Revelations about world’s second largest bank mean difficult questions for UK government
An “urgent” investigation is to be conducted by the Public Accounts Committee following the revelations of HSBC’s role in a huge tax-dodging scheme.
A leak of damning records indicating that the bank helped thousands of wealthy clients evade tax through HSBC’s Swiss banking arm means the bank is already facing criminal investigations in France, Belgium, the US and Argentina.
In the UK, no criminal charges have yet been brought. This led Margaret Hodge, the chair of the committee to lash out at HMRC, which is responsible for prosecuting tax evaders.
Yesterday she said to the BBC: “You are left wondering, as you see the enormity of what has been going on, what it actually takes to bring a tax cheat to court. If it had been a benefit cheat it would have been up for court years ago.”
During a speech in the House of Commons, Hodge later said that “the Public Accounts Committee will be launching an urgent inquiry to which we will require HSBC to give evidence – and we will order them if necessary.”
HSBC’s global chief executive at the time, the Rev and Right Honourable Lord Green of Hustpierpoint, a Conservative Peer, has refused to comment on the global scandal that is currently unfolding. Speaking to the BBC’s investigative programme Panorama, he said: “As a matter of principle I will not comment on the business of HSBC past or present.”
The revelations are also embarrassing for David Cameron’s government. Green was appointed as trade minister just eight months after the leaked documents implicating the bank were handed over to HMRC in 2010.
This has led to comparisons between Green’s appointment and the government’s appointment of Andy Coulson – who was hired as David Cameron’s director of communications despite having already been implicated in the phone hacking scandal.
Cameron subsequently made a public apology for employing Coulson.
But Cameron is defending Green’s record. Yesterday the prime minister said “Stephen Green was an excellent trade minister, he did a good job. But I’d also add no government has done more than this one to crack down on tax evasion and aggressive tax avoidance.”
Meanwhile, Ed Miliband, the leader of the opposition said to Sky News: “We need to know why HMRC apparently did not act, apart from at the margins, on the information that they seem to have been given about what was going on.
“We need to know from the government why they appointed Stephen Green of HSBC as a trade minister well after this information was passed to HMRC. I would like to see the government explain what they did.”
The bank is co-operating with all the current enquiries. In a statement it said: “HSBC Global Private Banking (‘GPB’) and in particular its Swiss private bank have undergone a radical transformation in recent years.
“HSBC has implemented numerous initiatives designed to prevent its banking services being used to evade taxes or launder money.”
The end of Swiss bank secrecy?
UBS, Switzerland’s biggest bank is also to be investigated over similar allegations, it has emerged this week.
UBS confirmed it is being investigated by the US over allegations of tax avoidance for wealthy clients.
According to Business Insider, UBS has already been slapped with fines of £656m to settle a raft of scandals, including a foreign exchange market manipulation investigation in 2014.
Defending HMRC’s record on chasing down tax avoiders, Financial Secretary to the Treasury, David Gauke yesterday said that “the era of bank secrecy is over”.
According to the Guardian, the Swiss politician Micheline Calmy-Rey, who served as foreign minister between 2003-2011, said that the UK’s decision to open an investigation “would be the least that could be done.”
She said the scandal has damaged the country’s reputation. “I am angry. Switzerland has a good reputation for its efforts towards peace, for its economy. But then we learn there are slick individuals who do things.”