HSBC accused of 'engaging a systematic and profitable collusion in serious criminal activity'

Lord Ken Macdonald said there existed 'credible evidence' of HSBC’s involvement in 'grave' cross border crimes that should have had a 'sustained criminal investigation' in the UK

Oliver Wright
Sunday 22 February 2015 21:07
HSBC alone was fined £216m in the UK and $275m in the US
HSBC alone was fined £216m in the UK and $275m in the US

The banking giant HSBC is today accused by a former Director of Public Prosecutions of engaging in “a systematic and profitable collusion in serious criminal activity”.

In a damming intervention Lord Ken Macdonald, who led the Crown Prosecution Service until 2008, said there existed “credible evidence” of HSBC’s involvement in “grave” cross border crimes that should have been the subject of urgent and “sustained criminal investigation” in the UK.

Lord Macdonald added that a decision by Her Majesty’s Revenue and Customs not to investigate HSBC for its role in facilitating possible tax evasion was “seriously legally flawed”.

Lord Macdonald’s intervention will increase the pressure both on the bank, which reports its full year results today, and HMRC. It comes as the Liberal Democrat Chief Secretary to the Treasury Danny Alexander called for new laws to be introduced to crack down on tax evasion before the next election.

Until now HMRC has claimed it received the details of accounts held by clients of HSBC Suisse under strict international treaty conditions, which it said, limited their use of the data to only to pursuing tax offences.

But in a legal opinion prepared for the international online campaign group SumOfUs Lord MacDonald challenged that assumption.

“There is no rule of law or evidence in criminal proceedings that unlawfully obtained data cannot be relied on by the prosecution or that there is any specific corroboration requirement for it,” he wrote. “Such evidence is in principle admissible if it is relevant.”

SumOfUs said on the basis of his opinion it had written to HMRC to notify it that unless a criminal investigation is begun by next month it will institute judicial review proceedings.

In his opinion Lord MacDonald said there appeared to be clear and credible evidence that “HSBC Swiss and/or its employees have engaged over many years in systematic and profitable collusion in serious criminal activity against the exchequers of a number of countries”.

He added it seemed “equally clear that this criminal activity has taken place within the context of an institutional cynicism that is deeply shocking”.

“The corporate and wholesale nature of HSBC Swiss’ apparent involvement in what amounts to grave cross border crime makes it all the more obvious that the relevant evidence, once it came to the attention of HMRC, should have been the subject of urgent and sustained criminal investigation,” he wrote.

“It is inescapable that this investigation should have included a rigorous inquiry to establish whether there was any criminal complicity on the part of HSBC Holdings PLC in the UK into this category of wrongdoing on the part of its Swiss subsidiary.

“Any sufficient evidence of such complicity would be virtually certain to warrant prosecution in the public interest.”

His comments come as Mr Alexander used an interview to propose creating a new offence of “corporate failure to avoid preventing an economic crime” for those who encourage or help tax evasion.

Those found guilty could be given matching fines to those imposed on the people who actually benefited from the schemes under plans for a “tough disincentive” against those in the City aiding tax-dodgers.

“Organisations, be they accountants, banks or whatever, who help people evade tax will be liable for this new offence and crucially liable for financial penalties,” Mr Alexander told the BBC’s Marr Show.

“So, for example, if their customers have to pay back hundreds of millions of pounds in tax then those organisations should have to match that with hundreds of millions of pounds of their own money. I think that’s a very tough disincentive to them to get involved in this in the first place.

Mr Alexander said he was hoping to introduce the measures before parliament in advance of the general election.

If the party does not succeed, then, he said, the proposals would be included in the Lib Dem manifesto for the election.

HSBC has faced widespread anger over allegations that it had helped wealthy Britons to avoid paying millions in tax by hiding cash in its Swiss banking arm.

The Financial Conduct Authority (FCA) this week said it had begun looking into the affair.

Bit George Osborne insisted last week that it was not for the government to intervene in the decision over whether to bring prosecutions.

“There are very serious allegations [against HSBC], there are allegations around tax evasion, which is illegal,” he said.

“We have independent prosecuting authorities in this country and I don’t think it would be right for a chancellor of the exchequer to direct prosecutions against individuals or individual companies.”

HSBC declined to comment on Lord MacDonald’s opinion. But an HMRC spokesperson said: “HMRC received the HSBC Suisse data under very strict international treaty conditions, which limited our use of it only to pursuing tax offences. As the data is now in the public domain, the French have confirmed that they will provide all assistance necessary to us.

“We are awaiting formal written confirmation from the French that they will alter the conditions to allow its wider use by HMRC and have already started discussions with other UK law enforcement agencies about exploiting it.”

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