Monday, February 9, 2015 1:30 pm
The documents published at the weekend claim the bank helped clients in more than 200 countries evade taxes on accounts containing $119 billion (104 billion euros).
The huge cache of files, which were stolen by an IT worker in 2007 and passed to French authorities, has sparked criminal probes in several countries and attempts to claw back the cash.
The International Consortium of Investigative Journalists (ICIJ) obtained the files via French newspaper Le Monde, and shared them with the BBC and The Guardian newspaper in Britain, US programme 60 Minutes and more than 45 other media organisations worldwide.
The documents showed that HSBC provided accounts to international criminals, businessmen, politicians and celebrities, according to the ICIJ.
– Calls for crackdown –
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 across Europe.
Tax avoidance is legal, but tax evasion is not.
“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.
A range of former and current politicians from Russia, India and a range of African countries, as well as Saudi, Bahraini, Jordanian and Moroccan royalty, and the late Australian press magnate Kerry Packer were named in the files.
Following the bombshell disclosure, there were calls for a Swiss probe against the bank, which is already facing prosecution in France and Belgium.
“I am angry,” former Swiss foreign minister Micheline Calmy-Rey told public broadcaster RTS, claiming the scandal had seriously damaged Switzerland’s reputation.
HSBC shares were up 1.24 percent to 621.00 pence in late morning trade in London.
Switzerland has to date only launched an investigation against HSBC employee-turned-whistleblower Herve Falciani who stole the files at the heart of the scandal.
The files were used by the French government to track down tax evaders and shared with other states in 2010, leading to a series of prosecutions.
HSBC’s Swiss banking arm insisted it has since undergone a “radical transformation”.
“HSBC’s Swiss Private Bank began a radical transformation in 2008 to prevent its services from being used to evade taxes or launder money,” Franco Morra, the head of HSBC’s Swiss unit, told AFP in an email.
He said the bank had closed “the accounts of clients who did not meet our high standards and ensuring we have strong compliance controls in place”.
“We have no appetite for business with clients or potential clients who do not meet our financial crime compliance standards.
“These disclosures about historical business practices are a reminder that the old business model of Swiss private banking is no longer acceptable,” he said.
The Swiss Banking Association said the country’s banks had worked hard in recent years to clean up the shop and ensure conformity with tax laws.
But it warned that banks “must always respect existing laws… (both) in their own country and the laws in the countries where they operate.”
If they don’t follow the law “they have to take the consequences,” it said in a statement to AFP.
Notes in the leaked 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, ie 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.