The French financial prosecutor has lodged a formal request calling for HSBC’s Swiss private bank to be sent to a criminal trial over an alleged tax-evasion scheme catering to wealthy patrons.
The request followed an extensive investigation by French magistrates into the connection of 3,000 French taxpayers to a suspected tax-evasion scheme. The move is a procedural step towards bringing the Swiss subsidiary closer to a trial in France; the outcome of which, according to HSBC, “is not determined as of today”.
HSBC, the Swiss bank’s parent company, faces a separate investigation that is still ongoing. The banking giant will have one month to respond before leaving French magistrates to take on the decision of whether to pursue a trial.
French newspaper Le Monde reported that HSBC declined a plea deal that would have allowed it to circumvent a potential trial. It said that the firm would have been required to pay an estimated $1.47 billion fine.
On top of investigations in France, HSBC also faces scrutiny from investigators in the U.S. as well as an inquiry from British MPs following reports that it assisted customers in concealing millions of dollars’ worth of assets since 2007. HSBC has nevertheless admitted shortcomings in compliance and controls in its Swiss arm.
Prosecutors in France have already filed cases against individual clients of the Swiss bank.
The operation came to the surface after several media outlets revealed leaked files implicating the Swiss bank of allowing its clients to aggressively evade taxes and withdraw “bricks” of cash without question.
The bank also faces inquiries in other countries such as India, Belgium, and Brazil.
Stuart Gulliver, HSBC’s chief executive, acknowledged that the disclosures are a source of shame, adding to chairman Douglas Flint’s admission that they are “deeply humbling”. The two have sworn to clean up the bank, but say they are not to be held accountable for the Swiss Bank’s actions.
According to The Guardian, Gulliver held an account in the Swiss Bank and used a Panamanian company to channel his funds into it. While he confessed to the suspicious arrangement, which was closed in 2009 but claimed that it was to protect his privacy.
The chair of the UK’s public accounts committee, Margaret Hodge, called for non-executive HSBC director Rona Fairhead to resign as chair of the BBC Trust amidst the scandal.
Similar pressure was exerted on Flint when former Bank of England policymaker Robert Jenkins stressed that he should resign to protect the reputation of both himself and the bank.
The revelation comes in addition to a $1.9 billion fine imposed on HSBC by U.S. authorities for allowing its Mexican branch to process and launder money for drug cartels.
Millionaire heiress to the Nina Ricci fashion and perfume house, Arlette Ricci, went on trial last month in Paris after being accused of hiding more than $22 million from French tax authorities using an account she holds with the Swiss bank.
Ricci, a 73-year-old psychoanalyst, and writer, was on trial with her daughter and accountant in a new Paris court specifically used to deal with tax fraud. She was one of more than 60 wealthy French clients who have been formally investigated out of a list of thousands who have been listed as alleged users of the Swiss bank’s tax evasion services.
The French state prosecutor endorsed a two-year prison sentence with a $3.1 million fine on top of an additional two years of suspended sentence. A verdict will be made on April 13.▪