September 28, 2020

HSBC bank ‘helped clients dodge millions in tax’

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Screen Shot 2015-02-09 at 10.17.47 AMFrom BBC

Banking giant HSBC helped wealthy clients across the world evade hundreds of millions of pounds worth of tax, the BBC has learned.

Panorama has seen accounts from 106,000 clients in 203 countries, leaked by a whistleblower in 2007.

The documents include details of almost 7,000 clients based in the UK.

HSBC admitted that it was “accountable for past control failures.” But it said it has now “fundamentally changed”.

“We acknowledge that the compliance culture and standards of due diligence in HSBC’s Swiss private bank, as well as the industry in general, were significantly lower than they are today,” it added.

The bank now faces criminal investigations in the US, France, Belgium and Argentina.

Screen Shot 2015-02-09 at 10.15.02 AMHSBC said it is “co-operating with relevant authorities”. But in the UK, where the bank is based, no such action has been taken.

At 15:30, there will be an urgent question in the House of Commons on tax avoidance by HSBC, tabled by Labour MP for Birmingham Ladywood Shabana Mahmood.

“We need to understand whether actually HMRC have been putting lots of cases before the Crown Prosecution Service (CPS) and it’s the CPS who’ve been refusing to prosecute and those are questions that I hope that the government will answer,” she said.

Offshore accounts are not illegal, but many people use them to hide cash from the tax authorities. And while tax avoidance is perfectly legal, deliberately hiding money to evade tax is not.

India’s finance minister Arun Jaitley has said that all Indian names on the list will be investigated, although he cautioned that some accounts might be legitimate. An ongoing inquiry looking into more than 600 people who hold accounts overseas, will now be widened to look into the the current list of names.
The French authorities concluded in 2013 that 99.8% of their citizens on the list were probably evading tax.

Joint investigation
The thousands of pages of data were obtained by the French newspaper Le Monde. In a joint investigation, the documents have now been passed to the International Consortium of Investigative Journalists, the Guardian newspaper, Panorama and more than 50 media outlets around the world.

HM Revenue and Customs (HMRC) was given the leaked data in 2010 and has identified 1,100 people from the list of 7,000 British clients who had not paid their taxes. But almost five years later, only one tax evader has been prosecuted.

HMRC said £135m in tax, interest and penalties have now been paid by those who hid their assets in Switzerland.

But the chairwoman of the Public Accounts Committee, Margaret Hodge MP, said: “I just don’t think the tax authorities have been strong enough, assertive enough, brave enough, tough enough in securing for the British taxpayer the monies that are due.”

Screen Shot 2015-02-09 at 10.17.31 AMHSBC did not just turn a blind eye to tax evaders – in some cases it broke the law by actively helping its clients.

The bank gave one wealthy family a foreign credit card so they could withdraw their undeclared cash at cashpoints overseas.

HSBC also helped its tax-dodging clients stay ahead of the law.

When the European Savings Directive was introduced in 2005, the idea was that Swiss banks would take any tax owed from undeclared accounts and pass it to the taxman.

It was a tax designed to catch tax evaders. But instead of simply collecting the money, HSBC wrote to customers and offered them ways to get round the new tax.

HSBC denies that all these account holders were evading tax.

‘Dodge liabilities’
Richard Brooks, a former tax inspector and author of The Great Tax Robbery, said: “I think they were a tax avoidance and tax evasion service. I think that’s what they were offering. They knew full well that people come to them to dodge their tax liabilities.”

The man in charge of HSBC at the time, Stephen Green, was made a Conservative peer and appointed to the government.

Lord Green was made a minister eight months after HMRC had been given the leaked documents from his bank. He served as a minister of trade and investment until 2013.

He told Panorama: “As a matter of principle I will not comment on the business of HSBC past or present.”

Treasury minister David Gauke defended Lord Green’s appointment on BBC’s Radio 4. “I am not aware of any evidence that suggests that Lord Green was involved in this sort of activity”, but said he did not know whether anyone asked him about HSBC prior to his government appointment.

But Ms Hodge said: “Either he didn’t know and he was asleep at the wheel, or he did know and 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.”

Verbal messages
Meanwhile, HSBC said it has completely overhauled its private banking business and has reduced the number of Swiss accounts by almost 70% since 2007.

In a statement, the bank said: “HSBC has implemented numerous initiatives designed to prevent its banking services being used to evade taxes or launder money.”

The bank said it now puts compliance and tax transparency ahead of profitability.

But Panorama has spoken to a whistleblower who said there were still problems with tax dodging at HSBC private bank when she worked there in 2013.

Treasury Minister David Gauke: “There are large numbers of people who have had to pay the tax, pay interest on the tax and pay a penalty”

Sue Shelley was the private bank’s head of compliance in Luxembourg. She said HSBC did not keep its promise to change. “I think the verbal messages were great but they weren’t put into practice and that disturbed me greatly,” she said.

It was her job to make sure HSBC followed the rules, but she said she was sacked after raising concerns. She has since won a tribunal hearing for unfair dismissal.

For more on this story and videos go to: http://www.bbc.com/news/business-31248913

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