HSBC calls in police over alleged £70m fraud attempt

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The Independent Online

Police are investigating an alleged €90m (£70m) attempted fraud by a London-based member of staff at HSBC, Britain's biggest bank.

A man has been charged over the alleged scam, which was discovered last week at HSBC's securities services division, which settles trades for clients. A payment to a bank raised suspicions at the division in HSBC's head office building at Canary Wharf and the police were called.

A police spokeswoman said that Jagmeet Channa, 25, from Ilford in Essex, was charged on 25 April with conspiracy to defraud, money laundering and abusing a position of trust. He was remanded in custody until 25 June, when he will appear at Southwark Crown Court. The police said three other men aged 26, 33 and 38 were on police bail in connection with the investigation.

HSBC said that no customer funds were involved and no transactions were disrupted. No customer or bank funds were lost, the bank added.

"HSBC is co-operating fully with a police investigation into an alleged fraud at the bank. As the matter is before the courts, we cannot comment further," a bank spokesman said.

Banks around the world have tightened anti-fraud systems after Société Générale of France suffered losses of €4.9bn in the fourth quarter from the biggest rogue trading scandal in history. SocGen blamed unauthorised positions taken by Jérôme Kerviel, a junior trader, which were compounded by the impact of the credit crisis as the bank unwound the trades into a falling market.

The trades, discovered in mid-January, shattered SocGen's reputation for risk management after it was revealed that numerous alerts about M. Kerviel's activities had not raised suspicions of wrongdoing. Concerns about financial institutions' operational risk management are the last thing the industry needs as banks write down billions of dollars of investments in complex securities.

Marcus Agius, the chairman of Barclays, had to reassure concerned shareholders at the bank's annual general meeting last week that unauthorised trading on the scale of what occured at SocGen could not happen at Barclays because its systems and culture would not allow it.

HSBC is thought to have informed the Financial Services Authority about the alleged fraud at its securities services division as a matter of course.