10) HSBC HELPS WIDEN WEALTH GAP

PV Commentary

            While this scandal has seen little coverage in Canada, the BBC is reporting that banking giant HSBC helped wealthy clients across the world evade hundreds of millions of pounds worth of tax.

            The BBC show Panorama has seen accounts from 106,000 clients in 203 countries, leaked by whistleblower Herve Falciani in 2007. The documents include details of almost 7,000 clients based in the UK.

            HSBC admits that it was "accountable for past control failures," but it has now "fundamentally changed". (Of course, genuine “fundamental change” would require taking a stand against global capitalism, but no doubt HSBC has a different definition of this term.)

            The bank now faces criminal investigations in the US, France, Belgium and Argentina. But not in the UK, where HSBC says it is "co-operating with relevant authorities".

            As the BBC notes, “offshore accounts are not illegal, but many people use them to hide cash from the tax authorities. And while tax avoidance is perfectly legal, deliberately hiding money to evade tax is not. The French authorities concluded in 2013 that 99.8% of their citizens on the list were probably evading tax.”

            Thousands of pages of data obtained by the French newspaper Le Monde have now been passed to the International Consortium of Investigative Journalists, the Guardian newspaper, Panorama and more than 50 media outlets around the world.

            Britain’s HM Revenue and Customs (HMRC) was given the leaked data in 2010, and has identified 1,100 people from the list of 7,000 British clients who had not paid their taxes. But almost five years later, only one tax evader has been prosecuted.

            HMRC said 135 million pounds in tax, interest and penalties have been paid by those who hid their assets in Switzerland, and he bank claims that  it now puts compliance and tax transparency ahead of profitability. But many observers believe that the tax scam is much larger and still ongoing.

            The bank did not just turn a blind eye to tax evaders- in some cases it broke the law by actively helping its clients. The bank gave one wealthy family a foreign credit card so they could withdraw their undeclared cash at cashpoints overseas.

            HSBC also helped tax-dodgers stay ahead of the law. When the European Savings Directive was introduced in 2005, the idea was that Swiss banks would take any tax owed from undeclared accounts and pass it to the taxman. It was a tax designed to catch evaders. But instead of simply collecting the money, HSBC offered customers ways to get round the new tax.

            Richard Brooks, a former tax inspector and author of The Great Tax Robbery, said: "I think they were a tax avoidance and tax evasion service. I think that's what they were offering. They knew full well that people come to them to dodge their tax liabilities."

            The man in charge of HSBC at the time, Stephen Green, was made a Conservative peer and appointed to the government. Lord Green was made a minister eight months after HMRC had been given the leaked HSBC documents. He served as a minister of trade and investment until 2013.

            Speaking on BBC’s Radio 4, UK Treasury minister David Gauke defended Lord Green's appointment, saying "I am not aware of any evidence that suggests that Lord Green was involved in this sort of activity". Sure, just like Al Capone had no idea that his gang was involved in criminal pursuits.

(The above article is from the February 15-28, 2015 issue of People's Voice, Canada's leading socialist newspaper. Articles can be reprinted free if the source is credited. Subscription rates in Canada: $30/year, or $15 low income rate; for U.S. readers - $45 US per year; other overseas readers - $45 US or $50 CDN per year. Send to People's Voice, c/o PV Business Manager, 706 Clark Drive, Vancouver, BC, V5L 3J1.)