Peter Jones: Bank scandals breeding new politics

HSBC and its tax evasion for customers are just the latest blow to the public’s belief in democracy, writes Peter Jones
The HSBC building at Canary Wharf in London. Customers of its Swiss subsiduary avoided tax. Picture: GettyThe HSBC building at Canary Wharf in London. Customers of its Swiss subsiduary avoided tax. Picture: Getty
The HSBC building at Canary Wharf in London. Customers of its Swiss subsiduary avoided tax. Picture: Getty

Reading about the HSBC tax evasion scandal, for a moment I was just stunned. Very rapidly, I became angry. This hitherto respected international bank engaged in a criminal conspiracy to help rich people not just avoid, but to evade tax. Not just millions, but hundreds of millions, maybe even billions. And hardly anyone in Britain has been brought to book over it. For a moment, I wanted to become a revolutionary and get after these people with a guillotine.

An emotional and extreme reaction? Only a bit, I think, for I believe what HSBC was doing is as corrupt and corrosive to society as drug-dealing which, incidentally, they are also accused of helping.

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And the failure of politicians and prosecutors to do much about it also exemplifies what’s wrong with our political system and why people are so attracted to voting for non-establishment parties, from our own SNP to Syriza in Greece.

It is difficult to summarise the depravity of what HSBC was up to. Essentially, the Swiss subsidiary it bought in 1999 used Swiss banking secrecy laws to operate as “a tax avoidance and tax evasion service” to quote a former HMRC tax inspector on the BBC TV Panorama programme. A good number of the Swiss subsidiary’s estimated 7,000 British customers used its secrecy to hide money and assets from the taxman.

This was not just making use of legal loopholes to avoid paying tax, but illegal tax evasion. While holding a foreign bank account is perfectly legitimate, failure to tell the taxman what it earns is illegal.

Moreover, according to the world-wide media grouping which has acquired the information: “Other clients of HSBC now turn out to be unsavoury characters, attracted by the secrecy. Evidence exists that some may have been smuggling drugs, handling bribes, committing fraud, helping to finance terrorists, or looting their own countries.”

In what way is this different from the BCCI scandal – the bank which offered insanely high interest rates which persuaded unfortunate bodies like the Western Isles Council to deposit money in it only for it to be lost when it collapsed – and which became known as the Bank of Crooks and Conmen International?

It too pursued the kind of high net worth individuals and dictators such as Saddam Hussein who took advantage of its services, also operated from banking secrecy domains, such as Luxembourg and the Cayman Islands, and happily laundered drug cartel and terrorist money.



The difference is that banking regulators became suspicious, investigated, and shut it down. Criminal and civil law cases followed, huge sums were forfeited though remarkably few people went to jail.

We only know about HSBC’s malpractices because of a whistleblowing IT employee who became so appalled at what his employer was doing that he extracted thousands of documents in breach of Swiss law and fled to France where he is now protected by the French government from pursuit by Swiss police.

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This was in 2010. The French made the documents – files on 30,000 accounts with £78 billion in them – available to other governments. French, Belgian, US, and Argentinian authorities are now pursuing criminal investigations into HSBC. But little seems to have happened here in the UK except the recovery of £135 million in tax which was evaded. More recoveries are said to be ongoing.

And of a UK criminal investigation, there is barely a whisper. Then there is Stephen (now Lord) Green. He joined HSBC in 1982, rose to become chief executive in 2003, then chairman in 2005, leaving the company in 2010 to become, what else, minister for trade in David Cameron’s government.

The files now being revealed cover 2005-07 but, of course, Green (I can’t bring myself to afford him the usual proprieties), it is said by his friends and supporters, could not be expected to know what was going on in these far-flung reaches of the bank.

Sorry, but he is expected to know. His culpability is laid bare by the bank’s explanation for why this disgusting behaviour was allowed to flourish – that the bank was much more federated in its structure, code for admitting that various bits of it including the Swiss bank were allowed to operate mostly unsupervised by group management.

If Green did not know what it was doing, he is culpable. If he did not inquire, he is negligent. A chairman’s legal duty, certainly on behalf of shareholders but sadly not on behalf of honest customers it seems, is to make sure that the full-time executives are generating profits, but doing so legally and decently so there is no future retribution that could damage shareholdings.

I’m sick of this stuff. I’m sick of hearing about rich people avoiding and evading tax. I’m sick of rich companies paying next to no tax and bleating that they are doing nothing illegal. And I’m sick of hearing about powerful people presiding over these malpractices and swanning ever onwards and upwards to yet more power and riches.

It damages society because every pound of tax that these people don’t pay is a pound more that has to be extracted from you and me. Most of them have benefited from an education system and a health service, from roads and a justice system, from defence forces and a democracy, all of which has to be paid for by the taxpayer.

What miserable, warped, corrupt, mentality assures them they should be free of this tax burden that weighs down folk like you and me? If they won’t pay their due tax, why should we?

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This is breeding a new politics. The old division between left and right is redundant. Today’s division is between the included and the excluded, between the insiders and the outsiders. The included insiders get power, influence, riches and the ability to wave two fingers with impunity at us, the excluded outsiders.

I’ve had enough. I want to fight back. I want a government that actually is on my side, that will ruthlessly pursue these cheats, subject them to merciless grillings in public and in the courts, and then jail the guilty.

So, I suspect, do most people. And if we don’t get it, there’s always the option of revolution.