HSBC settles tax allegations with French prosecutors

Chris Hamblin

17 November 2017

A judge in Paris has reportedly decided upon a penalty of about €158 million and damages and interest of about €142 million. The terms of such an agreement do not provide for an admission of guilt on the part of the payer. HSBC has stated that this agreement is the first of its kind to be made in accordance with the Judicial Convention of Public Interest. This innovation stems from the Sapin II Law that France enacted on 9 December last year and provides for the French equivalent of an American-style non-prosecution agreement between a potential defendant and the prosecutors.

As usual, nobody is going to gaol except the 'whistleblower.' The investigation that HSBC has just laid to rest with its payment began against it after Hervé Falciani, an IT man at its offices in Geneva, replicated information about clients' accounts and passed it to the French government.

Although France has been making use of the trove of incriminating data about 130,000 potential tax evaders contained in the so-called Falciani List, others have not. The French Government obtained the data by raiding Falciani's home and then gave it to the British Government in 2010 in the erroneous expectation that it would use it to apprehend and prosecute tax evaders. By the beginning of this year it had prosecuted only one out of 6,800 UK-related accounts.

More trouble seems to be looming on HSBC's horizon, with the BBC stating that Lord Peter Hain believes the bank to be embroiled in South Africa's developing Gupta scandal. On a lighter note, Stuart Gulliver, 58, the head of HSBC since January 2011, has been awarded the Order of the Aztec Eagle by the Government of Mexico, the country where HSBC (according to the US Government, which fined the bank $1.9 billion in 2012) moved billions of dollars of cash around in armoured vehicles, cleared suspicious travellers' cheques worth billions and allowed drug lords buy to aeroplanes with money laundered through Cayman Islands accounts. Mexico's foreign secretary, Luis Videgaray Caso, and finance secretary, José Antonio Meade, decorated Gulliver for his contribution to the national and international financial system and his commitment to Mexico.

In 2015 HSBC issued a communiqué in which it justified its conduct in this area with reference to bygone secrecy laws and standards of practice. At the very beginning were the words 'in the past.' It stated: "Private banks, including HSBC’s Swiss private bank, assumed that responsibility for payment of taxes rested with individual clients, rather than the institutions that banked them any bearer shares in non-individual accounts. We review all Politically Exposed Persons annually at the highest levels within the group."