More News » PAC blasts ‘incompetent and naïve’ HSBC bosses over tax

PAC blasts 'incompetent and naïve' HSBC bosses over tax

MPs lambast current and former HSBC bosses as beleaguered bank continues to suffer following historic tax practices at its Swiss private bank

MPs in the Public Accounts Committee have accused bosses at scandal-hit HSBC of incompetence after the executives claimed they were unaware at the time of tax evasion activities in their Swiss private bank.

Chris Meares, ex-head of HSBC’s private banking division, said he didn’t know what staff “were up to”, but amid heavy questioning, admitted he is responsible for “control failings”, but not for “individual actions of wrongdoers”.

“Either you’re completely incompetent in your oversight duties or you knew about it,” committee chairwoman Margaret Hodge (pictured) told him.

The furore centres on thousands of wealthy clients HSBC is said to have helped evade tax through its Swiss arm. As many as 100,000 customers are implicated, with between 6,000 and 7,000 UK-based.

Many British clients of the bank had failed to declare their holdings with HMRC, and while offshore accounts are not illegal, deliberately hiding money to evade tax is.

The story first emerged when HSBC whistleblower Hervé Falciani stole data from the bank’s Geneva office and attempted to contact HMRC by e-mail in 2008.

Heated exchange

During one heated exchange in the hearing, Hodge called for HSBC non-executive director Rona Fairhead to quit the BBC.

Fairhead is the former Pearson CFO who took over as chairwoman of the BBC Trust last year, but before that she was chair of HSBC’s audit committee until 2010 and subsequently led the bank’s risk committee.

“When things go wrong in the public sector on your watch you resign. No one has deigned to accept responsibility,” Hodge said during the hearing, adding Fairhead’s performance at HSBC raised serious questions about her current position as chair of the BBC Trust.

“I think the government should sack you,” she said.

Fairhead said that the expectation at the time was if anything untoward happened, it would be highlighted by the internal and external audit teams, but Hodge claimed Fairhead and her colleagues were “completely seduced by structure”.

“When you’re a non-exec in an oversight role, you have to rely on the policies and controls in place,” Fairhead said.

As HSBC acquired more businesses, it “became more complex and there were a huge number of standards on money laundering and tax that we were complying with,” she explained.

“We got to the stage where a 130-year-old, 140-year old structure was no longer fit for purpose.”

Local information

She said the board relied on information from local managers, and blamed Swiss employees for poor oversight – something former private banking head Meares seconded.

Two weeks ago, before the Treasury Select Committee, HSBC chairman Douglas Flint appeared to lay the blame for the activities of the group’s Swiss private bank at Meares’ door, and while he admitted he was “fairly responsible” for the actions of employees in global private banking, he said “control failings” had allowed tax evasion to take place.

He did not accept assertions from committee members that he is the “fall guy” in the affair.

Was this article helpful?

Leave a Reply

Subscribe to get your daily business insights