aNewDomain — Socialite Leona Helmsley once said that “Only the little people pay taxes.” The world’s second largest bank has now blown away any pinch of hyperbole in Helmsley’s claim.
It turns out that HSBC, a giant bank founded by British imperialists after the First Opium War in China, has recently helped more than 100,000 wealthy clients from more than 200 countries dodge tax in their respective countries. It’s unclear when the crime began, but it lasted at least until 2010, when French authorities tipped off to the widescale tax evasion began to make arrests and notify tax authorities in other countries, authorites confirmed Monday.
The British tax authority (HMRC, short for Her Majesty’s Revenue and Customs) has confirmed that some 1,100 British taxpayers have now paid $205 million in back taxes and penalties in the aftermath of the receipt of data from the French authorities. That’s an average of $186,000 per taxpayer in tax avoided. What’s more, another 6,000 British taxpayers were on the list of tax avoiders.
The US IRS has admitted that nearly 3,000 US taxpayers were on the HSBC list but has so far declined to state how much unpaid tax it has collected using the information.
While the relevant taxing authorities have known about this scandal for several years, Monday’s public announcement of the scam resulted from an investigation led by a coalition of news organizations that included Le Monde, the BBC, the Guardian newspaper, and the International Consortium of Investigative Journalists.
Serious questions about the world’s banking system are again being asked throughout most of the developed world’s governments about how the banking system is regulated – or not regulated.
If the unpaid US tax parallels the unpaid British tax, then the US has missed about $560 million in unpaid taxes. To put it in perspective, that’s an amount equal to the entire annual budget of the largest public school district in Washington State, Seattle Public Schools..
“Why is it that there’s one law for the rich and one for the poor?” British MP Dennis Skinner asked Parliament during an emergency debate when the news came to light yesterday. He pointed out that the British government had 10 times the number of civil servants investigating welfare fraud than it had investigating tax fraud.
The tax avoidance scheme involved HSBC Swiss subsidiary where the funds were held. In some cases, HSBC apparently provided clients with credit cards that they could use to draw down the funds in their Swiss accounts.
HSBC banker Herve Falciani is the Edward Snowden of this whole affair. He leaked knowledge of the scheme four years ago to the French government. The governments didn’t announce the scam or acknowledge it until the media investigation came to light this week.
The Monaco native, working at HSBC’s Swiss subsidiary, proved what was going down by downloading the account information for some 106,000 of the bank’s customers and more than 300,000 private accounts between 2006 and 2007. Falciani was briefly detained by Swiss authorities but ultimately fled to France where French authorities obtained the HSBC information and began prosecuting French tax evaders, according to Falciani and French authorities.
French authorities have shared the information with other tax authorities and now say they are open to sharing even more information.
Serious questions are now being asked of banking regulators and taxing authorities in most Anglophone nations.
Heated debate arose during an emergency session in the UK Parliament Monday. The major British political parties viciously blamed each other for the seven-year-old debacle.
The opposition Labour Party pointed out that the Conservative Government had appointed HSBC’s former chairman Stephen Green to the House of Lords and an English trade minister. Green, who is also an ordained Anglican priest, ran HSBC during the time when the tax avoidance scheme was underway. For their part, the Conservative government argued that it had enacted stronger tax measures than the Labour Party who were in power when the tax scheme was operating in full throttle.
Monday’s revelations come just three years after HSBC paid the US government nearly two billion dollars in fines due to the banks money laundering operations on behalf of Mexican drug lords and various terrorists organizations.
HSBC has its origins in the drugs trade.
The bank’s name stands for the “Hong Kong Shanghai Bank Corporation” and was started by Sir Thomas Sutherland in the aftermath of the First Opium War in which the UK obtained Hong Kong and the right to trade opium throughout China without interference by the Chinese government. The result of the opium wars was to facilitate turning millions of Chinese into drug addicts using drugs financed by HSBC.
Cover image: “Mondi” by Thepurepoison – Own work. Licensed under CC BY-SA 3.0 via Wikimedia Commons.
Image of Sir Thomas Sutherland: from Vanity Fair 1887: “Thomas Sutherland, Vanity Fair, 1887-10-22” by Carlo Pellegrini – Vanity Fair, 22 October 1887Digitised version from : University of Virginia Fine Arts Library. Licensed under Public Domain via Wikimedia Commons.
Opium War Museum image: “Opium War Museum entrance” by Moody75 – http://www.flickr.com/photos/moody75/88087900. Licensed under CC BY-SA 2.0 via Wikimedia Commons.