HSBC has behaved like the mafia — yet STILL not one of its bankers has been put on trial

OF ALL Britain’s banks, the proud Hong Kong and Shanghai Banking Corporation, now known as HSBC, always seemed a cut above the rest.

Its roots in the UK’s colonial past meant that it lacked the swagger of some of its financial rivals, and was governed more like the civil service than the other banks.

But in the midst of the financial crisis of 2008, which brought disaster to banks around the world, it stood solid, the only safe place for ordinary consumers and the super-rich to place their money.

To top it all, from 2003 to 2010 — first as chief executive and then as chairman — HSBC was headed by Stephen Green (ennobled by the Tories five years ago), a fiercely intellectual, diffident man and an ordained Anglican priest, who was proud of the fact that he was the first practising banker to preach at Sir Paul’s Cathedral in the heart of the City.

Dynamite

In 2009, his book Good Value, a moral defence of capitalism, was nominated for the FT Business Book of the Year prize.

All of which makes it all the more astonishing to discover it was on Green’s watch that HSBC’s Swiss private bank was engaged in tax avoidance and money-laundering activities on an industrial scale.

Details of the alleged nefarious activities centred on HSBC’s discreet Swiss arm first started to emerge in 2007 when an IT employee at the bank fled to France with electronic files containing details of 30,000 accounts.

The missing files, handed to the French tax authorities, showed that HSBC’s private banking network was engaged in what appear to be grave misdemeanours. Until Swiss banking secrecy laws were overhauled in 2014, in response to the revelations contained in the HSBC Swiss files, it was possible for the holders of bank accounts in Switzerland to keep their names secret, and thus hide behind numbers and anonymous nominee names.

Among the names used by clients were Painter, Captain Kirk and Capitaine Haddock.

Such anonymity made the Swiss private banking system a honeypot for tycoons, dictators and drug-dealers from across the world to stash their cash out of the reach of tax authorities and enforcement agencies seeking to stamp out moneylaundering and corruption.

Hollywood movie-style scenes of couriers travelling to and from Switzerland with bundles of currency carried in aluminium cases with false bottoms appear to have been a reality in this elevated universe.

Shockingly, the HSBC files also led the French police to an extraordinary network of drugtrafficking, money-laundering, fraud and tax evasion, the proceeds of which seem to have ended up in HSBC’s Swiss private bank.

It had come under the aegis of HSBC when, in 1999, the firm’s then chairman Sir John Bond bought two private banks — the Republic Bank of New York and Safra Republic Holdings — for $10billion from the financier Edmond Safra.

So secretive were the affairs of Safra’s banks that a special writing script, reserved for the richest and most sensitive clients, was used to record transactions.

In buying the private banks, at a time when huge new wealth was being created in China and exported from HSBC’s original Hong Kong home, Bond and his board clearly felt they could tap into the great riches being generated around the world.

What they would not have known was that a cache of information on their clients would be leaked, and that the French tax authorities would act upon it so assiduously.

The data was sifted in France and parcelled out to relevant national authorities. As a result, HSBC is facing potential criminal charges in a number of jurisdictions, including France, Belgium, the United States and Argentina. In Britain, the Inland Revenue has sought private settlements with tax-avoiding HSBC clients, but so far no one has faced a criminal charge.

Nor has HSBC, headquartered at Canary Wharf and supervised by the Bank of England, faced any charges in Britain over its illegal behaviour.

The latest episode at HSBC will only exacerbate the view that our political classes have been totally negligent when it comes to taming the rapacious and ethically dubious actions of our major banks.

Too often, those in power at Westminster have been in thrall to the big bankers, thanks to the tax income they generate and the exaggerated skills to which they lay claim.

The bankers have also run rings around the regulators in their search for ever-larger profits and the bonuses that come with them. And the toothless enforcers have, like their political masters, been too timid in their dealings with these serial offenders.

What will aggravate the public most, however, is the behaviour of HMRC. The tax inspectors spend far too much of their time plaguing the lives of small business owners and individuals, for a very low return.

But the biggest tax avoiders — whether they be large corporations such as Starbucks or Amazon, major banks or fat-cat entrepreneurs — escape their obligations far too easily, without the full force of Britain’s comprehensive tax code being properly applied, or the weight of the courts being exerted.

Scandals

Despite a series of banking scandals in Britain — ranging from the fixing of the foreign exchange and interest-rate markets, to the biggest banking collapse in history — so far only one banker has been successfully prosecuted.

His name, the bank he once worked for and the precise nature of the case against him remain under wraps at the instruction of the courts. Such is the nature of modern British justice. Similarly, fines imposed by the British authorities on the UK banks have been minuscule compared with those overseas, particularly in the U.S.

Indeed, the uncovering of HSBC’s alleged appalling behaviour in France will come as no surprise to those of us who have monitored its other activities around the world in recent years.

In July 2012, the same month as the Libor interest- rate scandal erupted at Barclays, another banking scandal was revealed by the U.S. Senate Permanent Sub- Committee on Investigations.

In a damning report, it accused HSBC of being a ‘conduit for drug kingpins and rogue nations’ including Mexico. It was accused of infringing Iranian sanctions legislation, and maintaining relationships with Saudi Arabian banks responsible for funnelling cash to al- Qaeda and other terrorist groups.

To settle the charges, the bank paid a fine of $1.9billion (£1.2billion), the largest penalty ever imposed on a British bank.

Rogue

HSBC laid the blame for these terrible misdeeds — involving drug barons who put people’s lives at risk — on a historic corporate structure that allowed rogue operations, such as those in Mexico and Switzerland, to carry on virtually unchecked.

But the HSBC board, which includes the new chairman of the BBC Trust, Rona Fairhead, cannot escape criticism for a culture that was out of control, and which has come to public attention only as a result of the whistle being blown in France, and probes in the U.S.

Here in Britain, Ed Balls — who was City Minister under Labour at the time the scandal was unfolding — did nothing to curtail what we now know to be the corrupt behaviour of the bad bankers, and counted the cash as the taxes on bonuses and profits rolled in.

The Tories, meanwhile, appointed Stephen Green as trade minister even as they claimed it was they who were cleaning up the City after the regulatory slackness of Labour.

What will most outrage the public is that a supposedly morally upright bank was at the centre of activities more appropriate to the mafia — yet still not a single HSBC banker has been tried for these egregious misdeeds.