The Guardian has the following on HSBC Holdings Plc (HKG:0005) (NYSE:HSBC) (LON:HSBA).
British clients of an HSBC-owned private Swiss bank that is the focus of a major HM Revenue & Customs investigation are alleged to have evaded tax by an amount likely to exceed £200m, the Observer has learned.
The potential scale of the tax loss will heighten pressure on trade minister Lord Green, who was chairman of HSBC’s private banking division during the period the HMRC is investigating. He is already facing questions from MPs about the bank’s links to Mexican drug cartels and terrorists that came to light this month in a devastating US Senate investigation. Emails released as part of that investigation showed Green was twice warned about compliance failures and allegations that huge sums were laundered by Mexican drug gangs through a subsidiary of HSBC.
The HMRC in 2010 received data smuggled out of HSBC by a former bank IT worker, now under arrest in Spain and facing possible extradition to Switzerland, that contained details of 6,000 UK-linked individuals, companies and trusts.
This is generally interesting mainly due to the study of the techniques used: There are remarkable similarities to the case where Nordrhein-Westphalen bought CD’s with tax evasion data each covering roughly the same number of people.
This means that employees start using the dirt they have on their superiors. In most organisations employees take extra photocopies of incriminating documents partly to guard their own back, partly to have some leverage if the boss turns nasty. In the German case it seems like there were mainly some dissatisfaction with promotion and retirement plan. In this Spanish case the dissatisfaction seems to be management not entirely satisfied with job performance – one way or the other – otherwise an extradition to Switzerland would not be the cruellest threat.
The number of accounts seems to be what one clerical worker has access to without the banks internal IT-department alerting management to a possible security breach. The implication is more enlightening: These – in themselves – rather trivial revelations in terms of money (.2 bio. EUR is mentioned) do seem to lead up the corporate ladder. The bank inspection might want some answers to questions in view of information brought to their attention – from the supervisor or higher management.
These supervisors have naturally also covered their backs and might have some tales to tell about their superiors.
There is no shortage of information: In the LIBOR scandal 34 million emails were gathered. A reasonably well read person might read a million pages in his life: So there is an awful lot of chaff to sort from the wheat. What is needed is a lead to where to find nuggets. Apparently we are now getting them from disgruntled employees. That is not strange in view of banks cutting staff to an extent where there are no appropriate sinecure positions available to underlings with compromising insights.
The banks position has until now been that of a sound organisation with a few unavoidable bad apples; but the investigative progress shows what everyone but the most gullible have suspected. It might sound sensationalistic; but of course it goes all the way to the top – otherwise you accuse bank managers of not being in control of their own staff. Of course they are. The difficulty has always been one of being able to prove it.
There is reason to notice two things as being relatively new:
1) With the reporting procedures demanded by bank inspections the information is still there somewhere in the jungle. In the good old day the shredder was management’s best friend when a slight alteration to reality was called for – that and premature senility with associated poor recall.
In some cases the quality of bank inspections have been appalling: In Denmark (symbolic) fines were handed out to banks for failing to report stock deals over (in one published; but unnoticed case) several years and the bank inspection didn’t find out that the data wasn’t at hand.
But this data available in many cases does afford the authorities opportunity to progress in their investigation. They are even beginning to breach the vault of silence in Swiss banks.
2) The other salient point is the degree of intra European cooperation beginning to take effect: The former employee in Switzerland in Spanish police detention has information about British tax evaders. Up to now the spectre of banking has been their swift international connections; but the bank inspections now seem to be exchanging information more effectively as well. It would be no surprise if the anti-terror campaign and the associated money laundering and transfers actually made the ground work about a decade ago.