HSBC chief kept millions in Swiss account: report

LONDON, United Kingdom - HSBC chief executive Stuart Gulliver, who vowed to reform the scandal-hit bank, kept millions of dollars in a Swiss account, the Guardian newspaper reported on Sunday.

It is the latest in a stream of so-called "Swissleaks" allegations that have hit the reputation of the British banking giant and caused a political storm ahead of a general election in May.

The report claims the chief executive was a client of the Swiss private banking arm accused of helping wealthy clients evade tax.

Gulliver held about $7.6 million (6.7 million euros) in 2007 in a Swiss account in the name of Worcester Equities Inc, a Panama-registered company, according to the report.

Gulliver, who is based in Britain but is domiciled in Hong Kong for legal and tax purposes, was listed as the beneficial owner of the account, the report said.

It was published on the evening before Gulliver is due to present HSBC's annual report, expected to be overshadowed by a scandal that has prompted investigations of the bank by Britain's financial watchdog and Swiss authorities.

HSBC did not immediately respond to a request for comment by AFP.

However, a representative for Gulliver told the Guardian that the chief executive had used a Swiss account to hold his bonus payments prior to 2003, when he moved from Hong Kong to London.

Gulliver's lawyers said that Hong Kong tax had been paid on this income and that his Swiss accounts had been declared to British tax authorities.

British newspapers published a letter from Gulliver apologising for the Swiss division's behaviour in full-page advertisements last week.

Gulliver insisted the Swiss arm had been "completely overhauled" since 2007, when former employee Herve Falciani stole a huge cache of data and passed it to French authorities.

British tax authority HM Revenue and Customs (HMRC) officials, accused of failing to act adequately on evidence of tax evasion in the files, are to be grilled by members of parliament on Wednesday.

source: www.abs-cbnnews.com

Swiss raid HSBC in money laundering probe

GENEVA - Swiss authorities on Wednesday raided British banking giant HSBC's Swiss unit as part of a money laundering probe into the bank that has been accused of helping clients to dodge millions of dollars in taxes.

The investigation comes just days after HSBC Switzerland became the centre of a global scandal following the publication of secret documents claiming it assisted many of its wealthy clients in thwarting the taxman.

"A search is currently under way in the bank's offices," Geneva's top prosecutors said in a statement.

The search and money laundering investigation was launched "following the recent revelations related to HSBC Private Bank (Switzerland)," they added.

The cache of files, made public in the so-called SwissLeaks case, claimed HSBC's Swiss private banking arm helped clients in more than 200 countries evade taxes on accounts containing $119 billion (104 billion euros).

The files provided details on over 100,000 HSBC clients, including people targeted by US sanctions, suspected arms dealers and drug traffickers.

A wide range of celebrities, politicians and business leaders were also named, although their inclusion does not necessarily imply wrongdoing.

The documents, originally stolen by former HSBC IT worker Herve Falciani in 2007, alleged that billions of dollars transited through the bank as customers from around the world tried to dodge taxes in their home countries or laundered dodgy proceeds through offshore shell corporations.

Falciani told Swiss television RTS late Wednesday that he was ready to help the Swiss authorities in their investigation against HSBC in return for "safe passage."

The Swiss have charged him with data theft.

He said he would cooperate with the Swiss in the same way he has with the Spanish authorities by sharing information through the "cloud."

Risks five years prison

Following the raid, HSBC Switzerland said: "We have cooperated continuously with the Swiss authorities since first becoming aware of the data theft in 2008 and we continue to cooperate."

According to Swiss law, a bank can be held responsible for "aggravated money laundering" if it does not take all the necessary measures to ensure such infractions do not take place within its institution.

The prosecutor general Olivier Jornot in the Geneva canton and another top prosecutor, Yves Bertossa, were heading the HSBC investigations.

They said the probe initially only targeted the bank itself, but warned that "depending on the evolution, the investigation might be broadened to include physical persons suspected of committing or participating in acts of money laundering".

Anyone found guilty of such crimes could face up to five years behind bars as well as large fines.

Following the SwissLeaks revelations more than a week ago, HSBC's Swiss banking arm insisted it has undergone a "radical transformation" since the period referred to in the files.

HSBC now has "strong compliance controls in place", Franco Morra, the head of HSBC's Swiss unit, told AFP in an email, adding that the revelations are "a reminder that the old business model of Swiss private banking is no longer acceptable".

The SwissLeaks documents were obtained by French newspaper Le Monde and shared via the International Consortium of Investigative Journalists with more than 45 media organisations worldwide.

As soon as the documents were made public on February 9, calls arose for a Swiss probe against HSBC Switzerland, which is already facing prosecution in the United States, France, Argentina, Spain and Belgium.

Switzerland had so far only launched an investigation against Falciani.

Falciani himself said last week that the media reports on the documents' contents were based on just a fraction of the files he handed over to French authorities.

"This is only the tip of the iceberg," the 43-year-old Franco-Italian told France's Le Parisien newspaper.

Falciani remains wanted on data theft charges, but France and Spain have offered him protection by refusing to extradite him to Switzerland.

The SwissLeaks files have already been used by the French government to track down tax evaders and were shared with other states in 2010, leading to a series of prosecutions.

In London, chief political commentator Peter Oborne announced his resignation from the Daily Telegraph as he accused the broadsheet of suppressing negative stories about HSBC to keep the valuable advertiser happy.

The Telegraph denied the accusations.

source: www.abs-cbnnews.com

Meet the banker-priest in eye of SwissLeaks storm

LONDON - The man at the centre of the SwissLeaks tax scandal in Britain is a soft-spoken Church of England clergyman who turned HSBC into Europe's biggest bank, and was once seen as a model of ethics in finance.

HSBC's former chief executive and chairman, Stephen Green, used to be courted for his advice by politicians of all stripes and by the Anglican hierarchy, but now he finds himself widely shunned.

The ex-banking titan was pursued down a London street by a BBC journalist this week in the wake of the revelations, refusing to answer questions.

"I'm not prepared to make any comments about HSBC business past or present," the 66-year-old Green said before walking off, clutching his briefcase.

Growing pressure may force him to change his mind.

Green has been asked to testify before a British parliamentary committee which is investigating who knew what, when about alleged tax dodging strategies on accounts containing tens of billions of pounds.

The fall from grace has been particularly astonishing for a man praised for steering HSBC through the global financial crisis without the bailouts using taxpayer money that other banks resorted to.

'Powerful philosophy'

The son of a lawyer, Green began his career with the management consultancy McKinsey in 1978 and joined HSBC in 1982, rising to the top of an institution with its historical roots in the British empire.

As he rose through the ranks in his 28-year career with the bank , he was also ordained as an Anglican clergyman in 1988. He has spoken frequently about the need for an ethical approach in banking.

He has written a book entitled "Serving God? Serving Mammon?" about how to reconcile being a Christian with working in finance, as well as calling for "enlightened" capitalism.

The links between the Church of England and the world of business are not so unusual and there are many ordained clergy in secular employment.

Since his retirement, Green has also advised the Church of England on how to reform its hierarchy -- putting forward proposals that have proved controversial as being too business-minded.

In a letter in the Guardian this week, a fellow clergyman, Reverend Paul Nicolson from the campaign group Taxpayers Against Poverty, criticised Green.

"The Rev Stephen Green’s chairmanship of HSBC while legal tax avoidance and illegal tax evasion were taking place raises important questions for the Church of England about the role of all clergy in secular employment," Nicolson wrote.

The focus of the political controversy over Green, however, has been his time in government in a period after the revelations about HSBC's Swiss private banking arm first surfaced in 2007.

In September 2010, Green announced he would join Cameron's coalition government as an unpaid minister of state for trade and later that year, he was made a life peer as Lord Green of Hurstpierpoint.

Conservative Prime Minister David Cameron, however has pointed out that the HSBC revelations first came out when the opposition Labour party was in power.

They too have worked with Green, who was a top business advisor to former prime minister Gordon Brown.

When he was appointed to government in 2010, business secretary Vince Cable said Green was "one of the few to emerge with credit from the recent financial crisis.

Green, he said, was "somebody who has set out a powerful philosophy for ethical business".

source: www.abs-cbnnews.com

Meet the whistleblower 'who terrifies the rich'

PARIS - Herve Falciani was once just an IT worker at a big bank, but since running off with hundreds of thousands of damaging documents from banking giant HSBC he has been alternately called a hero and a thief.

"He is brave. We have the highest opinion of Mr. Falciani's work, whatever his motivations may be. He has served the public interest," said Eric Alt, vice president of the French anti-tax fraud group Anticor.

Swiss authorities however have charged him with data theft for taking the documents that became the basis for the SwissLeaks revelations this weekend.

The cache of documents claimed HSBC's Swiss private banking arm helped clients in more than 200 countries evade taxes on accounts containing $119 billion (104 billion euros).

Life was not always so complicated for the 43-year-old Franco-Italian, but later twists would be worth of a spy novel, according to Le Monde journalist Gerard Davet.

He started off working in a Monaco casino in the 1990s, before becoming an IT worker for HSBC in 2000. When he moved to the bank's offices in Geneva in 2006 his life would take a major turn.

The so-called "Snowden of tax evasion" and "the man who terrifies the rich" obtained access to a massive database of encrypted customer information.

In 2007 Falciani took the names of over 120,000 clients and by 2008 headed for Lebanon with his mistress and a plan to sell the data. Swiss authorities described it as "cashing in."

Yet suspicious bankers in Lebanon were not interested in buying the dubiously sourced client list, and at least one instead tipped off counterparts in Switzerland to Falciani's activities.

After his plan to sell the data fell apart, Falciani got in contact with European fiscal authorities and began passing them the pilfered information, which prompted numerous tax evasion audits.

Though he remains wanted on data theft charges, France and Spain have offered him protection by refusing to extradite him to Switzerland. He did, however, spend a couple months in a Spanish prison in 2012 at Switzerland's request before winning his release for helping Spain track down its tax cheats.

Falciani even made an unsuccessful run in May's European Parliament elections as a candidate for Spanish protest party, Partido X.

These days Falciani makes 3,500 euros a month (over $3,900) in exchange for lending his scientific expertise to French tax authorities. His paychecks come from France's national computer technology institute INRIA, where he has been a researcher for the past few years.

In comments to the French Senate in July 2013 he said he represents "a threat to the most precious asset of private banks: their reputation."

In an interview on Monday with Swiss public broadcaster RTS, he said far more needed to be done to protect whistleblowers like himself, including financial support.

"You must not be naive. We are made of flesh and bones... we cannot do this merely with the energy of our own despair," he said.

source: www.abs-cbnnews.com

Leaked bank files show HSBC 'helped clients dodge taxes'

LONDON - A cache of secret bank files shows that HSBC's Swiss banking arm helped wealthy customers avoid taxes and hide millions of dollars, according to a report by a network of investigative journalists released Sunday.

The files, analysed by reporters in the International Consortium of Investigative Journalists (ICIJ), showed that British banking giant HSBC provided accounts to international criminals, corrupt businessmen, politicians and celebrities.

"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.

The files list a range of former and current politicians from Britain, Russia, India and a range of African countries, Saudi, Bahraini, Jordanian and Moroccan royalty, and the late Australian press magnate Kerry Packer.

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 in Britain and Europe.

Notes in the 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, i.e. 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.

"The risk for the couple is, of course, that when they return to Italy the UK tax authorities will pass on information on them to the Italian tax authorities. My own view on this was that ... there clearly was a risk," the employee wrote.

HSBC did not immediately respond to a request for comment, but told the ICIJ: "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."

Richard Brooks, a former tax inspector, told the BBC: "I think they were a tax avoidance and tax evasion service. I think that's what they were offering."

Businessmen, politicians, designers, models

The investigation was done by the ICIJ, linked to the US-based Center for Public Integrity, who enlisted more than 140 journalists from 45 countries in cooperation with France's Le Monde, Britain's BBC and The Guardian, US programme 60 Minutes, German newspaper Suddeutsche Zeitung and more than 45 other media organisations.

Names in the files include people sanctioned by the United States, including Turkish businessman Selim Alguadis and Gennady Timchenko, an associate of Russian President Vladimir Putin targeted by sanctions over Ukraine.

Alguadis told the ICIJ it was prudent to keep savings off-shore, while a spokesman for Timchenko said he was fully compliant with tax matters.

Former Egyptian trade minister Rachid Mohamed Rachid, who fled Cairo during the 2011 uprising against former president Hosni Mubarak, is listed as having power of attorney over an account worth $31 million, according to the files. He did not respond to requests for comment from the ICIJ.

Other individuals named include the late Frantz Merceron, an associate of former Haitian president Jean Claude "Baby Doc" Duvalier, and Rami Makhlouf, cousin of Syrian President Bashar al-Assad. Makhlouf did not respond to a request for comment from the ICIJ.

Also named were designer Diane von Furstenberg, who told the ICIJ the accounts were inherited from her parents, and model Elle Macpherson, whose lawyers told the ICIJ she was fully in compliance with UK tax law.

Formula One driver Valentino Rossi, listed as having $23.9 million in two accounts, said he had regularised his tax situation with Italian authorities.

Formula One businessman Flavio Briatore is connected to 38 bank accounts that held as much as $73 million between 2006-2007, according to the ICIJ. His lawyer told the ICIJ Briatore's accounts were legal and complied with tax laws.

The files are a version of a set obtained by former HSBC employee-turned-whistleblower Herve Falciani, who copied thousands of bank documents before fleeing from Switzerland to France, where they were obtained by tax authorities in 2009.

They were used by the French government to track down tax evaders and shared with other states in 2010, leading to a series of prosecutions for tax evasion.

HSBC Private Bank, the Swiss subsidiary of the British banking group, is under formal investigation in a French probe into tax fraud.

In 2012, HSBC paid a record $1.9 billion fine in a settlement in a money laundering case, after a US Senate investigation found it was used to launder hundreds of millions of dollars for Mexican drug cartels.

source: www.abs-cbnnews.com