HSBC CEO Gulliver Issues Apology Over Swiss Unit’s Tax Evasion
(Bloomberg) — HSBC Holdings Plc Chief Executive Officer Stuart Gulliver offered “sincerest apologies” following fresh details of how the bank’s Swiss unit helped customers evade taxes.
The revelations were a “painful experience” for the bank, Gulliver, 55, wrote in full-page advertisements published in several British 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’s 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 percent, and 106 out of 140 clients mentioned in files are no longer with HSBC, he wrote.
U.S. Probe
The bank is also among a group of Swiss lenders subject to a U.S. criminal tax-evasion probe. Credit Suisse Group AG agreed in May to pay $2.6 billion 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 U.S. courtroom. UBS Group AG avoided prosecution in 2009 by paying $780 million and handing over the names of U.S. account holders.
In the U.K., 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. Her Majesty’s Revenue & Customs denied it failed to take adequate action when it received information in 2010 involving about 3,600 British individuals.
The U.K. Parliament’s Treasury Committee plans to question HSBC Chairman Douglas Flint over the latest allegations, said a person with knowledge of the matter. 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, CEO of HMRC, said the person, who asked not to be identified because the details of the hearing haven’t been published.
‘Angry People’
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 U.K. opposition Labour Party’s finance spokesman, Ed Balls, told BBC Television in an interview on Sunday that Cameron and Chancellor of the Exchequer George Osborne “didn’t ask the questions” about Green.
“The evidence is the Conservatives from the Treasury and No. 10 turned a blind eye to what was happening at HSBC,” he said. “That’s what makes people angry — when it comes to the rich and powerful they don’t ask the questions.”
Green has questions to answer, U.K. Business Secretary Vince Cable said in an interview with Sky News. “It’s now for him to answer the specific allegations that have been made,” said Cable, who is a member of the Liberal Democrats, the junior party in the governing coalition.
Green decided to step down from TheCityUK’s advisory council, the organization said in a statement on Saturday. The group represents interests of lenders, insurers and asset managers.
–With assistance from Tom Beardsworth and Stephen Morris in London.
To contact the reporter on this story: Simone Meier in London at smeier@bloomberg.net To contact the editors responsible for this story: Edward Evans at eevans3@bloomberg.net Robert Valpuesta, Raj Rajendran
