HSBC faces French criminal probe over 'SwissLeaks'
LONDON, United Kingdom – HSBC is to face a French criminal probe over tax dealings at its Swiss private banking arm, the British banking giant said on Thursday, April 9, adding that a 1.0-billion-euro ($1.1-billion) bail had been imposed.
HSBC said in a statement that: "It has been placed under formal criminal investigation by the French magistrates in connection with the conduct of HSBC's Swiss Private Bank in 2006 and 2007 for alleged tax-related offences" in a case which featured in the so-called "SwissLeaks" controversy.
The SwissLeaks affair erupted in February following investigations by international newspapers – led by Le Monde of France – using stolen documents supplied by former HSBC IT employee Herve Falciani.
That data indicated the bank helped over 120,000 clients to hide 180.6 billion euros from tax authorities.
Those revelations came among growing evidence that pledges by banks to halt illicit or irresponsible activities that led up to the 2008 financial crisis have not been fulfilled.
In February the British bank acknowledged that "we sometimes failed to live up to the standards the societies we serve rightly expected from us," but on April 9 it said the decision by French magistrates "is without legal basis" while the bail "is unwarranted and excessive".
HSBC said it would appeal the decision by the French magistrates and "defend itself vigorously in any future proceedings".
According to the investigations into Falciani's whistle-blowing data, HSBC allegedly arranged for more than five billion euros ($5.2 billion at current rates) to be tucked away in trusts, shell companies and offshore accounts for around 9,000 French clients.
An official close to the case said last month that investigating magistrates leading the French inquiry had obtained evidence indicating HSBC "benefitted from proceeds of financial fraud and, in organising the obscuring of financial flows, laundered funds of illicit origins, allowing thousands of clients holding large accounts to hide them from the French tax administration."
The formal charges follow the failure to reach a plea bargaining deal between prosecutors and HSBC, which refused to pay the fine being sought, the source close to the inquiry said.
In certain instances, fines in plea bargaining arrangements can represent half of total sums believed to have been involved in illegal activities.
Several legal investigations into HSBC's Swiss unit are underway in Europe, including in Spain and Belgium. – Rappler.com