2015-02-16 By Kenneth Maxwell
The secrets of HSBC were painfully revealed last week by the Washington based “International Consortium of Investigative Reporters” (ICIJ).
Working with an international team of 140 journalists in 45 countries, the leaked documentation, reveals how HSBC’s (Suisse) Private Bank, helped wealthy customers conceal billions of dollars of assets: Over 100,000 accounts worth almost US$ 120bn were involved, including 2,900 connected with the US.
But the net is global in scope.
Full details can be assessed at “Swiss Leaks Data” on the ICIJ website.
Some of these were accounts (between 2006/2007) held by Arab potentates, such as the King of Morocco and the King of Jordan, Sultan Qaboos of Oman, and assorted Saudi royals, including Prince Bandar bin Sultan. Saudi accounts accounted for US$5.8bn, the largest in the Middle East, and the 11th largest in the world.
The Lebanese accounts were worth US$4.8bn, and the Egyptian, UAE, and Turkey accounts were worth US$3.5bn.
The leaked details of the secret accounts also include 11,235 clients from Switzerland; 9,187 from France; 8,844 from the UK; 8,667 from Brazil; 7,499 from Italy.
The values involve US$31.1bn from Switzerland; US$21,7bn from the UK; US$14,8bn from Venezuela; US$13.4bn from the USA; US$12,5bn from France; and US$7bn from Brazil.
Not all these accounts were illegal ICIJ says, and holding these secret accounts is “not of itself an indication of any wrong doing.”
They involve of rock stars, including David Bowie and Tina Turner, and actors such as Joan Collins, as well as many wealthy individuals from Sweden, to India, to South Africa, to South America, to China.
The vast data trove of leaked files include client names, account holdings, and notes by bankers of conversations concerning the accounts.
But they do provide a fascinating insight into how many of these accounts were deliberately hidden from national tax authorities.
And in addition to assisting tax dodgers, the HSBC Private Bank also provided services to international criminals, drug lords and fugitives, and other “high risk” individuals, who wished to secretly horde or hide illicit cash in “black” accounts.
HSBC private bank ICIJ says “profited from doing business with arms dealers who channel mortar bombs to child soldiers in Africa, bag men for Third World Dictators, traffickers in blood diamonds and other international outlaws.”
The US, French, Belgium, Greek, and Argentinian tax authorities, have already begun investigations.
HSBC had previously entered into a agreement in the US where the bank admitted laundering drug profits from Mexico. In the US the chairman of the Senate Judiciary Committee, Senator Chuck Grassley (R-Iowa), is preparing a series of new questions for Coretta Lynch, President Obama’s nominee for Attorney General on the leaked data. Coretta Lynch negotiated a deal with HSBC two years ago where the bank avoided criminal charges.
HSBC is Britain’s largest bank and the scandal has already led to a heated blame game between the politicians who are facing a general election this May.
During the last Labour government, Ed Ball, now the shadow Chancellor of the Exchequer, was the city minister (2006-2007), responsible for the regulation of the banks when the shenanigans were taking place at HSBC’s Private Bank in Switzerland.
The Conservative Party made Stephen Green, the former head of HSBC (he was chief executive between 2003-2006 and chairman until 2010) a baron and member of the House of Lords. He was then appointed minister of trade and investment (2011-2013) by prime minster David Cameron.
This was months after the UK tax authorities had been notified by Paris of tax dodging by wealthy British HSBC clients in Switzerland. But the politicians claim they only heard about the scandal last week. Lord Green is an ordained priest in the Church of England.
The man responsible for the biggest banking leak in history is Herve Falciani (43), a former HSBC IT specialist, born in Monaco, and of French and Italian nationality. Some call him the Edward Snowden of private banking.
The Swiss accuse him of theft.
His story is in fact the stuff of action movies:
- A clandestine visit to Lebanon.
- An encounter with Mossad.
- A cross-border escape from Switzerland into France.
- Imprisonment in Spain.
His transformation from IT consultant into whistle-blower began when he was transferred from HSBC Monaco to HSBC Private Bank in Geneva. Between 2006 and 2007 he downloaded details of tens of thousands of accounts. He later turned these over to the French authorities.
The (then) French finance minister, Christine Lagarde (later head of the IMF), shared the data with other national tax authorities.
HSBC’s Swiss private banking misadventure (apparently) began in 1999 with the acquisition of Republic National Bank of New York and Safra Republic Holdings which accounted for the bulk of its Swiss private bank clients.
The company had been controlled by billionaire Edmond Safra who was mysteriously killed in a fire in his Monte Carlo penthouse, this despite his Mossad trained bodyguards. Conspiracy theories and rumors persist of Russian mafia and Columbia drug lords involvement. Joseph Safra, his brother runs (independently) the Safra banking empire in Sao Paulo, Brazil.
Lord Green has now steeped down as chairman of the City of London banking lobby group “TheCityUK.”
But he has so far declined to comment on the scandal. The current chief executive of HSBC, Stuart Gulliver, published a full page advertisement in many UK newspapers on Sunday (15 February 2015). where he said that “these allegations deal with historical practices, no longer in place. We therefore offer our sincerest apologies.”
But the fallout from this banking scandal is already global in scope and it will be very difficult to contain.
And as for those who are not simply seeking to avoid publicity or wishing to avoid taxes are sorted out from others who have decidedly more criminal intents, this crisis could spill over into a number of other issues, ranging from drug smuggling, terrorist financing, and even areas like the sanctions against Russia.
Given the central role London plays in the global financial community, the HSBC scandal will have significant global outreach and implications.