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HSBC bosses apologise over Swiss tax debacle

Bank's chairman and chief executive apologise, but insist Swiss management team "most accountable" for tax scandal

TWO of HSBC’s most senior figures have apologised for the “unacceptable” practices that took place at its Swiss private bank which helped clients evade and avoid tax.

In a grilling by politicians yesterday, HSBC chief executive Stuart Gulliver told the Treasury Select Committee that the “events that took place at HSBC Switzerland in the mid-2000s were unacceptable”.

Chairman Douglas Flint [pictured] said he and his colleagues felt “shame” over the affair, which ultimately led to a huge cache of data relating to clients suspected of tax evasion and avoidance being leaked in 2008. As many as 100,000 customers are implicated, with between 6,000 and 7,000 UK-based.

Flint, who was CFO at the time HSBC took over the Swiss subsidiary, said he would take his share of responsibility but shifted much of the blame for the problems in the Swiss private bank onto the local management team who he said are the “most accountable for the failings”.

“Most culpable were the relationship managers [in the Swiss private bank],” Flint said. He estimated that some 30% of those relationship managers were still employed by HSBC.

The pair assumed their roles in 2011 – after the Swiss events had taken place – but acknowledged some “proximity” to the issues having both held directorate roles at the time; Flint in particular was a long-serving finance director, while Gulliver’s association with the bank stretches back 35 years.

Gulliver told the committee that his personal holding of a Swiss bank account through a Panamanian company had “no tax purpose“.

He said the arrangement only reflected a desire for privacy from his colleagues at HSBC in Hong Kong, where he is domiciled. As a director, employees at the bank would have been able to see his remuneration on the internal network had he not done so, he said.

“It was purely about privacy from colleagues in Hong Kong and Switzerland,” he said. “I was among the highest paid people and I wished to preserve my privacy from colleagues. Nothing more than that.”

Gulliver told the committee he had “followed the letter of the law” of the UK non-domicile rules.

“The important point is I’ve paid UK tax on my HSBC earnings during that entire period [since being based in the UK], so the amount of tax I have paid is the fair and appropriate amount,” he said.

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