The allegations prompted the bank to release a statement admitting it was “accountable for past compliance and control failures” at its Swiss subsidiary HSBC Private Bank.
The files, analysed by reporters in the International Consortium of Investigative Journalists (ICIJ) in collaboration with more than 140 journalists from 45 countries, showed that British banking giant HSBC provided accounts to international criminals, corrupt businessmen, politicians and celebrities.
- "HSBC profited from doing business with arms dealers who channelled mortar bombs to child soldiers in Africa, bag men for Third World dictators, traffickers in blood diamonds and other international outlaws," ICIJ reported.
The Guardian alleged in its report that the files showed HSBC’s Swiss bank routinely allowed clients to withdraw “bricks” of cash, often in foreign currencies which were of little use in Switzerland, marketed schemes which were likely to enable wealthy clients to avoid European taxes and colluded to conceal undeclared accounts from domestic tax authorities.
Employees helped clients hide money
The secret documents, covering the period 2005-2007, amount to the biggest banking leak in history, revealing details of some 30,000 accounts holding almost $120 billion (€106 billion) of assets.
Listed in the files are a range of former and current politicians from Britain, Russia, India and a range of African countries, Saudi, Bahraini, Jordanian and Moroccan royalty, and the late Australian press magnate Kerry Packer.
The revelations are likely to stoke calls for a crackdown on sophisticated tax avoidance by the wealthy and by multinational companies, a key political issue in Britain and Europe.
Notes in the files indicate HSBC workers were aware of clients' intentions to keep money hidden from national authorities.
Of one Danish account holder collecting cash bundles of kroner, an employee wrote:
"All contacts through one of her 3 daughters living in London. Account holder living in Denmark, i.e. critical as it is a criminal act having an account abroad non declared."
In another memo, an HSBC manager discusses how a London-based financier codenamed "Painter" and his partner could avoid Italian tax.
"The risk for the couple is, of course, that when they return to Italy the UK tax authorities will pass on information on them to the Italian tax authorities. My own view on this was that ... there clearly was a risk," the employee wrote.
Richard Brooks, a former tax inspector, told the BBC: "I think they were a tax avoidance and tax evasion service. I think that's what they were offering."
Responding to the revelations, HSBC said in a statement Sunday that its Swiss arm had not been fully integrated into HSBC after its purchase in 1999, allowing “significantly lower” standards of compliance and due diligence to persist.
It said the Swiss private banking industry, long known for its secrecy, operated differently in the past and this may have resulted in HSBC having had “a number of clients that may not have been fully compliant with their applicable tax obligations”.
HSBC’s private bank, especially its Swiss arm, had undergone “a radical transformation” in recent years, it said.
The files are a version of a set obtained by former HSBC employee-turned-whistleblower Hervé Falciani, who in 2007 hacked into customer files while working in the IT department of HSBC’s Swiss subisidary.
He then fled to France to avoid prosecution by Swiss authorities who had charged him with industrial espionage and breaching the country’s banking secrecy laws. French authorities have refused to extradite him.
Mubarak, Putin and Assad
Some of the details of the list have been released before. The names of 2,000 Greeks with HSBC accounts was made public in 2010 and dubbed the “Lagarde List”, after former French finance minister Christine Lagarde. France passed the names to Greece to help it crack down on tax evasion.
Names in the files include people sanctioned by the United States, including Turkish businessman Selim Alguadis and Gennady Timchenko, an associate of Russian President Vladimir Putin targeted by sanctions over Ukraine.
Alguadis told the ICIJ it was prudent to keep savings off-shore, while a spokesman for Timchenko said he was fully compliant with tax matters.
Former Egyptian trade minister Rachid Mohamed Rachid, who fled Cairo during the 2011 uprising against former president Hosni Mubarak, is listed as having power of attorney over an account worth $31 million (€27.4 million), according to the files. He did not respond to requests for comment from the ICIJ.
Other individuals named include the late Frantz Merceron, an associate of former Haitian president Jean Claude "Baby Doc" Duvalier, and Rami Makhlouf, cousin of Syrian President Bashar al-Assad. Makhlouf did not respond to a request for comment from the ICIJ.
Also named were designer Diane von Furstenberg, who told the ICIJ the accounts were inherited from her parents, and model Elle Macpherson, whose lawyers told the ICIJ she was fully in compliance with UK tax law.
Formula One driver Valentino Rossi, listed as having $23.9 million (€21 million) in two accounts, said he had regularised his tax situation with Italian authorities.
Formula One businessman Flavio Briatore is connected to 38 bank accounts that held as much as $73 million (€64.4 million) between 2006-2007, according to the ICIJ. His lawyer told the ICIJ Briatore's accounts were legal and complied with tax laws.
HSBC Private Bank is currently under formal investigation in a French probe into tax fraud.
In 2012, HSBC paid a record $1.9 billion (€1.7 billion) fine in a settlement in a money laundering case, after a US Senate investigation found it was used to launder hundreds of millions of dollars for Mexican drug cartels.
(FRANCE 24 with AFP, REUTERS)
http://www.france24.com/en/20150209-hsbc-helped-clients-millions-tax/
9/2/15
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