9th Feb 2015 17:52
London (Alliance News) - HSBC's Swiss-based private bank helped wealthy clients evade millions of dollars in taxes, according to an investigation of thousands of leaked documents.
Among those helped to evade tax were several clients who had been linked by the United Nations to arms trafficking, corruption and other crimes, the Washington-based International Consortium for Investigative Journalism said on Monday.
The data, leaked by a former HSBC computer expert, was obtained by French daily Le Monde and jointly examined by international media including the BBC and the Guardian.
It showed that London-based HSBC "served those close to discredited regimes such as that of former Egyptian president Hosny Mubarak, former Tunisian president Ben Ali and current Syrian ruler Bashar al-Assad," the ICIJ said.
The leaks prompted British opposition lawmakers to question Prime Minister David Cameron's decision to appoint former HSBC boss Stephen Green as trade minister from 2010 to 2013. Green led the banking group from 2006 to 2010.
But Cameron, during a visit to the northern city of Chester, defended his government's record on reducing tax evasion and said Green had been an "excellent trade minister."
In London, David Gauke, financial secretary to the Treasury, said the "era of bank secrecy is coming to an end."
"It clearly is not acceptable for people to evade or aggressively avoid taxes and we have taken a number of measures to address that," Gauke said.
The BBC said it had viewed "thousands of accounts from HSBC's private bank in Switzerland leaked by a whistleblower in 2007."
"They show bankers helped clients evade tax and offered deals to help tax dodgers stay ahead of the law," it said.
The 60,000 leaked files contain details of about 100,000 HSBC accounts holding more than 100 billion dollars, including 11,000 held by Swiss citizens, 9,000 by French citizens, 9,000 by British citizens and 19,000 by people "not associated with any country."
Details of 30,000 accounts holding about 78 billion dollars are in the files examined.
Covering 2005-07, the files "amount to the biggest banking leak in history," the ICIJ said.
Reacting to the reports, HSBC admitted that problems were caused by ambiguity in the former rules over whether Swiss-based private banks or their clients were responsible for paying taxes.
"This resulted in private banks, including HSBC's Swiss private bank, having a number of clients that may not have fully met their applicable tax obligations," the bank said.
It said HSBC's Swiss private bank began a "radical transformation in 2008 to prevent its services from being used to evade taxes or launder money."
"New senior management have comprehensively overhauled the business, including closing the accounts of clients who did not meet our high standards and ensuring we have strong compliance controls in place," HSBC said.
Problems of tax evasion were "a reminder that the old business model of Swiss private banking is no longer acceptable," it said.
European Commission spokeswoman Vanessa Mock said the leaked data "confirm that banking secrecy has been used to avoid paying taxation."
The EU and Switzerland are negotiating an updated agreement on the taxation of savings to comply with new global standards, Mock said.
"We're hoping that the coming into force of this new agreement at the very latest by 2018 will put an end to tax evasion and fraud via the use of secret bank accounts," she said.
The ICIJ said the files examined showed that HSBC had "repeatedly reassured clients that it would not disclose details of accounts to national authorities.
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