Tag Archives: Scandal

HSBC Aided Tax Avoidance Worth “Hundreds of Millions”

HSBC, a familiar name in banking on an international scale, has helped clients to collectively avoid hundreds of millions in tax according to a joint investigation by media outlets around the world. The investigators have seen details of accounts representing a large number of the bank’s clients in order to substantiate the allegation.

The data examined by the consortium of media outlets was leaked in 2007 by a whistleblower. It contains details of accounts belonging to 106,000 HSBC clients. Overall, the data covers clients in 203 different countries, including 7,000 in the UK. After its release, it was passed on to more than 50 media outlets including the Guardian and the BBC’s investigative programme Panorama.

The bank will now be the subject of criminal investigations in France, Belgium, the US and Argentina. It currently faces no investigations in the UK, where the bank is based. According to a statement, HSBC will be “co-operating with relevant authorities” while such investigations are ongoing.

In regard to the nature of the accusations, HSBC admits in a statement that some of its clients have been aided in tax avoidance by HSBC’s policies. Specifically, the bank admits that secrecy policies have been taken advantage of by certain clients in order to hold accounts that were not declared for tax purposes. However, the bank insists that since this took place, it has “fundamentally changed.”

However, HSBC is accused of more than just passively implementing secrecy policies that aided tax avoiders. After the 2005 introduction of the European Savings Directive, designed to allow Swiss banks to take money directly from undeclared accounts on the taxman’s behalf, HSBC wrote to customers offering ways around the new measures. This is just one of a number of ways in which the bank is accused of taking a more active role in assisting with tax avoidance.

Neither the holding of offshore accounts nor the avoidance of tax is necessarily illegal. However, deliberately hiding money in order to avoid paying tax that is rightfully due is an illegal practice, and offshore accounts are frequently used as a means to achieve this.

In 2013, the authorities in France concluded an examination of the data released by the whistleblower. They decided that almost all (around 99.8%) of French citizens featured in the data were probably involved in tax evasion. Meanwhile in India, finance minister Arun Jaitley has said that investigations will be launched into all Indian citizens featured on the list. Jaitley did, however, warn that the list may also contain legitimate accounts.

As well as to the various media outlets and journalistic bodies that have been analysing and investigating the list, the leaked data has also been in the hands of HMRC since 2010. However, though the data seems to identify over 1,100 who have evaded tax that they legally owe. However, only one prosecution has so far been made.

Forex Controversy Leads RBS to Suspend Bonuses

The Royal Bank of Scotland (RBS) has suspended the bonuses of 18 employees as the bank continues its internal investigation into forex rigging. The bank has so far investigated the conduct of over 50 present an previous staff in relation to the scandal and has looked over millions of documents.

The bank announced yesterday that 18 forex traders employed by the bank would have their bonuses frozen in relation to the investigation. According to the bank’s head of conduct and regulatory affairs, Jon Pain, “no further bonus payments will be made or unvested bonus awards released to those in scope of the review until it has concluded and its recommendations have been considered by the Remuneration Committee and the Board Risk Committee.”

However, it has not been definitely established whether the traders in question have in fact done any wrong, and each is being investigated individually. As such, the number of individuals associated with the investigation and having their bonuses frozen could be subject to change by the time of the final review. Currently, the final review is due for early 2015.

The Foreign Exchange (ForEx) market is currently worth around US$5.3 trillion a day. It involves trading funds into different currencies in order to achieve a profit. By correctly predicting which currencies will rise in value against other monies and then placing funds in those currencies, it is possible for experienced traders to make significant profits (and for novices to make equally significant losses).

The recent scandal surrounds attempts made by certain traders to not just predict the market but deliberately manipulate it in order to rig their investments for success. By trading confidential information about their clients’ investments, traders were able to deliberately coordinate trades in order to noticeably impact the market and boost profits. This is one of the latest in a line of scandals that have impacted public confidence in the banking system in recent years.

RBS was among the banks embroiled in the scandal, and last month was handed a fine worth £400 million by international regulators. The bank is reportedly still in discussion with other regulatory bodies, and could potentially face further fines.

According to an investigation carried out by the Bank of England and the Financial Conduct Authority (FCA), traders openly boasted about their manipulation of the market in online chatrooms. Transcripts show boasting from a number of traders, including some employed by RBS. Six of the bank’s employees are currently facing disciplinary action, and three of those have been suspended ahead of further investigation into their involvement in the scandal.

The bank has declined to disclose the identities of the eighteen staff who have now had their bonuses frozen.