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UK-based Michael Mason-Mahon, who is helping bank customers to resolve their grievances, says he has been shocked and disgusted by the behaviour of HSBC towards their customers in India. Here are the excerpts from his interview to Moneylife
UK-based Michael Mason-Mahon is small private shareholder of Hong Kong and Shanghai Banking Corporation Ltd (HSBC). Over the past four-five years, he has been helping people across the globe to resolve their grievances against HSBC. Recently, he visited India to meet and help resolve complaints of several customers of HSBC. He also had meetings with officials from the Finance Ministry and Reserve Bank of India (RBI), which according to him were “not too encouraging” as everybody tried to re-direct him to someone else and nobody was willing to act or take responsibility for HSBC's actions.
In an interview to Moneylife’s Yogesh Sapkale, Mr Mason-Mahon raised several questions on HSBC’s operations in India.
Here are the excerpts from the interview…
Yogesh Sapkale (ML): You hold a small stake in HSBC and have been keeping the ‘shareholder spring’ alive by questioning management during shareholder meetings. What is your view about the operations and behaviour of HSBC bank, which is fifth largest lender in the world?
Michael Mason-Mahon (MM): Douglas Jardine Flint, Group Chairman of HSBC Holdings Plc often states how important HSBC’s reputation is. Similarly, Stuart Gulliver, its chief executive, talks about HSBC’s values and staff acting with courageous integrity, empowering staff to do the right thing. The same lender was fined by both the US and UK regulators for breaking several laws against doing business in Syria and Iran and also with drug cartels from Mexico.
Last year, HSBC paid out $4.2 billion to cover cost of its past wrongdoing. This includes, $1.92 billion fine in the US for allowing itself to be used to launder a river of drug money flowing out of Mexico and other banking lapses. As per the US Justice Department, Mexico's Sinaloa cartel and Colombia's Norte del Valle cartel between them laundered $881 million through HSBC and a Mexican unit.
And yet, despite all the ‘dodgy dealings’, HSBC rewarded its top executives. Its top 16 executives were paid $4.9 million each. And Mr Gulliver ‘proudly’ says the bank’s performance had been strong enough to allow it to increase dividends by 10%.
But this is not limited to large customers or corporate clients. Even small customers are facing several issues with HSBC. Just a simple search on the Internet will show you thousands of complaints about HSBC and its behaviour. Especially, several people from India have complained about being threatened, intimidated and blackmailed by the staff. Some customers, who never received any statement for their credit cards are being asked to pay huge money and are being threatened with credit bureau like CIBIL reporting. Some customers are falsely reported to CIBIL for failing to comply with the rules and regulations. Some customers are even being asked to sign blank letters of instructions (LOIs). All this is violating people’s rights and violating the Indian Penal Code (IPC).
ML: You have been raising several grievances related with HSBC and helping customers who feel cheated by the Bank. How and when did you start doing this?
MM: I started helping people in April 2010. A friend of mine from India asked me to help a client, and I did. I worked on the case, I spoke to the person. I was shocked when I was told to investigate. I went on to the Indian Consumer Forum site and found that this was not a lone case. Several people contacted me for help. I did my best to help these people and within about three months, I managed to get results in 13 cases. The results were to the satisfaction of these customers and not HSBC's satisfaction.
ML: US Senate investigation report says, HSBC provided a, "gateway for terrorists to gain access to US dollars and the US financial system". Is this, according to you limited to the US or spread in other countries as well?
MM: HSBC has stated categorically that they will always keep high standards and follow rules and regulations in any country they operate. Personally, I can honestly say, it is the standard line that is issued time and time again that has no reality in it. Because, in reality as we have seen around the globe that this organisation been penalised by authorities, regulators. So this statement ‘HSBC complies with rules and regulations’ is a myth.
I have reported several misdeeds of HSBC to its Board of Directors, especially threatening behaviour of its staff, illegally registering people with credit bureau, taking out money from account without the customer’s permission and so on. I have been shocked and disgusted by the behaviour of HSBC in India towards their customers in India. Even Mr Flint, the group’s chairman has ignored customers who have contacted him directly concerning their serious problems with HSBC India and referred their complaints back to India.
ML: You have questioned the behaviour of HSBC with its chairman and board of directors at AGMs in the past? What was the reply you received?
MM: In one simple word, B****hit. I asked the chairman of HSBC to tell me the truth during the AGMs in 2011 and 2012. Mr Flint’s response was to provide false and misleading information to the shareholders at the AGMs. Especially responding to issues faced by Indian customers, Mr Flint feigned ignorance!
Is this man ignorant about the rules and regulations in India or are we talking about the chairman of the fifth largest bank in the world? How ignorant can you be? This is the same man who had ignored customers who contacted him directly concerning their serious problems with HSBC India and referred their complaints back to India.
ML: One of the major allegations against HSBC is the fraud in its credit card business, especially in India. Can you explain it in detail?
MM: Yes. There are two sides of this story. People who have credit cards with HSBC and I am not saying that all customers of HSBC are cheated. But there is percentage of them.
It started many years ago, when HSBC wanted to expand its credit card operations here in India and had two and half million credit card holders in a short span of time. At that time, HSBC did not have that many branches, may be they had 40-50 branches then. So the only way they could have so many credit card customers was through direct sales agents (DSAs). And it is here, when HSBC’s series of problems became a critical problem. It was serious as well as critical because people who have been misled, people who have been deceived started complaining. However, majority of these complaints were ignored. There are complainants I do not only know personally, but I have read the stories and contacted them, or I find them on the internet.
Many credit card holders have stated they never received statements for up to six years. When they contacted, HSBC demanded that they should pay first else there would be penalty charges, or the customers would find (themselves) their names as defaulter in credit bureau list.
Take the example of Sanjeev Kumar. He never received any credit card from HSBC bank and never received any statements for due amount or a reminder statement. And yet, on 13 August 2009, the bank deducted Rs39,093.42 from his account, leaving him and his family with zero rupees. HSBC left no money for food, no money for rent and not a single rupee in his account. HSBC Bank did return Rs11,990.13 subsequently, on 20 August 2009 to his savings account. When he wanted to close ‘his credit card’, the bank did not allow him to do so.
In December 2010, HSBC entered into Kumar’s account and made a credit of Rs29,780.38, without his authorisation or agreement. When Kumar refused this settlement, HSBC refused to answer him. Since December 2010, Kumar has contacted Stuart Davis, the erstwhile CEO, and Mr Milne, the then CEO of HSBC India, in addition to Mr Flint, the Group Chairman. They have all refused to answer the simple question: What legal right did HSBC have to enter into his account and deposit money without his authorisation or agreement?
When we sorted his case out, he turned around and said to me, thank you for giving me my life back, my family’s life back and I was so humbled by those words. And it still has effect on me today. I didn’t do anything, just helped him resolve his situation, and it was resolved by HSBC in such a way that where they just paid him interest. All along HSBC knew it’s all in the rules and regulations that he was entitled to (receive) double (compensation).
ML: You are coming to India regularly and helping many people here as well as you are meeting with the regulators and ministry in India about the HSBC, so what is their response?
MM: I tried meeting with Dr Raghuram Rajan, the Governor of the RBI, this was not possible, which I do understand. When I asked if the Governor would appoint someone else to meet with me I was told I would have to put this in writing, which I do not understand. I did comply with their request, only for the RBI to keep denying they ever received my e-mails or faxes, which I do find highly suspicious (my ISP would have stated e-mail was failed to be delivered and why would the fax machine state the fax was delivered?).
The only logical reason for the RBI denying they have received my e-mail and faxes, because this gives the RBI THE DENIABILITY FACTOR.
I also sent the same e-mail to the Secretary of Finance and they received my e-mail and they would not meet with me.
Not one person either in the RBI or the Ministry of Finance have shown any interest in investigating HSBC in India. Without a proper investigation HSBC may been committing illegal and criminal actions in India for many years.
As the records show the HSBC Group has been committing illegal and criminal behaviour around the world for many years. Why would the Indian Government refuse to investigate HSBC in India? How many tens of thousands of lives have HSBC ruined in India? How many ten thousands people have been falsely registered with CIBIL by HSBC in India?
If HSBC in India has been falsely registering debts against people who have never held a credit card account. If HSBC in India has been writing these debts against their tax liability's, would this mean HSBC India has been committing tax fraud in the country?
That the press in the UK do not care about the fraud been committed by the HSBC in India.
In one case, in 2009, Justice Appa Rao, who wrote the judgment, clearly held that there is deficiency in the service rendered by HSBC, which 'had acted against the guidelines issued by the Reserve Bank of India (RBI) and Banking Codes Standards Board of India (BCSBI) in regard to the code of bank's commitment to customers'.
The bank not only failed to rectify its mistake but also flouted all the rules, regulations and the guidelines issued by RBI and BCSBI, the judge said and awarded the compensation to the petitioner.
What is the Governor of RBI doing? What is the Ministry of Finance doing? They don’t have to listen to Michel Mason Mahon? They don’t have to listen to the many tens of thousands of people’s whose lives that have been ruined by HSBC in India.
I did hope and think that Dr Rajan, the new Governor of the Reserve Bank of India, would order an investigation into HSBC India.
ML: So what’s next for you?
MM: I will once again go to the shareholders meeting of HSBC Holdings Plc on the 23 May 2014. This is to question the Chairman Mr Douglas Flint and the Board of Director about why is HSBC India still committing illegal and criminal behaviour in that country?
Complaints are still coming in and people still need my help.
Did HSBC India sell their written off credit card and personal loan debt to JM Financial and they knew there was serious problems with the data base?
I have to congratulate JM Financial that it was able to resolve very quickly complaint concerning. I informed JM Financial about the serious problems concerning the personal details HSBC India had supplied them with.
With HSBC Holdings Plc barring me from helping represent anyone in the world, even my own wife, isn't this action illegal?
Has Mr David Lewis the head of Customer Relations at HSBC Bank acted in an illegal manner, by stating that he was going to inform the RBI that HSBC Bank had forced me to close my accounts?
Did Mr Lewis also provide false information concerning my accounts in an internal e-mail?
Why has the Chairman Mr Flint failed to stop senior managers from committing illegal and criminal behaviour?
I do refer to Mr Flint's statement to the shareholders at the 2011 AGM and the 2013. At the 2011 the Chairman stated that it was an invidious irritation to be registered on CIBIL, this was totally false.
At the 2013 AGM, I raised a question on behalf of Sanjeev Kumar concerning HSBC India entering Mr Kumar's bank account and depositing money illegally.
Mr Flint the Chairman of HSBC Holdings Plc made a joke of Mr Kumar's question. Why would the Chairman trivialise Mr Kumar's question?
Is Mr Flint treating customers and a shareholder in India differently from customers and a shareholder in the UK?
I did discuss two cases with Mr Hennity part of HSBC Holdings Plc legal department two years ago and asked Mr Hennity to settle two cases, the first case was that of Ms Suchitra Krishnamoorthi.
So why did HSBC India settled Ms Krishnamoorthi's claim within 24 hours two years later?
Moneylife has helped Ms Krishnamoorthi and I do believe without Moneylife's help Ms Krishnamoorthi would never have achieved a settlement.
Moneylife has helped to expose the illegal and criminal behaviour of the HSBC Group in India.
I just being contacted by the woman in United States, because she is another victim of the HSBC Group. Is HSBC Holding Plc still committing illegal and criminal behaviour in the USA?
Has HSBC Holdings Plc broken the Deferred Prosecution Agreement?
I ask, please India, wake up and see what the HSBC Group have been doing to the citizens of India for many years.
Please allow me to thank Moneylife for helping me to expose what HSBC Holdings Plc has been doing in India.
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It may be shocking for readers to know that fake Indian currency notes of the Rs5, Rs10, Rs20, Rs50 and Rs100 denomination have surfaced in Bangalore! RBI Governor needs to clarify on the polymer currency notes issue and also, when the plan would be implemented
As a parting shot, Dr KC Chakravarty, the deputy governor of Reserve Bank of India (RBI), just before leaving office has stated, as widely reported in the media, that the introduction of "plastic" bank notes of Rs10 denomination has been (indefinitely?) delayed due to failure of the selected bidders in meeting the "required" technical specifications!
In addition to this, it has been stated that there is reluctance on the part of bankers to mop up such "old" notes in circulation. According to information available, as at March 2013, Rs10 notes accounted for 34% of the total bank notes aggregating to Rs7,351.50 crore ; and in value terms, the Rs10 denomination notes accounted for about 2% of the total Rs11.65 lakh crore worth of bank notes in circulation. By December end, notes in circulation increased to 7,647 crore pieces and the coins in circulation amounted to 8,991 crore pieces valued at Rs16,800 crore.
In the past, the counterfeit currency notes minted in Pakistan that were, and still are, being smuggled into the country covered the Rs500 and Rs1,000 denominations. Time and again, the Directorate of Revenue Intelligence, the lead agency in checking smuggling, have caught crores worth of these fake notes, most of which have come into India via Nepal, Sri Lanka, Bangladesh and Cambodia! A little later, these started coming from Gulf countries too, where a very large Indian expatriate population lives. Now, China is one more transit hub for Pakistan based operators to circulate FICNs!
At the moment, no body really knows how much these high value notes have come in during the election, which is still in progress. In the meantime, it may be shocking for the readers to know that fake Indian currency notes of the Rs5, Rs10, Rs20, Rs50 and Rs100 have surfaced in Bangalore!
Instances have been reported where the auto-drivers have "refused" to accept these notes, stating that "these are fakes". The passenger had no alternative but to tender "acceptable" notes and took the trouble to verify with the banker to authenticate the "note" only to be told that these are "fakes"!
It is regrettable that it was Dr Chakravarty, while on a visit to Bangalore, way back in May last year when he gave details of the polymer currency notes, selection of six towns for test marketing and spoke of one billion notes for this purpose. Anyone reading the press reports (coverage) of this visit would automatically come to the conclusion that India was making progress to introduce the polymer currency notes. Now, it looks like we are back to square one, and that, no progress has been made at all in replacing the paper currency with polymer based notes.
It is time that RBI governor Dr Raghuram Rajan clearly make a policy statement on this issue of polymer currency notes. It is hard to believe what Dr Chakravarty has stated in regard to the "failure" of the bidders to come up to the RBI's exacting needs! Are we to understand that ALL the bidders have failed? What is the problem in taking the issue directly with Australian Currency Board and seeking their help?
We need a clear-cut clarification on this issue from RBI.
(AK Ramdas has worked with the Engineering Export Promotion Council of the ministry of commerce. He was also associated with various committees of the Council. His international career took him to places like Beirut, Kuwait and Dubai at a time when these were small trading outposts; and later to the US.)