Leaked List Shows HSBC’s Swiss Arm Helped Putin Allies, Drug Lords and Fugitives Hide
(Bloomberg) -- The private-banking unit of HSBC Holdings Plc made significant profits for years handling secret accounts whose holders included drug cartels, arms dealers, tax evaders and fugitive diamond merchants, according to a report released Sunday by an international news organization.
HSBC is among a handful of banks to face criminal prosecution in recent years for its role in a Swiss banking system that allowed depositors to conceal their identities, and in many cases dodge taxes or launder ill-gotten cash. The report, prepared by the Washington-based International Consortium of Investigative Journalists, revealed for the first time the massive sweep of HSBC’s private-banking arm as of 2007, when it controlled $100 billion in assets and served a swath of wealthy depositors from the elite to the illicit.
HSBC shares fell 2.2 percent to 607.10 pence at 2:23 p.m. in London, giving the bank a market value of 117 billion pounds ($178 billion).
“These revelations confirm that banking secrecy has been used to avoid taxation,” Vanessa Mock, a European Union spokeswoman for tax affairs, said Monday.
‘Radical Transformation’Depositors included royal families and convicted cocaine dealers, ambassadors and terror suspects, entertainers and elected officials, corporate executives and athletes. To these and other clients, the bank actively promoted its accounts as an efficient way to hide assets from tax collectors, according to the report.
HSBC, in a written response to the report, said its compliance efforts had been insufficient. It pointed out that the bank had undergone “a radical transformation” since 2007 and now enforced far more stringent reporting requirements.
Stephen Green, former chief executive officer and chairman of HSBC, told the BBC he won’t comment on the bank.
“HSBC has initiated numerous initiatives designed to ensure that its banking services are not used to evade taxes or launder money,” according to the statement. London-based HSBC operates in more than 70 countries and has a private-banking unit located in Geneva.
Putin TiesThe report said the bank held deposits for controversial figures such as the political operative for the late Haitian President Jean-Claude “Baby Doc” Duvalier, who was accused of embezzling hundreds of millions before fleeing his country, as well as fugitives like diamond dealers Mozes Victor Konig and Kenneth Lee Akselrod, whose names appear on the wanted list run by Interpol, the international police agency.
Other depositors have appeared on U.S. sanction lists, including Russian oligarch Gennady Timchenko, a billionaire whose close ties to Russian President Vladimir Putin put him in the U.S.’s sights after Russia annexed Crimea. Anton Kurevin, a spokesman for Timchenko’s Volga Group, declined to comment.
Disclosures about HSBC’s clients are the latest blow to the Swiss private banking system, which once offered near-impenetrable privacy to depositors. Most countries don’t forbid citizens from holding offshore accounts, and many are used for legitimate purposes. Among many entertainers who held accounts, according to the report, was rock star David Bowie, a Swiss citizen. It didn’t accuse him of wrongdoing. A spokesman for Bowie didn’t respond to e-mails seeking comment.