HSBC to pay $352 mil­lion to avoid French tax fraud trial

The Daily Star (Lebanon) - - BUSINESS -

PARIS: HSBC Pri­vate Bank, a Swiss unit of bank­ing gi­ant HSBC, has agreed to pay 300 mil­lion eu­ros ($352 mil­lion) to avoid go­ing to trial in France for en­abling tax fraud, prose­cu­tors said Tues­day.

HSBC was ac­cused last year of help­ing French clients to hide at least 1.67 bil­lion eu­ros from the tax au­thor­i­ties, ac­cord­ing to a source close to the probe.

The deal struck be­tween the fi­nan­cial crime pros­e­cu­tor’s of­fice and the bank is a first in France un­der a new pro­ce­dure that al­lows com­pa­nies un­der sus­pi­cion of cor­rup­tion or dis­sim­u­la­tion of tax fraud to ne­go­ti­ate a fine to stop a case from go­ing to trial.

The deal does not in­clude a guilty plea and French prose­cu­tors have now dropped the case against HSBC Hold­ings.

In­ves­ti­ga­tors be­lieve that HSBC’s pri­vate bank­ing di­vi­sion of­fered cus­tomers sev­eral ways of hid­ing as­sets from the French tax­man, no­tably the use of off­shore tax havens.

The bank­ing gi­ant was at first ac­cused of fail­ing in its su­per­vi­sory role over its pri­vate bank­ing di­vi­sion, but fur­ther in­ves­ti­ga­tion led to sus­pi­cions that HSBC “par­tic­i­pated ac­tively in the fraud­u­lent prac­tices,” the source said.

The probe named the for­mer chief ex­ec­u­tive of the bank’s Swiss pri­vate bank­ing arm, Peter Braun­walder, and an­other ex­ec­u­tive, Ju­dah El­maleh.

The case be­gan when French au­thor­i­ties in late 2008 re­ceived files stolen by Herve Fal­ciani, a for­mer HSBC em­ployee, whose dis­clo­sures sparked the so-called “Swissleaks” scan­dal on bank-sup­ported tax eva­sion.

The French-Ital­ian na­tional – dubbed by some me­dia as “The Ed­ward Snow­den of bank­ing” – leaked a cache of doc­u­ments al­legedly in­di­cat­ing that HSBC helped more than 120,000 clients of a num­ber of na­tion­al­i­ties to hide 180.6 bil­lion eu­ros from tax au­thor­i­ties be­tween Nov. 2006 and March 2007.

He was sen­tenced in ab­sen­tia in Novem­ber in Switzerland to five years in prison. The leaked files led to in­ves­ti­ga­tions by tax au­thor­i­ties in sev­eral Euro­pean coun­tries in­clud­ing Spain and Bel­gium, in ad­di­tion to France. –

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