The French parliament says the nation needs to increase its efforts to battle tax evasion, report Reuters’ Lionel Laurent and Emile Picy. The statements came in a parliamentary report focusing on a tax investigation into HSBC Holdings plc (NYSE:HBC) (LON:HSBA)’s French operations. The probe reportedly uncovered $5 billion worth of assets that had not been declared and that were in thousands of different bank accounts in Switzerland.
The Investigation Into HSBC
The report was published today and examined why French officials spent more than four years to start investigating after a former employee at HSBC Holdings plc (NYSE:HBC) (LON:HSBA) actually handed over a list of those who had money at the bank’s Swiss unit.
France has been investigating HSBC for months, trying to determine if it sold financial products which were aimed at helping clients avoid paying taxes in France. UBS AG (NYSE:UBS) (VTX:UBSN) was fined $13.1 million late last month in connection with a similar investigation.
Last week lawmakers in France questioned Herve Falciani a former employee of HSBC. The bank claims Falciani stole the information, and Swiss officials had been trying to extradite him on data theft charges. He took refuge in Spain for some time and then moved to France.
The Parliamentary Report
According to Reuters, the report from the parliamentary committee highlighted a number of problems in a variety of different areas, including procedure, diplomacy, technicalities and legal issues. It indicates that these issues started right when Falciani handed over five DVDs of information to tax officials in France in 2008.
Aside from internal obstacles, it took authorities a year to go through the massive client list simply because of its sheer size. The process of extracting the names from that client list came to be known as Operation Chocolate. Investigators also experienced diplomatic problems because they said they were unable to rely on Switzerland’s help because it was attempting to extradite Falciani.
Bank Secrecy In Switzerland
Switzerland also has a reputation for being a safe haven for offshore assets. The nation of Switzerland has a $2 trillion offshore financial industry, and lawmakers there have been working to protect the industry. Switzerland recently proposed a bill that would enable banks in the country to easily handle tax disputes. That bill is expected to be pushed through, although lawmakers must first ensure that it doesn’t call into question the Swiss reputation for bank secrecy.
