In an unusual collaborative effort, a team of journalists from 45 countries has produced a blistering expose of a billionaires’ bank in Switzerland which was helping to place huge sums of its clients’ money beyond the reach of tax obligations and court settlements.
The banking giant HSBC was said to be a haven for tax dodgers, money launderers, arms dealers, politicians and celebrities worldwide.
HSBC’s Swiss private banking arm was revealed to be holding more than $100 billion, according to the investigative report which provides a rare glimpse inside the super-secret Swiss banking system.
The documents were obtained from a whistleblower by the International Consortium of Investigative Journalists (ICIJ) via the French newspaper Le Monde. They name famed soccer and tennis players, cyclists, rock stars, Hollywood actors, royalty, politicians, corporate executives and old-wealth families.
“This exposes once again the rotten core of banking—it would be shocking if it weren’t for the frequency with which we hear of such scandals,” said David Hillman, spokesperson for the U.K.-based Robin Hood Tax campaign. “It shows a sector not content with dodging its own obligations, but also conniving to help the richest people shirk their responsibilities to society as well.”
“It’s clear our…approach to the banking sector is wholly inadequate,” Hillman continued. “It’s time we ensured banks were working in the public’s interest instead of conspiring against us.”
Also named were some of the new rich in Africa, Asia and on other continents.
Among the HSBC African depositors was Aziza Kulsum and her family, named by the United Nations as financing the bloody Burundian civil war in the 1990s.
“Kulsum was a key player in the Democratic Republic of the Congo in the illicit trade in coltan, a strategically important mineral used in electronic devices, a U.N. report in 2001 found.” Her account, now frozen, holds $3.2 million, according to the report.
Another questionable account appears under the name of Katex Mines Guinee, a front company used by Guinea’s Ministry of Defense to traffic arms to rebel soldiers in Liberia during fighting in 2003, a U.N. report revealed. Some $7.14 million were held for the company by the bank.
The top 5 countries by numbers of HSBC accounts, the report said, are Switzerland, France, the UK, Brazil and Italy while the largest accounts are from depositors in Switzerland, the UK, Venezuela, the U.S. and Franc.
Africa is on the list but much further down. Kenya, for example, is ranked 58 with 742 accounts worth $35.8 million, the Democratic Republic of Congo has accounts worth $60.3 million, Ivory Coast with $190.5 million, Nigeria with $266.6 million and Zimbabwe with $272.2 million.
A piece in the Wall Street Journal last month noted: “HSBC Holdings PLC has spent hundreds of millions of dollars to overhaul its anti-money-laundering system, including hiring a former British spy and a tobacco-spitting former drug-enforcement official from the U.S.
But “despite fines of $1.9 billion in 2012 and a five year deferred prosecution agreement, the bank is said to have overlooked some $881 million in drug-trafficking proceeds laundered through its U.S. bank and that its staff stripped data from transactions with Iran, Libya and Sudan to evade U.S. sanctions,” the writers said.
Jack Blum, a former tax investigator at the U.S. Senate on a recent 60 Minutes television show, called the revelations “beyond shocking” but not that surprising. “Swiss banks have been caught protecting tax dodgers before, but never has this much detail been revealed,” he said. “Under U.S. law, any bank that does that, that assists a U.S. person in evading U.S. tax is guilty of a felony. And it doesn’t matter where the bank is located or where the bankers are located.”
An independent U.S. monitor is expected to submit a report to the Justice Department later this month assessing the British bank’s attempts to clean up its act.