[ 2015-02-09 ]

HSBC ‘helped customers to hide millions from taxman’
The Swiss banking arm of HSBC was used by 8,844
British customers to store $21.7 billion (£14.3
billion) with some of the money concealed from the
taxman in undeclared “black” accounts, it was
revealed last night.
Bank records leaked to the media show that the
bank allowed customers to withdraw “bricks” of
untraceable cash not normally used in Switzerland.
One British customer had deposited
£1  billion. The records of thousands
of customers including Hollywood stars, royalty
and heirs to some of Europe’s biggest fortunes
have been leaked.
The names of customers published include the model
Elle Macpherson and the actors Joan Collins and
Christian Slater. Richard Caring, the owner of the
Ivy restaurant, is reported to have withdrawn 5
million Swiss francs (£2.25 million) in cash in
2005. There is no suggestion of any impropriety by
any of these people.
The records, which were stolen in 2007 by a
computer expert working for HSBC in Geneva,
contain details of more than 100,000 clients
globally. The data was handed to Revenue & Customs
in 2010 and it identified 1,100 people who had not
paid their taxes.
HMRC said that £135 million in tax, interest and
penalties had now been paid by those who hid their
assets in Switzerland but only one evader has been
convicted. Michael Shanly, a property developer,
admitted evading £430,000 of inheritance tax and
paid £469,444 in fines and costs in 2012.
Lord Green of Hurstpierpoint, who was HSBC’s
chief executive and then chairman until 2010, was
appointed a Tory trade minister in 2010 in the
House of Lords.
Today David Gauke, the Treasury minister, defended
the government over its failure to punish either
the bankers or their clients through the criminal
courts, and its decision to give Lord Green a
government role.
“Stephen Green was appointed as trade minister
because he brought a lot to that role, was a very
successful trade minister and did a lot for
British businesses as a consequence of being a
minister,” said Mr Gauke.
“I’m not aware of any evidence to suggest that
Lord Green himself was involved [in orchestrating
tax avoidance].”
Mr Gauke said that HSBC “had questions to
answer”, but added that Ed Balls, who was city
minister in 2007, also had questions to answer
about why the Labour government had failed to
prevent tax evasion by British residents.
Mr Gauke conceded that the government had known
about HSBC’s Swiss scheme before it decided to
appoint Lord Green.
Margaret Hodge, the chairman of the public
accounts committee, described Lord Green’s
situation as “astounding”.
“Either he didn’t know and he was asleep at
the wheel, or he did know and then he was
therefore involved in dodgy tax practices. Either
way he was the man in charge, and I think he has
got really important questions to answer,” said
Ms Hodge.
It emerged yesterday that Robert Buckland, the
Tory solicitor general, is facing questions about
his membership of the Invicta film partnership
scheme which is being investigated by HMRC as a
possible tax avoidance vehicle.
The International Consortium of Investigative
Journalists (ICIJ), one of several media outlets
given access to the records held on disk, said
that Britons were the third-largest group of
customers and had the second-largest savings after
the Swiss. It was reported that the bank
aggressively marketed schemes likely to enable
wealthy clients to avoid European taxes and
provided accounts to international criminals,
corrupt businessmen and other high-risk
individuals.
HSBC, the world’s second-largest bank, said:
“We acknowledge and are accountable for past
compliance and control failures.” The bank,
which has its headquarters in London, said 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.
Tax authorities globally have had confidential
access to the leaked files since 2010 but the true
nature of the Swiss bank’s misconduct has not
been made public until now.
According to the files, HSBC’s Swiss bankers
also opened an account in Dubai for Emmanuel
Shallop, who was later convicted of dealing in
“blood ­diamonds”, the illegal trade that
fuelled war in Africa. One memo says: “The
client is currently being very careful because he
is under pressure from the Belgian tax authorities
who are investigating his activities in the field
of diamond tax evasion.”
HSBC managers were untroubled that a customer
collecting cash bundles of kroner might be
breaking Danish law, the records show. The bank
contacted clients in 2005 to suggest ways to avoid
a new tax on EU citizens’ Swiss savings
accounts, a measure brought in to tackle secret
offshore accounts.
When approached by The Guardian, Lord Green
declined to comment.
In 2012 The Times revealed that 1,100 tax evaders
who stashed money in HSBC Geneva would escape
prosecution and keep their identities secret. A
Revenue official justified the decision to grant
mass immunity deals by saying that “the courts
would not thank HMRC for taking zillions of
prosecutions into them”. However, tax experts
warned that it suggested there was one rule for
prosecuting rich tax evaders and another for
everyone else.
Rachel Reeves, the shadow work and pensions
secretary, said that Labour could not have acted
on HSBC’s tax avoidance scheme because evidence
did not emerge about it until 2010.
“What we’ve seen in the last five years is
absolutely no action from this government,” Ms
Reeves told BBC Radio 5 Live. “As far as I can
tell, just 1 per cent of people implicated have
been prosecuted, the head of HSBC has been given a
peerage and a ministerial job by this government,
and unpaid tax is on the increase.”
Mr Gauke said that the government had signed an
information-sharing deal with Switzerland that had
brought in an additional £1.2 billion for the
Treasury, although he conceded that this was far
short of the £3 billion that the deal had been
expected to glean.
“Perhaps more importantly, the era of bank
secrecy is coming to an end and over the course of
the next two to three years, all major financial
centres, all major economies – and that includes
Switzerland – will be engage in automatic
exchange of information. So in other words it
won’t be possible to conceal revenues and
conceal assets in the way that occurred in 2005 to
2007.”

Source - The Times

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