The ‘filthy rich’ Labour chairman of the ‘Public Accounts Committee’ – Margaret Hodge (Oppenheimer family) – does a fantastic job in bringing people to book or accountable in matters of public interest. I love it when she is incandescent with rage spitting blood at all and sundry, whom she feels have transgressed. She did not let us down and was consistent over the HSBC Tax/evasion/avoidance scandal. As with all politicians, she could just see evasion; nor were many of the politicians much interested in the mitigating circumstances or why the behaviour of HSBC’s private bank in Switzerland may have looked rather worse than perhaps it really was.
Anyway Mrs Hodge fired fierce salvos at the bank, HMRC and the CPS. Also her diseased-ridden mind was working overtime in possibly hoping to hang the previous CEO and Chairman, the Tory peer Lord Stephen Green out to dry, presumably based on the premise – “the buck sits at the top!” Government Minister David Gawke and the whining Rachel Reeves and the vociferous advocate Shabana Mahmood, who possibly knows less about the subject than I do, chucked their ‘two cents worth in.’ The ubiquitous Ed Balls was nowhere to be seen on this issue despite the fact some of these transgressions took place under his watch.
Let’s be candid tax evasion is illegal and cannot be condoned. However these transgressions conceivably involving hundreds/thousands of UK tax payers look place circa 2005/2007. It was around 2007 that the Swiss authorities started snitching on those who had squirrelled away money in the wake of UBS being fined $780 million for assisting US citizens in dodging tax – an allegation it admitted to keep its US banking licence. Many of you will have forgotten that a UBS whistle blower Bradley Birkenfeld having done 40 months ‘bird’ filled his boots with $104 million pay-off for exposing UBS’s tax evasion schemes for US citizens. Many banks had been using the Swiss banking system to best effects for decades. If anyone thinks that HSBC was on its own with these practices deludes itself. When did the ‘grey area’ become clear? When the change from tax avoidance to tax evasion manifested itself is the nub of the issue.
So far to date only £135 million has been recovered by HMRC and only one person has been prosecuted. This has made many, particularly Labour politicians erupt like Vesuvius! Don’t blame HMRC. They handed the case studies to the CPS. If there had been less ‘grey areas’ no doubt the CPS would have brought more prosecutions.
To hold Lord Green to account for knowing about these illegal activities is ridiculous. The man is the pillar of society! They happened 8-10 years ago. He resigned as chairman in 2010. He would not have known anything about tax evasion. HSBC is a huge complex bank. It may be known as the ‘local bank’, but it is the most global of banks with 300,000 employees. It is virtually for top management to keep tabs on all activities on a daily basis. Regulation of banks has tightened up measurably and I am confident that Chairman Douglas Flint and CEO Stuart Gulliver would never condone such behaviour and would be horrified to hear of any illegal activity under their watch. When confronted with allegations of money laundering for which the bank was fined $1.9 billion, the management reacted immediately and heads rolled.
This has been a bad seven years for the banking sector – awful! Trust is at an all-time low. However I feel that here in the UK the reputational damage to HSBC will be limited as much of this news is historical and took place away from these shores in Switzerland.