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HSBC bosses blame Swiss managers for tax avoidance failures

HSBC’s chairman and chief executive have declined to shoulder individual blame for staff aiding tax evasion which took place at the Swiss private bank between 2005 and 2007, despite apologising to MPs.

Grilled by MPs at the Treasury Select Committee yesterday, HSBC group chairman Douglas Flint and chief executive Stuart Gulliver both accepted conduct at the bank was unacceptable.

Gulliver said: “I would like to put on the record an apology from both myself and Douglas for the unacceptable events that took place at our private bank in Switzerland in the mid-2000s. It is an apology we would like to make to you, our customers, our shareholders and the public at large.”

However, Gulliver insisted that although he held some accountability, both he and Flint had helped to install reforms at the bank to improve controls.

He said: “I have been group chief executive since 2011, so I have collective responsibility for the group. But I’m responsible for cleaning it up, and I have made substantial changes.”

Flint added that the bank’s Swiss staff should carry the blame for the alleged infractions.

“Most accountable, I think are the management in Switzerland. It’s very difficult for people outside of Switzerland to get access to the detailed account information,” Flint said.

“The most culpable people are the relationship managers who did what they did.”

Of relationship managers in place between 2005 and 2007, Flint estimated that 30 per cent continue to hold roles at HSBC’s Swiss private bank.

“Those that have stayed have been vetted, screened and managed to make sure that, as far as we can see, they are adopting our policies in an appropriate way,” he said.

Between 2005 and 2007, Flint was serving as the bank’s group finance director, later becoming group chairman in December 2010.

Gulliver, meanwhile, was named chief executive of Global Banking and Markets and HSBC Global Asset Management, excluding Switzerland, in May 2006 and joined the board of HSBC’s Swiss private bank in September 2007.

However, despite joining the Swiss board, Gulliver maintained that he held only a “non-operational” role.

“I was not involved in its day-to-day management, and from 2008 onwards we started to restructure that private bank,” Gulliver said.

Pushed by MPs on whether he should sack Gulliver, Flint said: “I think he’s doing an excellent job.”

The HSBC chairman added that while he had not received a bonus since 2010, he did not feel it would be appropriate to waive any bonus received this year.

“I don’t feel that proximate to what was happening in the private bank,” he said.

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There are 3 comments at the moment, we would love to hear your opinion too.

  1. OK but one thing that still puzzles me is that HSBC have stated that the deposits in their Swiss accounts have reduced by 70% since all of this was happening yet nobody seems to have asked them whether that withdrawn money is still with HSBC PERHAPS IN OTHER JURASDICTIONS

  2. I can so well remember a documentary on the Barings debacle (Leeson) where it became clear that there was nobody on boardroom level who actually knew what a derivative was.

    Seems like there was nobody at board level with HSBC who knew what tax evasion was….Corporate culture = responsibility

  3. In the 1980’s IFS used to be the Institute of Bankers before becoming Chartered and subsequently re branding as IFS.
    New bank entrants were encouraged to do their banking exams and if you had O-levels, you did stage 1 and moved forward and A levels did a conversion course and moved on to Stage 2. Those on accelerated training (I failed the roleplay assessments for accelerated training, not sure why, but that is by the by).
    My point is, i probably have more banking exams than a lot of bankers now, especially as to make a point I sat the CIIs Retail Banking Exam last year without doing any revision and passed! So nearly 30 year old knowledge which is not mandatory.
    I also sat teh CIIs derivatives advice and dealing exam and the Discretionary Investment exam and yet NO FCA staff are required to sit exams…. they come across from the Treasury with degree’s in Japanese or Economics, but no broad spread of study as far as I am aware. Banking exams were the basics of everything ,i.e. a bit of economics, a bit of law, a bit of accountancy and a bit of practice of banking. Then we started to get graduate entrants who had degrees in geography or basking weaving and they wonder why the people at the top didn’t understand what the people elsewhere in the organisation were doing and the products they were using!
    And the F-pack made ADVISERS do mandatory exams in ETHICS. I think there are some people at the top who need to to a first sitting let alone a resitting!

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