By Kerry-anne Mendoza
Feb 11, 2015
An international collaboration of media outlets have leaked HSBC files which prove the Bank has actively sought to undermine domestic tax laws by hiding more than $100bn in Swiss bank accounts – but what is truly remarkable, it the complicity of the UK government in helping the 1% avoid paying their dues.
Sicilian mafia families have a position in their criminal organisation called the ‘consigliere’. A consigliere is an adviser or counselor to the boss, with the additional responsibility of representing the boss in important meetings both within the boss’s crime family and with other crime families. The consigliere is a close, trusted friend and confidant.
The relationship between the UK government, the HMRC and the banking sector appears to be one of consigliere – with the former providing advice and representation services for the latter, against the interests of the public.
The HSBC Rapsheet
The rap sheet for HSBC funding and colluding with the criminals of the world is a long and sad affair. HSBC has been caught laundering money for Mexican drug cartels, breaking sanctions with so-called pariah states, and funding the very same ‘terrorists’ the UK government is sending troops and weapons across the globe to defeat.
This is not a conspiracy theory. HSBC were found guilty in a court of law of funnelling the proceeds of crime through their books knowingly and deliberately, and it was not the act of some rogue trader.
HSBC set up a subsidiary firm with the specific intention of using it to launder the money of Mexican drug barons. It spirited away over $7bn of the stuff between 2001 and 2007.
HSBC deliberately concealed transactions between 2001 and 2007 worth $19.7bn which mostly involved Iran. These trades were illegal under US trade restrictions. HSBC Europe and HSBC Middle East repeatedly removed information from transactions to conceal that they were dealings with Iran.
HSBC also pressured its US subsidiary to rekindle its relationship with Saudi Arabia’s Al Rahji banks which was found after 9/11 to have relationships with terrorist organisations.
Finally, HSBC’s US subsidiary happily cashed over £290m in dodgy travellers cheques used to launder Russian money without taking due diligence procedures.
The penalty HSBC will face for such rampant criminal behaviour? A fine equivalent to just 14% of the profits posted by the bank for one year. No one is held personal responsible; no one goes to jail; no one’s personal fortune is diminished.
And now, in the latest leak, we find they have been running a wholesale tax evasion scheme out of a Swiss subsidiary bank. As the Guardian reports:
The files – obtained through an international collaboration of news outlets, including the Guardian, the French daily Le Monde, BBC Panorama and the Washington-basedInternational 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 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.
HSBC had no choice but to hold their hands up and confess to yet another lapse in compliance.
“We acknowledge and are accountable for past compliance and control failures,” the bank said in a statement. “HSBC was run in a more federated way than it is today and decisions were frequently taken at a country level,” the bank said.
Which of course raises serious questions about the lever of oversight provided by the senior management of the Bank, which has it’s headquarters in the City of London.
But whilst we might expect the criminal banking sector to be doing everything it can to save its clients money – what was the response of Her Majesty’s Revenue and Customs (HMRC) and the UK government? They, after all, should be doing everything they can to better the public finances.
The Role of the HMRC
It turns out that tax authorities around the world have had confidential access to the leaked files since 2010, but chose not to expose the Swiss bank’s misconduct to the public. This is probably because the files include Hollywood stars, royalty, and the heirs to some of Europe’s biggest fortunes.
The decision not to go public would have been made under the stewardship of former HMRC Chief Executive Dave Hartnett (pictured above) – a man with a track record in sweetheart deals with tax avoiders.
Osita Mba (pictured above), whilst working as a tax solicitor at the HMRC (the organisation responsible for ensuring proper tax contributions by persons and corporations) discovered HMRC Chief Executive Dave Hartnett made an off the books sweetheart deal with Goldman Sachs. The deal, made over coffee, saw Hartnett unilaterally relieve Goldman Sachs of their legal obligation to pay up to £20m of interest on back taxes they’d aggressively avoided paying for five years. Mba wrote to Amyas Morse, the auditor general of the National Audit Office, in March 2011 outlining his concerns over the deal. In response, The HMRC immediately suspended Mr Mba, referred his details to the Criminal Investigations unit and used RIPA legislation intended for terrorists and financial criminals to spy on him and his wife.
This is how the HMRC treat an employee who seeks to ensure that corporations follow the tax rules.
When it came to the HSBC debacle, Hartnett adopted the same approach. HSBC is already facing criminal investigations and charges in France, Belgium, the US and Argentina as a result of the leak of the files, but no legal action has been taken against it in Britain. Sweetheart deals were made with tax evaders to recoup some of the lost revenue, and the matter was hushed up.
In late 2011, when Hartnett’s sweetheart deals with Goldman Sachs were exposed, and his shambolic appearances before the Public Accounts Committee left him a public joke he was not forced to resign. Instead, he was allowed to retire with a £1.7m pension pot.
His next job? He was offered and accepted a position with none other than HSBC, as part of its new anti tax avoidance division. You could not make it up.
The HMRC which should be chasing down tax evaders is helping them out, the UK government which should be acting in the public interest is lobbying in Europe on behalf of bankers – and meanwhile the DWP is harassing sick and disabled welfare claimants literally to death in the name of ‘austerity’. The system is broken.