​MPs summon HSBC bosses for grilling over ‘grave cross-border crime’

2015/02/25
HSBC Chief Executive Stuart Gulliver (L) and Group Chairman Douglas Flint. (Reuters/Bobby Yip)

The UK Treasury Select Committee scheduled the hearing after a string of global media outlets published damning details of 100,000 bank accounts held by HSBC’s Swiss private banking arm.


The leaked files, dated between 2005 and 2007, revealed the bank’s complicity in tax evasion and aggressive tax avoidance. They also shed light on the bank’s practices of doling out large amounts of cash in mixed currencies to clients, and offering banking services to drug traffickers, criminals and tyrants.



Over the course of two hours on Wednesday, MPs are expected to grill Gulliver and Flint.


As HSBC’s ex-finance director, Flint is expected to face questioning on who was responsible for oversight of HSBC’s banking empire between 2005 and 2007.


MPs will likely challenge Flint on whether HSBC subsidiaries in Mexico and Switzerland were exempt from compliance oversight.


Lin Homer, CEO of HM Revenue & Customs (HMRC), will also face questioning on the tax authority’s failure to ensure that those involved in criminal activity were held to account.


The Treasury Select Committee, headed by Conservative MP Andrew Tyrie, will likely focus on Gulliver’s efforts to reform HSBC since 2011. MPs are also expected to probe Gulliver and Flint on HSBC’s current banking practices, and the efficacy of reforms implemented.



As Gulliver presented HSBC’s results alongside Flint on Monday, both men said they were ashamed of the scandal that has engulfed HSBC in recent weeks.


Gulliver was allegedly drafted into HSBC as an agent of reform. However, a recent revelation he owned a Swiss bank account that routed funds through Panama has caused controversy.


Leaked bank files, dated 2005-07, reveal Gulliver sheltered £5 million of his personal funds at a Panamanian firm with his Swiss HSBC account.


The HSBC chief said on Monday he used the Swiss bank account to conceal his bonuses from other colleagues based in Hong Kong.


He further claimed that these payments were diverted through Panama to hide them from HSBC colleagues in China. Although Gulliver’s actions were not illegal, they have raised fresh questions about HSBC’s facilitation of aggressive tax avoidance.


Another source of controversy for Gulliver is the fact he is domiciled in Hong Kong for tax purposes despite being a UK resident. He has not lived in China since 1990. Gulliver claims he expects to die abroad, and this is the most important factor for determining his domiciliary status.



Britain’s former Director of Public Prosecution, Ken Macdonald, argues that HSBC could be liable for criminal charges in Britain as a result of its involvement in tax evasion. He said there are reasonable grounds to investigate the bank for “cheating” HRMC.


Macdonald said on Monday the evidence he has indicates HSBC Swiss and/or its staff were embroiled in years of “systematic and profitable collusion in serious criminal activity against the exchequers of a number of countries.”


He concluded that when this “grave cross-border crime” came to the attention of HMRC, it should have prompted “urgent and sustained criminal investigation.”


Although the damning leaked files remained in the possession of the tax authority for five years, no criminal action has been pursued against the bank.


Earlier this month, HMRC CEO Lin Homer defended the tax authority’s handling of the HSBC leaks. She denied she had failed to take proper action against UK citizens who were concealing money in HSBC’s Geneva branch.


The chair of the UK Parliament Public Accounts Committee (PAC), Margaret Hodge, subsequently described Homer’s response as “pathetic.”


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