Last updated on April 25, 2015
UK’s banking giant, HSBC, found themselves amidst a Swiss tax-avoidance storm earlier this week, as an investigation into allegations that the bank helped its clients dodge millions in tax took the media by storm.
A ICIJ investigation revealed that between 1988 and 2007, HSCB’s Swiss private bank handled accounts of 106,000 customers from 203 countries worth $100 billion dollars.
It’s alleged that, to avoid paying tax, account owners did not declare the money in their home countries.
Details provided in a report by former HSBC employee Hervé Falciani to the International Consortium of Investigative Journalists illustrated ways the bank allegedly advised clients on avoiding paying taxes on their funds in their home countries. The report also included a list of clients.
According to ICIJ, the Swiss subsidiary of HSBC handled the accounts of 2,642 Mexican customers worth a total of $2.2 billion dollars. The list of Mexicans clients was released by Univision Communications, an American Spanish-language broadcast network that participated in the investigation along with ICIJ and the French newspaper Le Monde.
Named in the Swiss private bank subsidiary of HSBC were Carlos Hank Rhon (businessman), Federico Said Camil Garza (father of actor Jaime Camil), Luis Téllez (former director of the Mexican Stock Exchange), Alfredo Elías Ayub (former director of the Federal Electricity Commission), Eugenio Ebrard (former CEO of Walmart for Mexico), Moisés El Mann Arazi, (construction tycoon), Enrique Vilatela (a banker who served the Mexican government from 1975 to 2000) and Guillermo Prieto Treviño (former director of the Mexican Stock Exchange and current president of the Mexican Association of Automobile Dealers), who told Univision that all his income has been reported to Mexico’s Ministry of Finance. Carlos Hank declined to comment on the accounts.
The list of Mexicans of the Swiss bank also includes the partner of a major financial group, with about $168 million dollars; a renowned ophthalmologist, with $111 million dollars; an entrepreneur of the textile industry, with $95 million dollars; the founders of an internet and cable television company, with two accounts of $74 and $75 million dollars each, and a renowned filmmaker, with $50 million dollars.
Óscar Molina, chief of the division of Large Taxpayers of Mexico’s Tax Administration Service (SAT), said it’s important to understand that those listed are not necessarily tax evaders.
Chief executive of HCSB’s Swiss bank, Franco Morra, said that the unit “began a radical transformation in 2008 to prevent its services from being used to evade taxes or launder money. New senior management have comprehensively overhauled the business, including closing the accounts of clients who didn’t meet our high standards and ensuring we have strong compliance controls in place.”
He added that the new disclosures are a reminder that “the old business model of Swiss private banking is no longer acceptable.”