New penalties for bankers aiding tax evasion in UK

Britain mulls new laws against tax evasion, as HSBC chief’s own private Swiss bank account is revealed.

HSBC's Stuart Gulliver

Bankers and financial managers caught facilitating tax evasion in Britain look set to face tough new penalties, as politicians and the public continue to react to Swiss Leaks revelations, including news that HSBC’s chief executive has his own private Swiss bank account.

Political pressure for action is ongoing in the United Kingdom, where chancellor George Osborne has now announced new civil and financial penalties for people caught aiding tax evasion. The proposed fines were announced during Osborne’s first detailed parliamentary response to the Swiss Leaks project, and are expected to be included in the next UK budget, according to the Guardian.

UK chancellor George Osborne.“Ahead of the budget I set the Treasury to work on providing further ways to pursue not just the tax evaders but those providing them with advice,” he told MPs.

“Anyone involved in tax evasion, whatever your role, this government is coming after you. Unlike the last government, who simply turned a blind eye, this government is taking action now and will do so again at the budget.”

But other MPs have called for harsher measures. Over the weekend chief secretary to the treasury Danny Alexander called for new laws that would make aiding tax evasion a criminal offence, a call that was reinforced over the weekend and on Monday by former director of public prosecutions Lord McDonald of River Glaven, who questioned UK tax authority HMRC’s decision not to prosecute HSBC.

“The problem with financial penalties is that banks can afford to pay them. They seem to be happy to pay financial penalties and then just carry on misbehaving,” Lord McDonald told the Guardian.

The political debate added to a tumultuous start to the week for HSBC, the UK’s largest bank. Its share prices fell 4.5 percent as the bank reported lower than expected profits for 2014 (a drop of 15 percent to $13.7 billion), wiping $7.7 billion from the stock market value.

The bank’s chief executive Stuart Gulliver also faced questions over revelations he held his own private Swiss bank account through HSBC, which held up to $7 million in account owned by a Panamanian company at some stage in 2006 or 2007, according to a Guardian report based on information from the Swiss Leaks files. 

Gulliver denied the account was set up for tax purposes, and told reporters it was established for privacy reasons during his time at HSBC in Hong Kong, so his colleagues at the Hong Kong branch of the bank would not be able to see the details of his account.

Nevertheless, he has been asked to relinquish his position on the board of the Geneva-based Interpol Foundation for a Safer World. A spokesperson told Swiss media that Gulliver had been suspended "until more light can be shed on the [Swiss Leaks] allegations" against HSBC. Gulliver's position on the board was key in promoting one of the foundations core objectives of ensuring “clean and prosperous businesses which operate uncorrupted."

Gulliver, who was born in the UK and whose current role with the bank is based in the UK, is a resident of Hong Kong for tax purposes. Representatives for Gulliver told the Guardian that the Swiss account had been declared to British authorities, and that all relevant taxes had been paid in the UK and Hong Kong. 

Meanwhile in India, HSBC on Monday said it was served a summons by the Indian Income Tax Department as part of an investigation into alleged irregularities.

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