Leaked secret bank account files reveals, HSBC’s Swiss banking arm helped wealthy customers from 200 countries, dodge taxes and conceal $100millions of dollars of assets, sashing out bundles of untraceable cash and advising clients on how to circumvent domestic tax authorities. The files resulted from efforts from investigative journalists including Washington based international consortium of investigative journalists, BBC Panorama, the Guardian, the French daily Le Monde, reveal that HSBC’s Swiss private bank.
British bank HSBC Holdings Plc (HSBA.L) admitted failings by its Swiss subsidiary in response to international media reports it helped wealthy customers dodge taxes and conceal millions of dollars of assets.
The bank allegedly turned a blind eye to their wealthy customers including football and tennis professionals, rock stars, Diamond merchants, Hollywood stars and allowed them to withdraw bundles of cash, in foreign currencies of little or no use in Switzerland.
Connived with some private clients to conceal undeclared “black” accounts from their domestic tax authorities.
Provided accounts to international criminals, corrupt businessmen and other high-risk individuals.
These HSBC files, which cover the period 2005-2007, amount to the biggest banking leak in history, shedding light on some 30,000 accounts holding almost $120bn (£78bn) of assets.
The revelations will intensify calls for crackdowns on offshore tax havens and fuel political arguments in the US, Britain and elsewhere in Europe, India where exchequers are seen to be fighting a losing battle against fleet-footed and wealthy individuals in the globalised world.
According to the Guardian, HSBC, the world’s second largest bank, has now admitted wrongdoing by its Swiss subsidiary. “We acknowledge and are accountable for past compliance and control failures”. The Swiss arm, the statement said, had not been fully integrated into HSBC after its purchase in 1999, allowing “significantly lower” standards of compliance and due diligence to persist.
HSBC was headed during the period covered in the files by Stephen Green – now Lord Green – who served as the global bank’s chief executive, then group chairman until 2010 when he left to become a trade minister in the House of Lords for David Cameron’s new government. He declined to comment.
Although tax authorities around the world have had confidential access to the leaked files since 2010, the true nature of the Swiss bank’s misconduct has never been made public until now. Hollywood stars, shopkeepers, royalty and clothing merchants, diamond merchants feature in the files along with the heirs to some of Europe’s biggest fortunes.
“There are very few reasons to have an offshore bank account, apart from just saving tax. There are some people who can use an … account to avoid tax legally. For others it’s just a way to keep money secret.”
The Labour party said: “Tax avoidance and evasion harms every taxpayer in Britain, and undermines public services like the NHS. What is truly shocking is that HMRC were made fully aware of these practices back in 2010 but since then very little has been done.”
They come from over 200 countries, the total balance over $100 billion.
The investigation revealed 1,195 Indian HSBC clients, roughly double the 628 names that French authorities gave to the Indian Government in 2011.
Several top Indian Businessmen, Diamond traders, politicians are HSBC account-holders. Revealed in the list are several top Indian origin Diamond Traders including Rusell Mehta, Anoop Mehta, Saunak Parikh, Chetan Mehta, Govindbhai Kakadia and Kunal Shah.
The bank added that it had refocused this part of its business. “As a result of this repositioning, HSBC’s Swiss private bank has reduced its client base by almost 70% since 2007.”
In November 2012, India Against Corruption, led by Arvind Kejriwal, had released names of some account holders. These new papers now reveal that while he got some names right, his claim regarding the balance in those accounts was way off the mark.
Top officials of the Central Board of Direct Taxes (CBDT) in India, said that undisclosed income to the tune of £315m ($508m) has been brought to tax from among HSBC account-holders but pointed out that there were some significant gaps in the data — some 200 accounts with the Government had no balance and 211 of them were of NRIs.