International Consortium of Investigative Journalists

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French set €1b bail as HSBC probe goes beyond Swiss branch

HSBC boss Stuart Gulliver

French prosecutors are expanding a criminal investigation of HSBC Private Bank (Suisse) to the giant banking company’s global holdings company and have set bail for the company at €1 billion (about $1.06 billion U.S.).

The London-based bank issued a statement noting the widening of the probe, promising to fight back “vigorously.” HSBC said that the decision to launch a formal criminal investigation of the larger unit “is without legal basis, and the bail is unwarranted and excessive. “

HSBC has been under pressure on multiple fronts after an investigation by ICIJ and Le Monde revealed widespread instances in which the bank looked past evidence of law-breaking to accommodate the financial needs of customers who included arms traffickers, drug cartels, traders in blood diamonds and tax evaders, including some who were wanted by Interpol.

In March a French prosecutor formally requested that HSBC’s Swiss private bank face a criminal trial in France over allegations the bank was involved in tax evasion. The bank reportedly turned down a €1.4 billion settlement offer, and must now respond to the request for trial before French magistrates decide whether or not to proceed. 

France is just one of many fronts on which HSBC has been battling authorities, including in Argentina, where authorities accused HSBC of helping more than 4,000 clients evade taxes and demanded in March that the bank repatriate $3.5 billion, and in Belgium, where HSBC faces fraud and money laundering charges.

In the meantime, the tax status of HSBC chief executive Stuart Gulliver surfaces again and again in an debate heading into upcoming elections on how the overseas earnings of wealthy United Kingdom residents should be taxed. Current law allows the money to grow without being taxed in the UK as long as it stays abroad and if the holder is deemed to have a permanent residence elsewhere. Gulliver, who was born in England and lives there now, has money in Hong Kong, where he lived previously and plans to return.

Labor party leader Ed Miliband has called for abolishing the “non-dom” tax status.

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