HSBC Private Bank, the Swiss arm of the world's second largest bank, allegedly helped thousands of its wealthiest customers avoid domestic tax laws and squirrel away millions each in assets, according to thousands of recently leaked documents.
The "SwissLeaks" inquiry — an investigation led by an international collective of journalists — reveals that, between November 2006 and March 2007, HSBC's Geneva-based Swiss subsidiary helped some 100,000 customers withhold over $204.5 billion in assets from tax authorities in 203 countries.
Dubbed "the biggest banking leak in history" by The Guardian — one of the news outlets involved in the probe — the information points to evidence that the Swiss banking giant helped clients hide their money in accounts traced back to 20,000 offshore companies.
Back in 2014, French daily Le Monde obtained a USB key containing more than 100,000 customer file records. The files were originally hacked in 2007 by former HSBC employee Hervé Falciani, a systems engineer-turned-whistleblower, who handed over 100GB of data to the French authorities in 2008. In a 2014 interview with Swiss public television and radio station RTS, Falciani said his motive was "to reveal what deserves to be known."
Given the scale of the investigation, Le Monde called upon 154 journalists affiliated with 47 different media outlets including: The Guardian, CBS, Süddeutsche Zeitung, and The Indian Express, among others, to help analyze the data. The International Consortium of Investigative Journalists (ICIJ) has been coordinating this international collaborative effort.
According to the journalists' initial findings, HSBC knowingly offered to help its clients conceal their assets from tax authorities, even forewarning them in February 2005 of an imminent change in European tax law. In a letter sent out to clients at the time, the bank explained that there were many ways to circumvent the new legislation, effectively dodging tax. Reports suggest that the bank went as far as to help some of its clients set up bogus offshore companies based in tax havens like Panama or the British Virgin Islands where they could stash their money.
HSBC responded to the allegations in a statement Sunday, admitting its wrongdoing, saying, "We acknowledge and are accountable for past compliance and control failures." A week before the information was made public, the bank had written to its pre-April 2007 customers, warning them that, "substantial" stolen information could be leaked at some point in the future.
According to The Guardian, significant wealth is the only common characteristic of clients on the list, which includes everyone from Hollywood stars and teachers to royals and entrepreneurs.
"Not all HSBC's Swiss private bank customers are public figures and many are not dishonest," The Guardian wrote. "Some want secrecy for family reasons. The files disclose, for example, how a Finnish teacher set out to hide money from her husband. The history of the Holocaust may explain why some Israeli clients like their wealth to be in a safe place."
The identity of those clients will not be revealed, says The Guardian.
ICIJ has published the names of 63 public figures who benefited from the scheme, including sportsmen, actors, musicians, businessmen, and key figures in the fashion industry and media. The king of Jordan and the sultan of Oman are on the list, as is Syrian President Bashar al-Assad's cousin, businessman Rami Makhlouf. Some of the clients have since rectified their situation with their domestic tax authorities, others haven't.
According to the data, the five countries with clients who squirreled away the most assets are Switzerland, the UK, Venezuela, the US and France.
Fabrice Lhomme, a journalist for Le Monde who helped with the investigation, has criticized the Swiss legal system for its persistent lack of cooperation.
"The country is purposefully dragging its feet," Lhomme told French magazine Télérama. "It's as though it were being asked to give up its main source of income. To this day, the Swiss courts refuses to collaborate with the French legal system, on grounds that the information was 'stolen.' People are constantly bringing up tax secrecy during legal investigations."
According to Le Monde, the leak is just the first wave of revelations, and the results of a wider probe will be published in Spring 2015.
Follow Mélodie Bouchaud on Twitter: @Meloboucho