‘No knowledge’ of HSBC tax claims

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Published: Tuesday 10th February 2015 by The News Editor

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Downing Street has insisted that no Government minister had any knowledge of alleged tax evasion at HSBC’s Swiss banking arm before details emerged in the media at the weekend.

Labour has sought to step up pressure on ministers, demanding Chancellor George Osborne explain whether HSBC’s former chairman and chief executive Lord Green was asked about the activities of the its Swiss subsidiary prior to his appointment as minister for trade.

However a No 10 spokeswoman said neither Lord Green – who served as a coalition minister from 2011 to 2013 – nor any other member of the Government had been aware of the allegations concerning wrongdoing by the bank.

“No Government minister had any knowledge that HSBC may have been involved in wrongdoing in regard to its Swiss banking arm prior to the reports of the last couple of days,” the spokeswoman said.

She said that when French authorities passed a details of a huge cache of files relating to secret Swiss accounts – which had been leaked by an IT worker – to HM Revenue and Customs in 2010 they had imposed restrictions on how the material could be used.

In a letter to Mr Osborne, Labour’s Treasury spokeswoman Shabana Mahmood demanded to know whether HMRC had taken a “selective prosecution policy” towards cases contained in the documents.

The filess have already sparked criminal probes in several countries, and details of 30,000 accounts holding almost £78 billion of assets are now being revealed after they were obtained by a French newspaper and analysed by a team of investigative journalists, including reporters from The Guardian and the BBC’s Panorama.

Financial Secretary to the Treasury David Gauke yesterday told the House of Commons there was no evidence to suggest that Lord Green was “involved or complicit with tax evasion activities”, while Mr Cameron defended him as an “excellent trade minister” during his time in the post from January 2011 to December 2013.

But Ms Mahmood told Mr Osborne in her letter: “Given that, as the Financial Secretary said yesterday, the Government was made aware of allegations of wrongdoing against HSBC in May 2010, eight months before Mr Green’s appointment to government, failure to ask probing questions would have to be seen as wilfully negligent.

“As chairman of the bank, Mr Green would either have been aware of malpractice or, if not, surely questions would arise as to why not and his fitness for such a senior government post of trade minister.

“Can you provide details of the due diligence carried out by the Government in advance of Lord Green’s appointment concerning allegations against HSBC and Lord Green’s role in relation to them?

“I hope you agree it is essential that we now hear from Lord Green himself about what assurances he gave on his appointment to be a member of the government and what he knew about the activities at his bank, so will you encourage him to do so urgently?”

Ms Mahmood quoted a HMRC official who was reported to have said in 2012 that taxmen were taking a “selective prosecution policy” towards cases related to the HSBC files. And she noted that senior HMRC official Edward Troup told the House of Commons Public Accounts Committee later that year that, while only one criminal case had so far been brought, another dozen were “in train”.

She said: “There have been none since. It seems HMRC took a deliberate strategy to minimise rather than pursue prosecutions, which would explain why just £135 million has been recouped.”

And she asked Mr Osborne: “Can you explain why only a single prosecution has been made given the scale if the alleged wrongdoing and what role ministers played in deciding on ‘a selective prosecution policy’ for those accused of tax evasion or avoidance? People would expect you to have at least been aware of a decision of this seriousness.”

Labour also demanded to know when the Prime Minister, Chancellor and other ministers were informed of the files’ existence and content, and what action they took.

“Without clarity over these matters, people can only conclude that the Government has failed to act over the deeply serious matter of tackling tax avoidance and evasion,” said Ms Mahmood.

In a statement issued yesterday, HMRC said it had “systematically worked through” all the data provided and obtained tax, interest and penalties from those who hid their assets in Switzerland to get out of paying tax.

“The decision to prosecute is made by the Crown Prosecution Service based on the facts,” said the HMRC.

“The Lagarde list was used by HMRC for the express purpose for which it was provided – to assess, collect, enforce and prosecute tax offences. We have brought in more than £135 million as a result of this work.”

Business Minister Matt Hancock said it was “entirely appropriate” that ministers were not informed about the allegations concerning HSBC, even though it was Britain’s biggest bank.

“Politicians don’t know and aren’t told about the individual tax affairs of individual people. Britain’s biggest bank is also a private company and so it is entirely appropriate,” he told BBC Radio 4’s The World At One.

Asked about reports last year that the US authorities had fined HSBC millions of dollars to resolve charges that its Swiss private banking unit illegally offered services to US clients without being properly registered, he said: “I personally didn’t know more than was in the public domain.”

He added: “The responsibility of ministers is to make sure that the framework is right. We have taken serious action to tackle tax avoidance.”

Published: Tuesday 10th February 2015 by The News Editor

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