Household HSBC Watch

U.S. Gen. Charles Wald, deputy commander of the European Central Command, has been warning Congress and the Pentagon for months that al Qaeda-affiliated groups are active in Mauritania, Mali, Chad and Niger. The trade in diamonds used by terrorist groups, begun under the protection of former Liberian strongman Charles Taylor, continues despite international efforts to curb it. “The terrorist activity in this area is not going to go away,” Wald warned recently. “This could affect your kids and your grandchildren in a huge way. If we don’t do something about it, we are going to have a real problem on our hands.”

Wald has had success in bolstering regional efforts to face the terrorist challenge, but the problem is real. Despite Wald’s warnings and other reporting on al Qaeda’s regional activities and ties to the diamond trade, the intelligence community (particularly the CIA) has dismissed the reporting as inaccurate or irrelevant.

Another lesson is that terrorists are adaptable and learn from each other and their own mistakes. Hezbollah has been using diamonds from West Africa to finance its activities since its inception, successfully embedding its financial structure in the diamond trade. Al Qaeda operatives plugged into the same network, bridging the divide between Shiite and Sunni Muslims.

Al Qaeda demonstrated its adaptability in the aftermath of the 1998 bombings of two U.S. embassies in East Africa. The United States froze some $220 million in Taliban and al Qaeda gold deposited in the Federal Reserve system. To ensure that future finances could not be attacked in a similar way, the group began to systematically move its money out of banking systems and into commodities.

HSBC, through its wholly owned and predatory finance subsidiary Household International, has a private label program with Helzberg Diamonds to provide credit cards to customers.

The point is this - as news sources inform the general public of the link between terrorism and diamonds, they (diamonds) remain a profitable business. Blood diamonds derive their name from the practice of using profits to fuel insurgencies and civil war in some countries.

While Household seemed happy with dropping your FICO score, foreclosing on your homes, and telling you that your payment was late when it wasn’t, HSBC has opened a new door for Household and we don’t know where it leads, other than to profits for corporations.

Helzberg signed a contract with HSBC while knowing that Household’s handling of contracts with over 60 other merchants was questionable at best. Shea vs Household is an example, wherein HSBC - Household applied payments late for a period of almost ten years. It will possibly result in RICO charges and civil suits against HSBC and their largest merchants. Still, Helzberg signed a contract.

Consumers must ask the obvious questions. Where do these diamonds come from? How ethical are the suppliers, financiers, and the credit card processor? HSBC and Household have not proven themselves as ethical since HSBC bought Household in 2002.

And last but not least, will your payment be applied on time, or will your FICO score drop an average of 70 points? If you are getting married and thus the diamond signifies the start of a life together, perhaps you might want to pay cash or find better financing. The global impact of doing otherwise is a long chain from supplier through HSBC to your wallet and into the future.

In fairness we point out there is no direct link between Warren Buffett’s corporation which owns Helzberg Diamonds and Al Qaeda. Warren Buffett, who may be the world’s leading silver investor, in his March 3, 2003 letter to Berkshire Hathaway shareholders, cleared some of the awful stench just recently from the financial environment.