 8 difficult years, the company went bankrupt and gave up, conquered by disease, thick jungles, and landslides.
When the U.S. succeeded in building the 51-mile canal across the isthmus, ships were able to cross from the Atlantic to the Pacific for the first time in history without having to sail all the way around Cape Horn at the southern tip of South America.
The Panama Canal has great commercial value to the United States and many other nations. Cutting down transit time means lowering the cost of moving goods and products. But the most significant aspect of the Panama Canal is its strategic military value. The United States is partly surrounded by vast oceans, making us particularly vulnerable to attack by sea. Thus, our Navy is a crucial component of our national defense. And if the Navy is important, then the Panama Canal is (or was) the crown jewel of the U.S. Navy. The United States has two wide-open coastlines thousands of miles apart, facing two different oceans, on the eastern and western edges of the country. Ideally, we would have two Navies, one to protect the eastern, or Atlantic, seaboard and one to protect the western seaboard on the Pacific. Maintaining two Navies would be very costly, however. In the absence of two full Navies, the next best thing is to be able to move ships quickly between the Atlantic and Pacific Oceans as needed. Until 1914, however, we were blocked from doing that by the land masses of Central and South America.
It takes approximately 30 days to move a ship from the Atlantic to the Pacific by sailing around the southern tip of South America. Thirty days is a long time during a crisis. Thirty days can mean many lives lost and it can make the difference between winning or losing a war. Transit through the Panama Canal takes only approximately 8 hours, which makes the Navy much more able to quickly move from the Atlantic to the Pacific in order to defend our country’s two coastlines. Upon its completion, the Panama Canal became our most important military asset.
In 1977, to the utter horror of loyal Americans, and despite immense public opposition, President Jimmy Carter signed over ownership of the canal to Panama, which was then under the communist dictatorship of Omar Torrijos, who had seized power in a military coup. Torrijos then turned around and surrendered the U.S. military bases at the eastern and western ends of the canal to the communist Chinese.
Considering the military and commercial importance of the canal, why would President Carter do such a thing? Why would he just give the Panama Canal away? The answer is simple: money.
A bank is a business, just like any other company that manufactures a product or markets a service. The “product” that banks offer is money, in the form of interest-bearing loans. Manufacturers sell shoes or paper clips or corn flakes. Banks sell loans. Bank profits come from lending out the money that depositors place with the banks and then charging interest on those loans. The larger and longer the loan and the smaller the repayment amount, the bigger the profit. Banks especially love making loans to foreign governments because those types of loans are usually huge and long-term with enormous interest payments (profits) to the bank. A bank would much rather loan a zillion dollars to a Third-World nation with a long-term payback schedule than to loan $1,000 to a small businessman who is anxious to get out from under the debt as quickly as possible. It’s a lot more work for the bank to process hundreds of small loans than to process one gigantic loan to a Third-World nation.
Under Torrijos, Panama wracked up millions of dollars in loans from more than 30 international banks. Panama’s economy slowly sank under the crushing weight of debt, with interest eating up the tiny nation’s resources until it became clear that Panama would surely default, the banks would have to write off the loans, and the banks’ risky loan practices would be exposed to thousands of unhappy stockholders. One solution would have been to let the loans default and the banks absorb the loss (as they should have). The banks, of course, wanted to avoid default at all cost. They preferred to find a rich new source of income for Panama that would provide a constant stream of cash so the Torrijos government could continue to make the payments on its loans.
And where could an impoverished Third-World country run by a tin-horn dictator like Torrijos find a rich and endless stream of income to bail them out of their problem? Voila! The Panama Canal. The most valuable piece of real estate in all of Panama.
Thus began one of the most intense lobbying campaigns in American history. The goal was to persuade Congress and President Carter to give the Panama Canal to the Panamanian government. Panama would thus have a guaranteed annual revenue of $10 million from the tolls generated by the canal traffic, which would enable the Torrijos government to make their loan payments to Chase Manhattan, First National Bank of Chicago, Citibank, Marine Midland Bank of New York, and more than 20 other financial institutions which had made risky loans to the Torrijos government.
It was a classic government bailout. The canal tolls should have gone to the U.S. Treasury (i.e., the U.S. taxpayer). Instead the tolls would be paid to Panama, which would use the money to make their loan payments to the banks. In effect, American taxpayers would be paying off Panama’s debts instead of Panama. Panama would be happy. The banks would be happy. And U.S. citizens would foot the bill.
It’s hard to find words to describe the sheer arrogance of such a scheme. There was not even the slightest basis for giving the canal to Panama. The Panama Canal was indisputably a U.S. property. The U.S. had paid for the canal four times. First, we paid the Republic of Panama $10 million outright for rights to and sovereignty in the canal zone, plus we agreed to pay Panama an ongoing annual subsidy for the privilege of remaining there. That annual subsidy began at $260,000 per year and increased over the years to $2.3 million by 1977 when President Carter negotiated the surrender of the canal. Second, we paid $90 million to more than 3,000 individual landowners who owned property in what would become the canal zone. Third, we paid $40 million to the French Canal Company which had attempted unsuccessfully for eight years to build a canal across the isthmus.
We purchased their rights, their land, and all their property and equipment in the canal zone. Finally, we paid a $25 million-dollar peace offering to the government of Colombia, which was miffed that the Panamanians had revolted from the unstable Columbian government and formed an independent nation, thus depriving Colombia of the spoils of the canal treaty. Everyone who had even the most tenuous claim received compensation for selling their land and their rights to the U.S. government. The Panama Canal belonged to the U.S. or, more precisely, to the U.S. taxpayer. It was an irreplaceable commercial asset and the most important defense asset in our entire military arsenal. The idea of just giving it away to save the hides of a bunch of scheming bankers was outrageous and diabolical. Nevertheless, that was the plan.
President Carter apparently wasn’t hard to persuade. In his first official act after being sworn in as President, Carter signed a Memorandum to begin negotiations to give away the canal. He appointed Sol Linowitz as a co-negotiator for the proposed giveaway. Linowitz was a member of the Board of Directors of Marine Midland Bank, which had a $115 million loan out to Panama. This conflict of interest wasn’t lost on the U.S. Senate, which refused to confirm Linowitz’ appointment. However, President Carter could make a six-month “temporary” appointment without Senate approval, and that’s what he did. He evaded the confirmation process and seated a negotiator whose main interest was in saving the international bankers, not in protecting the property of American taxpayers or preserving national defense. Linowitz concluded the treaty negotiations just hours before his appointment expired.
The average American was unaware that the real issue in the Panama Canal giveaway was the bank bailout. As might be expected, the media helped in the cover-up. They demonized the U.S. as an imperialist villain which had robbed the impoverished Panamanians of their land and imposed its will upon them. The giveaway was framed as a gesture of goodwill to rectify supposed U.S. sins and apologize for its bad behavior. With President Carter pushing hard for the Treaty, it was quickly ratified by the Senate in 1978, a few months after the negotiations ended. The crown jewel of the U.S. Navy, worth millions of dollars, was stolen from the American people in order to save the sorry bank executives. Marine Midland Bank Director Sol Linowitz would later refer to his key role in the giveaway of the Panama Canal as, “... the accomplishment of which I am most proud."
But duplicity has its reward. In 1980, one year after the Panama Canal Treaty was confirmed, a Chinese financial empire ate Marine Midland Bank. The Chinese institution had managed to acquire a 51-percent controlling interest in Marine Midland and then continued to buy up more shares. By 1987, the Chinese bank owned 100 percent of Marine Midland. Fat, rich, and careless, Marine Midland was gobbled up by a fatter, richer and more ruthless bank. After shoving our most important military asset into the jaws of the communist Chinese, Marine Midland was itself then devoured by the same beast.
What, you might wonder, is the name of the bank that consumed Marine Midland? It’s HSBC, the same bank now accused of laundering drug and terrorist profits. Though based in London, HSBC is Chinese. The initials stand for Hong Kong Shanghai Bank of China. The U.S. branch of the bank, HSBC Bank of the U.S. (HBUS), is the former Marine Midland, and Marine Midland is HBUS. The scoundrel institution that gave away the Panama Canal is the same outlaw bank now laundering the profits of terrorists and drug cartels.
If money is the lifeblood of the banking industry, then power is the elixir that hydrates the black souls of the international bank executives. A 2009 Hollywood film, The International, explains how banks acquire power. The film was loosely based on the real-life BCCI international bank scandal in the 1990s. In the film, a character named Mr. Calvini, explains to investigators the ultimate goal of bankers:
“It’s about control .... Their objective ... is to control the debt .... You control the debt – you control everything .... This is the very essence of the banking industry, to make us all – whether we be nations or individuals – slaves to debt.”
Every individual who has ever gotten over his head in credit card debt understands this. A helpless feeling of dismay engulfs the debtor as payments consume his paychecks each month. He goes to work each day to pay the credit card company. Neither his money nor his time nor his labor belong to him anymore. They all belong to the card company, which will ruthlessly pursue him for every penny of the debt. Thus is an individual enslaved to his creditors.
It works the same way with nations. Nations that borrow heavily are soon enslaved as well. Once enslaved to debt, a nation is owned by its creditors every bit as much as an individual is. A country with out-of-control debt is dangerous and unpredictable. It no longer responds to the wishes of its citizens. In order to hang onto power, its leaders work only to please its creditors, lest the creditors pull the rug out from under them by calling in the debt, which would bring the national economy crashing down upon the government’s head. Control the debt; control everything.
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When bank executives like those at HSBC make risky loans to third-world countries, they understand that the loans may default. But laundering money for the drug cartels and terrorists keeps cash coming in which can be used to make additional lucrative loans to countries already awash in debt or to other third-world countries to tie a noose around them as well. Deposits from cartels and terrorists help to keep the bank solvent. Who really cares where the money came from? A great statesman calls this sort of game “profits over patriotism.”
Meanwhile, as the sun sets in the west tonight, hundreds of drug smugglers and illegal aliens gather on the Arizona/Mexico border to wait for darkness so they can creep into our country while the traitorous Washington bureaucrats sleep peacefully. Eventually, the drug profits will find their way to HSBC and other international banks. And so it goes, day after day, night after night, profits over patriotism, as our country fades into the shadows of history.
© 2012 Karen Johnson - All Rights Reserved
Jerome Corsi, Worldnet Daily, July 30, 2012, “HSBC
Says $700 Million Set Aside for Fines.”
2. Senate Permanent Subcommittee on Investigations, “U.S. Vulnerabilities to Money-Laundering, Drugs, and Terrorist Financing: HSBC Case Study,” July 17, 2012, pp. 8-9.
3. Congressman Philip M. Crane, Surrender in Panama: The Case Against the Treaty, Dale Books, 1978, pp. 15, 28, 30, 42.
4. Washington Post, “Sol Linowitz Dies; Carter-Era Envoy Helped Found Xerox,” March 19, 2005, p. B06.
5. Columbia Pictures and Relativity Media, The International, produced by Charles Roven, Richard Suckle, Lloyd Phillips, written by Eric Warren Singer, directed by Tom Tykwer, 2009.
Karen Johnson served in the Arizona legislature for 12 years, from 1997 through 2004 (AZ House of Representatives) and 2005 - 2008 (AZ Senate). Her all-time favorite committee assignment was chairing the Federal Mandates and States' Rights Committee. During her service in the legislature, she supported the Second Amendment, individual, property and of course states rights, as well as the Right to Life, and she still does. Karen and her husband, Jerry, have 11 children and 35 grandchildren. She believes strongly in the doctrine of liberty and does not desire to be tethered to ANY particular party.