UNETHICAL CONDUCT
For the topic of exploring the ethical conduct in the world of business, we are encouraged to discuss a legal case that includes with it the court proceedings and the punishment that was dished out. For the sake of intrigue, I chose a case in which a very controversial punishment was given by federal prosecutors.
In the wake of the 20 year surge in white collar crime…and after the dust settled from the Enron scandal & the Sarbanes-Oxley Act of 2002…there lies a handful of businesses that don’t seem to mind being unethical in a myriad of ways. The majority of the businesses in that group are in the banking business. My subject is Wachovia Bank, formerly one of America’s six largest banks by assets.
In 2012, Wachovia completed what amounted to a year-long probation arising from a March 2010 settlement deal with federal prosecutors who were pursuing criminal proceedings against Wachovia for its facilitating of illegal money transfers from Mexico totaling $378 billion. To put that number in perspective…that is more than the annual budget of the Pentagon, the world’s headquarters of military operations for the U.S.
Anyone interested in the happenings of the U.S. congress can research the percentage of U.S. dollars appropriated by our nation’s congress and see that military funding makes up, on average, over 50% of the federal budget. Conversely, an average of less than 10% is spent on education, job training, employment and social services combined! The first percentage is basically what America spends on war, clandestine operations, overthrowing dictators that don’t agree with our international policies, military style propaganda warfare (abroad AND here at home), etc. The other…tiny little percentage…is what’s spent on the welfare and future of the country in regard to the citizens of this nation.
To try to wrap your head around the total fallout of this scandal is an exercise in futility. Over $350 billion worth of drug money was laundered for the ruthless drug cartels of Mexico. A comprehensive scheme was put in place by many high ranking administrators in the Wachovia Banking Company with the intention of concealing this practice because it was so financially beneficial…not only to Wachovia, but the different cartels of Mexico. We can’t forget about the hundreds of tons of cocaine and other illicit drugs that hit our streets as a direct result. When the money was being traced back during the investigation, a list of airplanes purchased were found. In every plane that was found by the detectives, cocaine was on board. One plane had over 22 tons of cocaine alone! I won’t waste any time discussing why I find all of this to be unethical.
As noted in an April 2011 article in The Observer, the conclusion of the Wachovia case “was only the tip of an iceberg, demonstrating the role of the “legal” banking sector in swilling hundreds of billions of dollars – the blood money from the murderous drug trade in Mexico and other places in the world – around their global operations, now bailed out by the taxpayer.”
The taxpayers are directly involved because during the 2008-09 bailout for the banks, Wells Fargo opted to accept $25 billion in federal funds from the TARP program. In other words, they received $25 billion worth of taxpayer’s money. With that new cash, Wells Fargo purchased Wachovia for only $12.7 billion, which put them at second place for America’s largest banks. After becoming the parent company for Wachovia, business continued as usual until the story broke in a U.K. newspaper called The Observer. By the time the story was reported here in the U.S., all banks still displaying the Wachovia sign were removed and advertisements were widely televised telling citizens (and I’m paraphrasing) that Wells Fargo simply bought out Wachovia and that the customers won’t have to worry about a thing. That’s just another subtle form of propaganda used to misinform people before the news goes mainstream.
The aforementioned Observer article included observations made in 2008 by the then head of the United Nations office on drugs and crime providing evidence suggesting that drug/crime money was “the only liquid investment capital” available to banks on the brink of collapse. I suppose it is acceptable behavior in America because Wachovia/Wells Fargo was hit with a $160 million fine…but nobody was sentenced to ANY time in jail. The fine itself is about 6% of Wachovia’s profits from 2010 alone…and that doesn’t even account for the billions upon billions of dollars- worth of drug money the bank made just from their illegal narcotics trafficking business.
What should have happened, in my opinion, is at least an attempt to punish those who were directly involved in the shady business and who helped conceal their illegal actions.
Instead of sentences being given to the guilty, federal prosecutors just wiped their hands clean of the whole mess and let them get away with it.
If I had stolen $12 million from someone and my punishment was only a fine of $2,000, would you consider that an example of justice? Well, I would consider that an invitation for all people to engage in financial theft & fraud.
I just want to mention that including the U.S. cabinet members and various czars, thirty-five (35) of them come directly from Goldman Sachs. This is the most influential bank right now on Wall Street. When Lehman Brothers was caught doing illegal business, they simply dropped the company and the name. Many of the former administrators of that bank went to work for Goldman Sachs. My point is, if we expect our government to go after the real bosses of illegal business we are kidding ourselves. My mother would say it is the fox guarding the hen house. If we, as Americans, don’t start to treat the real causes of our problems, we’ll be going around and around until the end of time. America, as well as most of the world, needs to take a serious look at how their banking laws truly function if we are to make a beneficial change for the people.
REFERENCES
-Fletcher, P. (2010). Wachovia pays $160 million to settle drug money probe. Retrieved from http:www.reuters.com

-Saviano, R. (2012). Where the Mob Keeps Its Money. Retrieved from http:www.nytimes.com

-Vulliamy, E. (2011). How a big US bank laundered billions from Mexico’s murderous drug gangs. Retrieved from http:www.observer.guardian.co.uk