11 Feb 2015

HSBC tax secrecy timeline: who knew what, and when?

Revelations of apparent wrongdoing at a branch of the HSBC bank in Geneva have put the bank, and its former chairman Lord Green, in the spotlight. This is how the story unfolded.

Herve Falciani, HSBC whistleblower

Herve Falciani – the whistleblower

In 2006 HSBC computer specialist Herve Falciani started to upgrade software at the bank’s Swiss branch. He says bosses ignored his concerns about what was going on there and began to steal data relating to some 127,000 client accounts.

In 2008, with the Swiss authorities onto him, Falciani fled to France, but the authorities there were unable to use the data as it has been obtained illegaly. When the Swiss authorities demanded the extradition of Falciani, the French police raided his home, seized the data and the process of investigating it began.

UK informed

In May 2010 the French authorities officially passed on data to the UK tax authorities, HMRC.

Stephen Green

Stephen Green served as group chairman of HSBC from May 2005 until December 2010. He also served as a director of the HSBC Swiss branch.

Stephen Green, former chairman of HSBC with David Cameron

He stepped down as the group chairman of HSBC, a month after he became a Conservative peer in the House of Lords in November 2010.

In January 2011 he became a trade mininster. Speaking to a business conference in November 2011 Prime Minister David Cameron, said the arrival of Lord Green in politics was “one of the imports I’m most proud of”, adding: “There couldn’t be a better person for the job.”

UK investigations

In September 2011, giving evidence to a Treasury committee about efforts to reclaim unpaid tax, Dave Hartnett, the permanent secretary for Tax at the HMRC said: “I think the whole nation probably knows that our department has a disc from the Swiss – from the Geneva branch of a major UK bank – with 6,000 names, all ripe for investigation.”

HSBC apology

Investigations by tax authorities in other countries were triggered by the Falciani data.

In July 2012 Irene Dorner, president and CEO of HSBC Bank USA and HSBC North America Holdings, apologised for not living up to “our own expectations”, or those of regulators and the public.

In December 2012 the US authorities fined HSBC $1.9bn for money laundering.

Jersey data

In November 2012 another whistleblower, who remains anonymous, handed over the details of 4,388 British accounts managed by HSBC in Jersey. Those accounts held £699m pounds. UK tax authorities told Channel 4 News they “may” be able to claw back £10-20m in unpaid tax where applicable.

Falciani appears in court in disguise

Extradition request

In April 2013, still on the run, whistleblower Herve Falciani appeared in disguise in a Spanish court (see picture above). Having heard evidence over his role in exposing fraud, the judges refused a Swiss request to extradite him.

Spanish prosecutor Delores Delgado told Channel 4 News that, on the basis of documents used in the case and what Falciani had told her, HSBC was “in some of its behaviour” acting “like a tax haven in its own right.”

Channel 4 News spoke to Falciani at length in December 2013. See the report in full here:

In February 2015, a variety of news outlets including The Guardian newspaper, published allegations that HSBC’s Swiss banking arm had routinely allowed clients to evade tax, conceal assets, and even advised wealthy customers on how to circumvent domestic tax authorities.

In response HSBC said “we acknowledge and are accountable for past compliance and control failures,” adding “standards of due diligence were significantly lower than today.”

Lord Green has yet to comment.