Brussels, August 2019. Belgian prosecutors announced a number that La Libre called dizzying: 294.4 million euros, the price HSBC’s Swiss private bank agreed to pay to make a tax fraud case go away. The money goes to the Belgian state, to cover tax revenue prosecutors say was lost to the bank’s alleged schemes since 2013.
It was meant to be the largest deal of its kind ever struck between a Belgian prosecutor’s office and a defendant, though only if the judges’ chamber endorses it, which La Libre expected to happen in September. Reuters, which put the sum at nearly 300 million euros or $336 million, noted the same condition: the settlement needs the approval of Belgian judges.
What prosecutors alleged
The charges dated back to 2014. HSBC was accused of serious and organized tax fraud, forgery and falsification of records, money laundering and the illegal use of financial intermediaries. Prosecutors said the bank helped and encouraged wealthy Belgians to avoid the European Union tax on savings income, setting up offshore companies in Panama and other Caribbean havens “with no other purpose but to hide money.”
La Libre added detail on the Belgian end. Salespeople were sent from Switzerland to court rich clients, especially in Antwerp’s diamond trade. The offshore shells, in Panama and the Virgin Islands, had no real business activity at all.
Prosecutors estimated that the money moved into these vehicles could reach several billions of dollars. More than a thousand Belgian taxpayers might have used the arrangements, they said. Part of the transfers could also have involved money laundering, although the statement gave no further details.
A trail that began with stolen files
The story starts in 2007, when Hervé Falciani, a computer specialist at HSBC Private Bank in Switzerland, took bank data. The bank discovered it at the end of 2008. He was arrested and questioned, then released, and he took refuge in the south of France, where the authorities got hold of his files. They covered some 130,000 accounts belonging to 79,000 holders.
Belgium received data on about 800 of its taxpayers in July 2010 and concentrated on the 500 largest files. In the end, investigators traced 4,616 accounts held by 3,000 Belgians, worth a total of $6.2 billion, at the Swiss bank. The special tax inspectorate raised the taxable base by nearly 775 million euros, and the tax assessed came to 518 million. Investigating judge Michel Claise ordered searches in October 2013 and, a year later, charged the bank.
Under Belgian law, La Libre pointed out, paying is not an admission of guilt. HSBC gets prosecutors to drop the case in return. A spokesman for the bank declined to comment to Reuters, but prosecutors said it had made, and committed to, a significant overhaul of its practices against financial crime.
France had already been down this road. In November 2017 HSBC paid 300 million euros to the French treasury to avoid a long trial, though that figure included 142 million euros in damages claimed by the tax authority.
Switzerland’s banks were taking hits from several directions that summer. In February a French court had ordered UBS to pay 4.5 billion euros in penalties for illegally soliciting clients and laundering the proceeds of tax evasion. UBS denies the charges, and a similar case against it remains open in Brussels, where it is accused of approaching Belgian clients directly, without going through its Belgian subsidiary.
Sources
- HSBC agrees to 300 mln euro settlement of Belgian tax fraud case -prosecutors
- HSBC accepte de payer 294,4 millions à l'État
Sources
- HSBC agrees to 300 mln euro settlement of Belgian tax fraud case…
- HSBC Managers Risk Arrest Warrant in Belgian Tax-Evasion Probe
