HSBC issues apology over Swiss tax evasion

HSBC Holdings Plc chief executive Stuart Gulliver offered “sincerest apologies” following fresh details of how the bank’s Swiss unit helped customers evade taxes.

HSBC issues apology over Swiss tax evasion

The revelations were a “painful experience” for the bank, Gulliver, 55, wrote in full-page advertisements published in several newspapers, including the Sunday Times.

“Since 2008, our Swiss private bank has been completely overhauled,” he said. “We have absolutely no appetite to do business with clients who are evading their taxes or who fail to meet our financial crime compliance standards.”

HSBC has come under political fire after the publication of a report by the Washington-based International Consortium of Investigative Journalists this month showed details of how its Swiss unit handled accounts for tax evaders and criminals.

Gulliver, who took over as CEO in 2011, said Europe’s largest lender has since toughened internal controls and cut some clients at the Swiss private bank.

A self-described whistle-blower and former information technology worker, Herve Falciani, stole client account details from HSBC’s Geneva office in 2008 and passed them to French Finance Minister Christine Lagarde, now head of the International Monetary Fund, who alerted other governments.

HSBC has since “fundamentally changed” the way it is run, established “much tighter central control” around customers and boosted its compliance workforce to more than 7,000, according to Gulliver.

The Swiss private-banking unit cut the number of accounts by almost 70%, and 106 out of 140 clients mentioned in files are no longer with HSBC, he wrote.

The bank is also among a group of Swiss lenders subject to a US criminal tax-evasion probe.

Credit Suisse Group AG agreed in May to pay $2.6bn in penalties and pleaded guilty to helping Americans cheat on their taxes, making it the first global bank in a decade to admit to a crime in a US courtroom.

UBS Group AG avoided prosecution in 2009 by paying $780m and handing over the names of US account holders.

In the UK, the publication of details of how British citizens avoided taxes through HSBC sparked a political outcry less than three months before a general election and provoked a debate about the relationship between political parties and business.

Revenue & Customs denied it failed to take action when it received information in 2010 involving about 3,600 British individuals.

The UK Parliament’s Treasury Committee plans to question HSBC chairman Douglas Flint over the latest allegations, said a source.

Flint, 59, who was HSBC’s group finance director from 1995 to 2010, will be asked to testify later this month along with Lin Homer, chief executive of HMRC.

British prime minister David Cameron also came under fire about how he came to appoint ex-HSBC chairman Stephen Green as Trade Minister in 2011, months after the Treasury was handed files identifying individuals and businesses using HSBC’s Swiss arm.

The Labour Party’s finance spokesman, Ed Balls, told BBC TV yesterday that Cameron and Chancellor of the Exchequer George Osborne “didn’t ask the questions” about Green.

* Bloomberg

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