HSBC bank 'helped clients dodge millions in tax'

BBC Panorama, Richard Bilton, 8 Feb 2015

Britain's biggest bank helped wealthy clients cheat the UK out of millions of pounds in tax, the BBC has learned.

Panorama has seen 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.

HSBC admitted that some individuals took advantage of bank secrecy to hold undeclared accounts. But it said it has now "fundamentally changed".

The documents, stolen in 2007 by a computer expert working for HSBC in Geneva, contain details of more than 100,000 clients from around the world.

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.

The French authorities assessed the stolen data and 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.

The documents include details of almost 7,000 British clients - and many of the accounts were not declared to the taxman.

HM Revenue and Customs (HMRC) was given the leaked data in 2010 and has identified 1,100 people 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."

HSBC 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 bank now faces criminal investigations in the US, France, Belgium and Argentina. HSBC said it is "co-operating with relevant authorities". But in the UK, where the bank is based, no such action has been taken.

Stephen Green served as a minister of trade and investment

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."

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.

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.

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OECD takes last four states off tax haven list

Paris (ANTARA News) - The OECD on Tuesday removed Costa Rica, Malaysia, the Philippines and Uruguay from its list of hard-line uncooperative tax havens after they bowed to pressure and vowed to open up their books.

"These four jurisdictions have now made a full commitment to exchange information according to the OECD standard," OECD General Secretary Angel Gurria was quoted by AFP as telling a press conference in Paris.

They were the only remaining countries on the first of three lists published after world leaders agreed last week at a G20 summit in London to crack down on tax havens.

One list named the four states the Organisation for Economic Cooperation and Development said had not pledged to accept international tax reporting standards.

A second "grey list" named 38 territories that had committed to such standards but had not yet fully implemented them, and a third list identified 40 countries that had substantially implemented them.

"I am happy that there is no longer any one of the 84 jurisdictions normally monitored by the OECD ... that is in the category of not adopting and having not committed to adopt the standards," said Gurria.

"This is very important progress," said the head of the Paris-based organisation that seeks to coordinate the economic policies of its 30 industrialised members.

Costa Rica, the Philippines, Malaysia and Uruguay are now on the "grey list."

"They have officially informed the OECD that they commit to cooperate in the fight against tax abuse, that this year they will propose legislation to remove the impediments to the implementation of the standard," the OECD said.

Tax havens have come under increasing scrutiny as the global financial crisis bites ever deeper, sparking calls for radical action to curb abuses blamed for the debacle, among them tax evasion and bank secrecy.

After US and European governments bailed out a number of banks, politicians began questioning how and why some of those same financial institutions were able to continue to operate in countries that encourage tax evasion.

Transparency International France last year estimated about 10 trillion dollars -- four times France's gross domestic product -- were stashed in secret offshore accounts away from the prying eyes of regulators or tax inspectors.

In the run-up to the G20 London summit, countries with long-held banking secrecy laws including Liechtenstein and Switzerland agreed to comply with regulation forcing states to share tax information.

Several countries protested after the publication of the latest lists, with some disputing their designation and others vowing to clear their names.

Swiss Foreign Minister Micheline Calmy-Rey said Tuesday that the OECD list had been based on political criteria.

"They don't have qualitative criteria to draw up these lists," she told reporters in Berne.

"My interpretation is that they had to have something concrete at the end of this G20 (summit)," she added. "But in reality, these criteria are political.

The only positive outcome of the G20 summit had been the commitment to set up a mechanism to monitor progress in this area, she added.

Switzerland has already protested at finding itself on the OECD's "grey list".

The OECD's "grey list" also included Belgium, Brunei, Chile, the Dutch Antilles, Gibraltar, Liechtenstein, Luxembourg, Monaco, Singapore and Caribbean nations such as the Bahamas, Bermuda and the Cayman Islands.

A third list of countries that have largely implemented internationally agreed tax standards includes Britain, China apart from its special administrative regions, France, Germany, Russia and the United States.

Countries snap back at OECD tax list

Zurich (ANTARA News) - Countries faulted by the OECD for their tax reporting standards snapped back Friday, with some disputing their designation and others vowing to clear their names.

After the Group of 20 nations agreed to crack down on tax havens at a London summit Thursday, the OECD published three lists, one naming four countries it said had not pledged to abide by internationally agreed tax reporting norms and another of countries and territories that had yet to fully implement such standards.

A third list of 40 countries identified those that had substantially implemented the tax standard.

The Paris-based Organisation for Economic Cooperation and Development (OECD), which seeks to coordinate the economic polices of its 30 industrialised members, placed the Philippines, Malaysia, Costa Rica and Uruguay on the first list.

The second list had 38 names, including European Union members Austria, Luxembourg and Switzerland as well as Liechtenstein.

In reaction, the Philippines insisted it had one of the world's strictest banking secrecy laws and said it was "unfortunate" that it had been designated as having failed to meet OECD criteria.

"We are committed to compliance with those standards and we are confident that we will meet the requirements for removal from this list," Cerge Remonde, a spokesman for President Gloria Arroyo, told reporters.

Finance Secretary Margarito Teves said the Philippines "is and has always been ready to comply with conditions that have been set by international organisations, such as the G20 group of countries."

But he added that "a review of existing local legislation relative to banking secrecy as well as tax information secrecy" would have to be done by the Philippines legislature.

Trade Secretary Peter Favila added: "I'm sure the Philippine government would take the necessary steps to ensure that we meet their (OECD) expectations."

In Europe, Luxembourg and Switzerland complained of their inclusion on the middle tier -- or "grey" -- list.

"I think that the treatment given to some countries is a bit incomprehensible," Luxembourg Prime Minister Jean-Claude Juncker told journalists as he arrived to chair a meeting of eurozone finance ministers in Prague.

Juncker renewed criticism of the way the lists were drawn up, noting that several US states with tax-friendly laws were not put on either list.

He had said Tuesday that if Luxembourg were placed on any international list of offshore financial centres then Delaware, Nevada and Wyoming should also be named and shamed as tax havens.

The Swiss finance ministry issued a statement saying that "President Hans-Rudolf Merz regrets this procedure."

"The list does not specify the criteria on the basis of which it was drawn up. Switzerland is not a tax haven," it added, remarking that it was "particularly strange" that Bern was not consulted on drawing up the list even though it is an OECD member.

Liechtenstein said it hoped to be struck from the list. "Our objective is to no longer figure on this grey list," a government spokeswoman told AFP.

"We have already begun moving in this direction by starting bilateral discussions with Germany and Britain," she added.

Austrian Finance Minister Josef Proell played down Austria's inclusion on the "grey" list and said it did not affect the country's banking secrecy laws.

"The talks are over for us because the proof is there on the grey list that we have taken steps in the right direction," he told journalists as he arrived for the meeting with eurozone counterparts.

"From Austria's point of view, national banking law will not disturb banking secrecy," he said, adding that changes would entail improving the exchange of tax information with other countries when there is suspicion of wrong-doing.

German Finance Minister Peer Steinbrueck, who has led international efforts to crack down on tax havens, welcomed the new pressure on offshore financial centres.

"We cannot allow German taxpayers to be invited to put capital in these tax havens with the clear intention to hoodwink us, you and me," he said.

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Bank secrecy moves may force wealthy back onshore

By Lisa Jucca - Analysis, Reuters, Fri Mar 13, 2009 12:49pm EDT  

BERNE (Reuters) - Wealthy people who have stashed cash in undeclared accounts in Switzerland and other offshore centers may now seek ways to legitimize their money after Berne and other tax haven governments relaxed bank secrecy laws. 

In landmark statements, bank secrecy strongholds Switzerland, Luxembourg and Austria offered on Friday more cooperation on tax evasion than ever before to avoid being blacklisted by G20 countries as unco-operative tax havens. 

The decision, which comes on the heels of similar moves in other offshore centers, will not eliminate the principles of banking secrecy that have allowed the $7-trillion offshore industry to thrive, and the countries will offer help only on limited cases of suspected tax evasion. 

"It is not an open door policy. It is an easing of access to information in respect to tax crime," Swiss President and Finance Minister Hans-Rudolf Merz said on Friday. 

But Berne is already looking for a transitory solution to help its client come onshore, and did not rule out the option of negotiating tax amnesties with other jurisdictions. 

"This is not a fantasy. It is more than appropriate to talk about amnesties," Merz told a news conference. 

Liechtenstein, a tiny Alpine tax haven that also committed to more tax transparency on Thursday, has said it wants a legal solution to help its clients bring undeclared money onshore to stem the massive client withdrawals its banks have been suffering since a tax spat with Germany. 

"Tax amnesties are the most attractive solution for banks and bank clients to get out of a problem," said Dirk Hoffmann-Becking, an analyst with Bernstein Research, who says the changes on the tax arena are coming at a faster pace that the industry originally anticipated. 

"But it's not in Switzerland's hands to determine them." 

NO OVERNIGHT CHANGE 

Industry analysts do not expect Switzerland to lose its role of leadership in wealth management since the move toward tax transparency is affecting all offshore centers at the same time. 

Switzerland, which manages an estimated $2 trillion of offshore wealth out of $7 trillion, fears that rising financial star Singapore may steal the limelight in wealth management -- although the city state also said it is willing to embrace more information exchange on tax transparency this month. 

Also, the changes on tax cooperation will not be introduced overnight and are not as radical as some expected as foreign authorities would still need to give evidence of suspected tax evasion to Switzerland and others to be able to access bank account information. 

"We don't anticipate that this announcement will significantly impact the private banking industry, as foreign tax authorities will be unable to make blanket requests for information on all accounts, as was feared," said Jean Schaffner, a tax partner at Allen & Owery. 

But the trend toward moving money onshore will continue, Schnaffer said, noting that past tax amnesties in Belgium and other countries helped banks bring clients onshore without losing them. 

"This is definitely a tendency. There are a lot of people who have inherited undeclared money from their parents," he added. "The younger generations wants to use the money and they cannot do it if the money is not clean." 

Swiss tax lawyers say it has become more and more difficult for holders of undeclared accounts to benefit from these as the money cannot be moved and can only be spent in Switzerland. 

"This is dead money. It is money that burns under your fingers," said a tax lawyer who declined to be named. 

(Editing by Andrew Callus)

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Switzerland eases banking secrecy

BBC News, 13 March 2009 

Switzerland, Austria, and Luxembourg have become the latest countries to agree concessions on bank secrecy.

UBS gave US authorities details of
300 American clients last month

Their agreements come after talks with the Organisation for Economic Cooperation and Development (OECD), which sets rules on bank data sharing.

Liechtenstein and Andorra agreed similar OECD deals on Thursday. All had come under increasing pressure to reform their banking sectors.

Last month Swiss bank UBS gave the US details of 300 of its American clients.

The agreements were announced ahead of a meeting of finance ministers and central bank governors from the G20 group of industrialised nations, which begins near London later.

The meeting is likely to focus on the need for tougher regulation of banks and discuss increasing funding to tackle the crisis.