The recent tax scandal involving HSBC, the second-largest bank in the world, and the largest bank in the UK, has revealed that its Swiss private bankers have assisted multi-millionaires across the world avoid millions of pounds worth of tax and have been working with clients to hide their undeclared accounts.
Herve Falciani a former employee of the bank and the whistleblower, who leaked the files, alleged that he sent an email to HM Revenue and Customs back in 2008 offering information regarding the account holders in Switzerland. Falciani declares that the email informed HMRC that he was able to access the information systems. However, HMRC insists that no email was ever received. Information regarding the accounts of 106,000 clients in 203 different countries has been revealed as a result Falciani leaking files back in 2008. 7000 of these clients are based in the UK. The whistle blower expressed annoyance to the BBC in an interview, as he truly believes the Government have known, or ought to have known of the misconduct since 2010.
HSBC has admitted that their compliance standards were not at a satisfactory level and that it is accountable for “past control failures” but has denied that all Swiss account holders have avoided tax and have stated that they are working alongside relevant authorities. Nevertheless they are facing criminal investigations in the US, Belgium and Argentina but not in the UK where HSBC is based. The bank also claims that its compliance standards are at a much higher level now.
With less than 100 days until the General Election, the pressure is on for leader of the Conservative party, David Cameron, as his Labour opponent, Ed Miliband, questioned him in the House of Commons earlier this week making accusations that he has recently accepted anonymous donations from ‘dodgy’ HSBC account holders. David Cameron did not deny the donations from the seven anonymous account holders. These allegations worked in favour of the Labour party as the opinion polls show Labour to be 2% higher than the Toris. The allegations also support their main argument that the Conservatives put the interests of the wealthy before those less well off.
The political unrest continued throughout the House of Commons during Prime minister Questions with David Cameron labeling the previous Labour Government as a “friend of the tax dodger”. The insults continued as Ed Miliband argued back calling Cameron “a dodgy Prime Minister” and the Conservative party as also being “dodgy”. The Conservatives have collected over £5 million worth of donations from HSBC Swiss account holders.
David Cameron appointed Stephen Green, a former chairman and chief executive of HSBC in 2011. Ed Miliband in the House of Commons questioned David Cameron as to whether he had discussed tax avoidance at HSBC with Stephen Green prior to his appointment as trade leader. David Cameron failed to answer the question four times.
Lin Homer chief executive of HMRC appearing before the public accounts committee in the House of Commons was questioned vigorously by MPs regarding the scandal. Homer announced that she wanted power to raid the personal bank accounts of “recalcitrant debtors”. However MP’s said her proposal did not comply with the provisions of Magna Carta. During the hearing, the HMRC executive stated that her agency were “speedy on the case” using the data to retrieve the money held by the UK citizens in the HSBC Switzerland Bank. She proclaimed that her agency had received better results than other countries, a controversial comment as both the French and Spanish authorities have recovered more cash.
Another piece of information that emerged from the hearing was that the HMRC, the Treasury or the UK bank regulators had all failed to question why the HSBC Swiss branch attracted thousands of wealthy people from across Europe and had never looked into the banks governance.
Latest reports suggest the Treasury Committee is to begin an investigation into the scandal. The committee chairman announced that they would be looking into HSBC as well as HMRC to gather as much evidence as they possibly can. The Treasury is also going to be creating new legislation to tighten the tax evasion laws that are currently in place.