The scandal unfolding around global banking giant HSBC’s alleged dealings with organized crime could potentially touch many famous people whose secret accounts at the bank have been revealed.
Among those now facing questions about their accounts are rockers David Bowie and Tina Turner and actors John Malkovich and Joan Collins, reports the International Consortium of Investigative Journalists (ICIJ).
The ICIJ notes that simply having a secret account doesn’t mean you have done anything illegal.
“Being identified as holding an HSBC Private Bank account is of itself no indication of any wrongdoing,” it said in its report, released Monday.
The ICIJ noted that “in many instances the records do describe questionable behavior, such as bankers advising clients on how to take a range of measures to avoid paying taxes in their home countries — and customers telling bankers that their accounts are not declared to their governments.”
Investigators will likely be more interested in the overtly criminal links to HSBC allegedly revealed by the report.
The bank “profited from doing business with arms dealers who channeled mortar bombs to child soldiers in Africa, bag men for Third World dictators, traffickers in blood diamonds and other international outlaws,” the ICIJ said.
The Associated Press reports:
LONDON - HSBC's Swiss private bank hid millions of dollars for drug traffickers, arms dealers and celebrities as it helped wealthy people around the world dodge taxes, according to a report based on leaked documents that lifts the veil on the country's banking secrecy laws.
The report from the International Consortium of Investigative Journalists and several news organizations comes as governments seek to crack down on tax evasion to bolster treasuries depleted by the financial crisis and staunch criticism that the rich aren't paying their fair share.
The leaked documents cover the period up to 2007 and relate to accounts worth $100 billion held by more than 100,000 people and legal entities from 200 countries.
Some details of such operations were disclosed previously, when HSBC was fined in 2012 by the U.S. for allowing criminals to use its branches for money laundering. Monday's report discloses a more detailed cache of data and information.
Academics estimate that $7.6 trillion is held in overseas tax havens, depriving governments of $200 billion a year in tax revenue, according to the ICIJ report.
The French government received the files from a whistleblower in 2010 and passed them onto tax authorities around the world, including the U.S., Britain and Germany.
In Britain, where HSBC is based, the report sparked criticism that tax authorities hadn't done more to penalize tax evaders. The tax agency clawed back 135 million pounds ($236 million) from some of the 3,600 Britons identified as using the Geneva branch of HSBC, but only one has been prosecuted. France, by contrast, launched 103 actions.
British lawmakers reacted with outrage.
"You are left wondering, as you see the enormity of what has been going on, what it actually takes to bring a tax cheat to court," Margaret Hodge, chair of Parliament's Public Accounts Committee, told the BBC.
Hodge also said the former chairman of HSBC, Stephen Green, who became the government's trade minister after he left the bank in 2010, must face serious questions about whether he was "asleep at the wheel, or he did know and he was therefore involved in dodgy tax practices."
HSBC stressed that the documents were from eight years ago and said it has since implemented initiatives designed to prevent its banking services from being used to evade taxes or launder money.
Franco Morra, CEO of HSBC's Swiss subsidiary, said the new management had shut down accounts from clients who "did not meet our high standards."
"These disclosures about historical business practices are a reminder that the old business model of Swiss private banking is no longer acceptable," he said in a statement.
Crawford Spence, a professor of accounting at Warwick Business School, said the latest revelations are damaging to HSBC in that they suggest complicity in tax evasion rather than simply tax avoidance. Besides that, the latest revelations are particularly damning to tax authorities.
"It appears that we need to rely on computer hackers, investigative journalists and corporate whistleblowers to expose tax evasion," he said, adding that tax authorities "must be lacking either in resources, political will or both."
The HSBC files were analyzed by the French daily Le Monde, The Guardian in Britain, the BBC and the Washington-based consortium.
Associated Press Writers Frank Jordans in Berlin and Greg Keller in Paris contributed to this story.
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