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Swiss Leaks a microcosm of billions lost annually in Africa

From arms dealers and diamond traders to billions lost in illicit outflows, Swiss Leaks touches on a significant issue for Africa.

African banknotes

For the thousands of citizens from countries across Africa who used its services, HSBC Private Bank (Suisse) offered secrecy, stability and expertise.

But for Africa as a whole, the billions of dollars – some of it held in undeclared accounts – were a tiny fraction of the money, assets and potential taxable income that the continent loses each year.

A recent report confirmed that Africa loses at least $50 billion each year in illicit outflows, which usually come from a range of legal corporate tactics as well as corruption, bribery and trafficking. The lost money is usually hidden and difficult to trace, especially in countries such as Switzerland that have strict financial secrecy laws.

Over 5,000 personal or corporate clients linked to 50 countries in Africa held billions of dollars with HSBC Private Bank (Suisse) at some point in 2006 or 2007, the year for which the leaked files provide detailed information. This includes $3.5 billion held by Egyptians and over $2 billion held by South Africans. Not all of the clients linked to Africa live or work on the continent.

There are legitimate reasons to hold Swiss bank accounts. However, the Swiss Leaks investigation has revealed that HSBC Private Bank (Suisse) knew of – and in some cases facilitated – tax avoidance and wrongdoing, including by Africa-based clients.

One wealthy South African met with his HSBC bankers in February 2004 at the Hilton Hotel in Durban, according to the leaked file notes.

“Our meeting was very pleasant and most of the discussion concerned the recently announced tax amnesty,” HSBC staff wrote. He was “very concerned as to whether he should declare his assets with us or not.” 

Another client, who met with HSBC in Kenya, said he had “no intention” of declaring his assets in Switzerland.

A secrecy jurisdiction in the heart of Europe, Switzerland is regularly accused of helping companies avoid paying taxes in Africa. Previous research highlights how profitable multinationals working in Africa route billions through Switzerland and minimize taxes paid in the African countries where products, such as gold, coal and beer, are made and consumed.

ICIJ’s Swiss Leaks investigation brought together 140 journalists from 45 countries to report on 60,000 files first obtained by French newspaper Le Monde.

While global banks can be useful for foreign investment, wrote British NGO Action Aid in a 2013 report, “they can also play a role in facilitating tax dodging.”

Swiss Leaks assembled more Africa-based journalists than any other ICIJ project. Long-established ICIJ members including Ray Choto from Zimbabwe, Rob Rose in South Africa and Hisham Allam in Egypt were joined by partners from other countries brought on board for this project.

“I don’t know where you got those details from but 100 percent I have never opened an account with HSBC,” former Zimbabwean deputy minister Aguy Georgias told VOA Zimbabwe, whose journalist Ray Choto worked on the project. The leaked files show that Georgias was listed alongside an account named “21151CG” that, according to the file, was closed in 1995. As with many of those whose names appear in the files, Georgias’ precise link with the account is not specified.

The files for Africa include former and current politicians from Kenya, Tunisia, the Democratic Republic of the Congo, Zimbabwe, Sierra Leone, Rwanda, Djibouti, Senegal and Algeria.

The profiles also include Africa’s wealthiest industrialist, Aliko Dangote from Nigeria; Zimbabwe’s former cigarette mogul, Roger Boka; Patrick Bedie, Cote d’Ivoire’s former rice and cocoa king and the son of Cote d’Ivoire’s former president; and Youssou N’Dour, Senegal’s famed musician and former Minister for Culture. Bedie told ICIJ that he did not wish to answer questions about his account and said he had already answered questions about his accounts with Swiss authorities. Dangote and N'Dour did not respond to repeated requests for comment.

South Africans were the bank’s largest group of Africa-based clients (more than 1,700) while Cape Verde had just one. Egyptians held the highest total amount of money with the bank, including former finance minister Rachid Mohammad Rachid who fled the country following the coup that ousted President Hosni Mubarak.

Soldiers in Liberia, 2003The names include some of Africa’s most notorious, including alleged arms traffickers in Burundi and Liberia, diamonds traders mired in controversy from the Central Africa Republic, lobbyists for corrupt arms deals in South Africa and Tanzania and businessmen allegedly involved in two of Kenya’s biggest corruption scandals. In some cases, HSBC Private Bank (Suisse) records notes of dealing with some of these clients even after their involvement in crimes and corruption was on the public record.

In the days following Swiss Leaks’ release, governments in Namibia, Ghana and Tunisia announced possible investigations over tax evasion and money laundering. ICIJ received direct requests for the data from multiple tax authorities. ICIJ, in keeping with its longstanding policy, will not share material with governments.

“We acknowledge that the compliance culture and standards of due diligence in HSBC’s Swiss private bank, as well as the industry in general, were significantly lower than they are today,” said HSBC in a response to ICIJ. The bank has reduced its number of clients by 70 percent, the bank said, following reforms and efforts to disassociate itself from problematic clients.

ICIJ will continue to work with Africa-based investigative journalists on additional Swiss Leaks reporting and for future ICIJ projects that have substantial African angles as part of our commitment to growing ICIJ's membership base and collaboration network across the continent. Global stories need to be both told and heard in all corners of the globe, and collaborating with Africa-based journalists – from large newsrooms in South Africa to one-man bands in Angola and Senegal – is central to ICIJ’s goal of achieving worldwide impacts through cross-border reporting, sharing of resources, and innovation in collaborative journalism.

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