HSBC offices raided as tax scandal deepens
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HSBC's Swiss HQ was raided on Wednesday as part of an inquiry into alleged tax avoidance. (Photo: George Rex)
By Benjamin Fox
Swiss prosecutors searched the offices of the Geneva subsidiary of UK banking giant HSBC bank on Wednesday (18 February) as the inquiry into alleged money-laundering by the bank deepened.
In a statement, the Geneva prosecutor said that “a search is currently underway in the premises of the bank, led by Attorney General Olivier Jornot and the prosecutor Yves Bertossa" into what it described as “aggravated money-laundering”.
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Documents suggest that HSBC helped clients avoid paying millions in taxes by hiding their money in secret Swiss accounts. (Photo: lucijanblagonic)
The scandal broke after Herve Falciani, a former IT worker with the bank, leaked details about clients involved in alleged tax avoidance to French newspaper Le Monde and, subsequently, the International Consortium of Investigative Journalists. The documents, which relate to activities between 2005 and 2007, suggest that HSBC helped clients avoid paying millions in taxes by hiding their money in secret Swiss accounts and gave them tips on how to exploit loopholes in the EU’s savings tax directive.
The revelations are particularly embarrassing for the UK government after it emerged that the UK’s tax authorities had been given information back in 2010 identifying 1,100 HSBC customers who had not paid taxes.
The affair is the second big tax avoidance scandal to hit Europe in recent months, following last November’s revelation about how a number multi-national corporations were able to minimise their tax liabilities by striking ‘sweetheart deals’ with the Luxembourg government, then headed by recently elected European Commission president Jean-Claude Juncker.
In response to the revelations, and wide-spread public anger about the scale of tax avoidance, which costs the bloc’s governments an estimated €1 trillion per year, the EU has vowed to tighten its rules on tax evasion and fraud, as well as its agreement on reporting requirements from Swiss banks.
EU ministers finally agreed to overhaul the bloc’s rules on automatic information exchange last year to widen the disclosure requirements for off-shore bank accounts held by EU nationals. They also negotiated a bilateral agreement with the Swiss government on the taxation of savings in 2014.
The annual exchange is set to include information on bank account balances, interest, dividends, and sales proceeds from financial assets, among other details. Switzerland has promised to put legislation in place to require its banks to supply this information by 2017.
For its part, HSBC has taken out full-page adverts apologising for its actions in a number of newspapers.
