HSBC settles French tax ‘fraud’ for €300m over ‘control weaknesses’

HSBC has paid €300m (£268m, US$354m) to settle a criminal investigation by French tax authorities into allegations that the bank’s Swiss subsidiary colluded with clients to help them evade tax, the bank has disclosed.

It is believed to be the second largest corporate fine in the country and has come about as the result of a change of the law in France that allows money to be paid to settle criminal cases.

The alleged misconduct is said to have taken place in 2006 and 2007, and the bank characterised the inquiry as a “legacy investigation”.

While the bank accepted that their had been “control weaknesses” in the past as the Swiss private bank that is its subsidiary, it had improved its anti-money laundering and tax compliance procedures, it said in a statement.

French tax authorities said that HSBC had helped its clients conceal assets that they held in the Swiss subsidiary from them, the bank confirmed.

The mutually agree settlement is made up of a penalty of €158m (£141m, US$186m), with damages and interest of about €142m (£127m, US$167m), a judge at a court hearing in Paris said.

The investigation into the Swiss private bank began when former information technology worker at the firm Hervé Falciani, pictured above, passed confidential client account details that he had stolen from the Geneva office in 2008 to the French government.
In 2015, Falciani was convicted in his absence by a Swiss court for what is believed to be “the biggest leak in banking history”.
He was living in France, where he had sought refuge from Swiss justice, and did not attend the trial.
Also in 2015, a French court ordered HSBC to post a €1bn surety against any eventual penalty, but the court later reduced it to €100m.
The Swiss subsidiary had been put under formal investigation in France the previous year, and was ordered to post bail of €50.

“HSBC is pleased to resolve this legacy investigation which relates to conduct that took place many years ago,” the bank said.

“HSBC has publicly acknowledged historical control weaknesses at the Swiss Private Bank on a number of occasions and has taken firm steps to address them.”

 

 

ABOUT THE AUTHOR
Eugene Costello
Eugene Costello has been a journalist for some 20 years, and has written for a wide variety of UK and international newspapers and magazines.

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