One bank employee with access to the computer system, a stack of copied files, and a failed attempt to sell them in Lebanon. That is roughly how the Swiss Leaks story begins, and it ended up costing HSBC hundreds of millions of dollars.
Hervé Falciani started at HSBC in 2000, working in IT at its Swiss subsidiary. In 2007 he took client data and tried, without success, to sell it in Lebanon, DW reported. He then handed it to European tax authorities, who used it to pursue evaders. Swiss prosecutors accused him of trying to cash in. Falciani said he wanted to expose tax cheats and money laundering.
From a raided home to a global story
Here is the practical chain of events. Swiss prosecutors, worried that Falciani held information from thousands of bank files for 2006 and 2007, asked the French to search his home. They did, in 2009, and found the data. The files later reached the International Consortium of Investigative Journalists through the French newspaper Le Monde. ICIJ began publishing the Swiss Leaks series on February 8, 2015.
The numbers vary by source. ICIJ said the data covered accounts holding more than $100 billion, drawn from 60,000 leaked files and about 100,000 clients. DW, reporting on Falciani’s trial, put the clients at more than 100,000 and the hidden money at some 180 billion euros ($205 billion).
What the files showed
ICIJ’s key findings were uncomfortable reading. HSBC Private Bank (Suisse) kept serving clients named by the United Nations, in court documents or in the press as connected to arms trafficking, blood diamonds and bribery. It had clients close to the governments of Hosni Mubarak in Egypt, Ben Ali in Tunisia and Bashar al-Assad in Syria. Politicians from countries including Britain, Russia, Ukraine, India and Kenya held accounts there.
The bank also repeatedly assured clients it would not give account details to national authorities, even when the accounts looked undeclared at home. Employees discussed ways to avoid taxes, such as holding accounts through offshore companies to sidestep the European Savings Directive, a 2005 rule meant to curb evasion through information exchange. HSBC’s response, which ICIJ headlined, said standards “were significantly lower than today.”
Investigations and payouts
Geneva prosecutors ordered a money laundering investigation into the Swiss subsidiary within days, on February 18, 2015. France, Belgium, Austria and Argentina opened their own probes. By June 2015 HSBC had agreed to pay millions of euros in fines, and the Swiss prosecutors closed their case, DW reported.
Falciani, who lives in France, skipped his October 2015 trial in Switzerland on charges of data theft, industrial espionage and breaking Swiss banking secrecy. France said it would not extradite him. The next hearing was set for November 2.
The biggest check came in November 2017. HSBC agreed to pay $352 million to settle French charges that it helped wealthy clients of its Swiss private bank dodge taxes worth $1.9 billion. It was the first settlement under a 2016 French law that works like a US deferred prosecution agreement, so the bank did not have to admit guilt. HSBC said it had “publicly acknowledged historical control weaknesses” at the Swiss Private Bank and taken firm steps to fix them. ICIJ’s archive also records a $192m penalty in December 2019 for helping Americans evade taxes.
Sources
- Swiss Leaks: Murky Cash Sheltered by Bank Secrecy – ICIJ
- HSBC to pay $352m to settle tax evasion charges in France – ICIJ
- 'Swissleaks' defendant fails to attend trial – DW
