Monday, February 9, 2015

Former trade minister and HSBC boss was either asleep at the wheel or involved in dodgy tax practices, says head of public accounts committee

Former HSBC group chairman Lord Stephen Green, pictured in 2012. Photograph: Ed Jones/AFP/Getty Images 

HSBC files 

Margaret Hodge accuses ex-chairman Lord Stephen Green over HSBC files

Former trade minister and HSBC boss was either asleep at the wheel or involved in dodgy tax practices, says head of public accounts committee

Juliette Garside, Josh Halliday and Rajeev Syal

Monday 9 February 2015 10.25 GMT

The former chairman of HSBC, Lord Stephen Green, was either “asleep at the wheel” or involved in “dodgy tax practices” when he led the bank, it was claimed on Monday after revelations that its Swiss subsidiary helped wealthy customers dodge tax by hiding millions of dollars of assets.

Investigations into the practices of HSBC’s Swiss private banking arm, published simultaneously on Sunday night by media organisations in 45 countries, reveal it provided accounts to international criminals, and routinely allowed clients to withdraw bricks of cash in currencies that would have been of little use in Switzerland.

Green, who was chief executive and then chairman of HSBC from May 2006 until December 2010, has so far refused to comment on the revelations by the Guardian and a consortium of other news organisartions about what occurred at the Swiss bank under his tenure.

“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,” said Margaret Hodge, the opposition Labour MP and chair of the UK parliament’s influential public accounts committee.

“Either way he was the man in charge and I think he has got really important questions to answer,” she said.

The 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 files – obtained through an international collaboration of news outlets, including the Guardian, the French daily Le Monde, BBC Panorama and the Washington-based International Consortium of Investigative Journalists – reveal that HSBC’s Swiss private bank:

• Routinely allowed clients to withdraw bricks of cash, often in foreign currencies of little use in Switzerland.

• Aggressively marketed schemes likely to enable wealthy clients to avoid European taxes.

• Colluded with some clients to conceal undeclared “black” accounts from their domestic tax authorities.

• Provided accounts to international criminals, corrupt businessmen and other high-risk individuals.

The UK’s chief tax collector, Her Majesty’s Revenue & Customs (HMRC) boss Lin Homer, and Indra Morris, director general for tax and welfare at the Treasury, will appear before Hodge’s committee on Wednesday. They are expected to be grilled on why, despite holding a copy of the HSBC files since 2010, the tax authorities have only launched one prosecution.
“You are left wondering, as you see the enormity of what has been going on, what it actually takes to bring a tax cheat to court,” Hodge told BBC Radio 4’s Today programme. “If it had been a benefit cheat it would have been up for court years ago. Now we have had only one tax cheat taken before the British courts.”

The Labour leader, Ed Miliband, called on the government to explain why Britain’s tax authority did not appear to have acted tougher, and questioned the appointment of Green as trade minister - a post he held from January 2011 to December 2013.

“We need to know why HMRC apparently did not act, apart from at the margins, on the information that they seem to have been given about what was going on,” Miliband told Sky News. “We need to know from the government why they appointed Stephen Green of HSBC as a trade minister well after this information was passed to HMRC. I would like to see the government explain what they did.

“We cannot have a country where tax avoidance is allowed to carry on and where government just turns a blind eye.”

HSBC files show how Swiss bank helped clients dodge taxes and hide millions 

Data in massive cache of leaked secret bank account files lift lid on questionable practices at subsidiary of one of world’s biggest financial institutions

The Australian Tax Office confirmed for the first time that it received the HSBC files in 2010, and that it has used them to recover £15m from tax avoiders. The authority said on Sunday night it had uncovered “a number of discrepancies” among hundreds of Swiss HSBC accounts held by Australians over the last five years.

The ATO said: “In some cases, it was found that taxpayers had correctly reported these accounts to the ATO. However, there were a number where there were discrepancies and as a result we took further action. We initiated a number of reviews and audits, which to date have resulted in over A$30m in additional tax liabilities.”

In the US, the behaviour of HSBC’s Swiss bank could be regarded as a felony, a report by the CBS programme 60 Minutes claimed on Sunday night.

“Under US law, any bank that does that, that assists a US person in evading US tax is guilty of a felony,” said Washington attorney Jack Blum. “And it doesn’t matter where the bank is located or where the bankers are located.”

Blum worked for the US Senate’s antitrust committee for 14 years and played a central role investigating the collapse of the Bank of Credit and Commerce International (BCCI), a major financial scandal dating to the early 1990s.

As HSBC shares dipped 1% in Monday morning trading, falling 7.6p to 613p, the Conservative Treasury minister David Gauke said primary responsibility for the scandal lay with HSBC, but he also hit out at Labour. The shadow chancellor, Ed Balls, was economic secretary to the Treasury during the period covered by the HSBC files, which are a snapshot of behaviour at the bank between 2005 and early 2007.

“The primary responsibility here lies with HSBC but this evidence shines a light on what was happening when banks were not behaving as they should have been, and tax avoidance and tax evasion was much too prevalent, and it would be very interesting to know what the City minister at the time was doing. Ed Balls has got questions to answer, frankly.”

Asked why only one person from the list of tax evaders has been prosecuted in the UK, Gauke said: “The Crown Prosecution Service has taken the view that without corroboration of information contained in the leaks, the chances of prosecution are very slim.”

With tax avoidance rising up the agenda before the UK general election, MPs and ministers are rushing to apportion blame for the scandal.

The deputy prime minister, Nick Clegg, said the revelations showed “what a sophisticated industry it was to allow the wealthiest in society to avoid paying the tax which they should pay”.

Asked on Sky News whether Balls should explain what he knew about the Swiss accounts, Clegg said: “I think it would be great if Ed Balls, or indeed [Labour leader] Ed Miliband, for once were just to get up and admit that they let the banks run riot on their watch.

“Ed Balls went on a prawn cocktail charm offensive to suck up to the banks and they now have the brass neck to somehow constantly accuse this government of not doing enough when we’ve done considerably more to straighten out the banks than Labour ever did.”

A source close to Balls said: “The information was first given to the government in 2010, so of course he was not aware of it. This is transparent and desperate stuff by the Tories to distract attention from this government’s appointment of the chairman of HSBC as a Tory minister eight months after they were given this information and the fact just one of 1,100 individuals has since been prosecuted.”

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