HSBC, the UK-based bank accused of helping clients to evade tax, is now being investigated by the Financial Conduct Authority (FCA).
The FCA joins the Serious Fraud Office, the Bank of England and the UK Treasury committee in examining extensive media allegations of tax-dodging activities at HSBC through its Swiss subsidiary.
The bank, the world’s second largest after China’s ICBC, is already under criminal investigation in France, Belgium, the US and Argentina.
The UK investigators are examining allegations that HSBC colluded with clients to conceal accounts from their domestic tax authorities – which amounts to evasion – and allowed them to withdraw large cash sums in Switzerland, often in foreign currencies.
A wealthy family was said to have received a foreign credit card permitting undeclared cash withdrawals at dispensers overseas. In another example, HSBC was named as a co-conspirator in releasing $100,000 sums (£65,000, €88,400) to the surgeon Andrew Silva so that he could post them illegally back to the US.
Clients are reported to have included Hollywood stars, royalty, clothing merchants, heirs to huge fortunes and people implicated in African corruption scandals.
HSBC has been accused even of writing to clients offering ways to circumvent a 2005 EU directive aimed at ensuring tax payments on undeclared Swiss accounts.
The irregularities surfaced after revelations by a whistleblower, Hervé Falciani, and files obtained through an international collaboration of media, including The Guardian in the UK, the French daily Le Monde, the BBC Panorama programme and the Washington-based International Consortium of Investigative Journalists.
HMRC, the UK tax body, was similarly criticised because it had had evidence for nearly five years before alerting other authorities. Members of the parliamentary public accounts committee called HMRC’s response “pathetic”.
Margaret Hodge, who as the committee chair has been the scourge of UK tax-dodging corporates, said: “I just don’t think the tax authorities have been strong enough, assertive enough, brave enough, tough enough in securing for the British taxpayer the monies that are due.”
She retaliated to remarks by the Treasury minister David Gauke that no blame attached to Lord Green of Hurstpierpoint, who as Stephen Green was chief executive and then chairman of HSBC.
Hodge maintained: “Either he didn’t know and he was asleep at the wheel, or he did know and he was therefore involved in dodgy tax practices. Either way, he was the man in charge and I think he has got really important questions to answer.”
Lin Homer, HMRC’s chief executive, explaining why only one HSBC tax evader has been prosecuted, said most of the leaked information was incomplete or “dirty” data. However, £135m had been recovered.
Green, who became a government trade minister for nearly three years after leaving HSBC in 2010, replies simply: “As a matter of principle I will not comment on the business of HSBC past or present.”
He has now quit as head of TheCityUK, the independent national body for financial services.
HSBC itself has apologised to customers and staff in full-page newspaper advertisements.
Chief executive Stuart Gulliver emphasised that the Swiss subsidiary had been “completely overhauled”.
He said: “We have absolutely no appetite to do business with clients who are evading their taxes or who fail to meet our financial crime compliance standards.
“We must show we understand that the societies we serve expect more from us. We therefore offer our sincerest apologies.”
Crawford Spence, the professor of accounting at Warwick Business School, who researches tax avoidance, regretted that the policing of HSBC had to be done by computer hackers, investigative journalists and corporate whistleblowers.
In a separate action Swiss prosecutors have searched HSBC’s Geneva offices as part of a money-laundering inquiry. They said they were seeking “persons unknown for suspected aggravated money-laundering”. The bank said it was co-operating.