Drug dealers, gun runners and Britain’s biggest bank

HSBC investigation: Drug dealers, gun runners and Britain’s biggest bank



Britain’s biggest bank is at the centre of a major HM Revenue and Customs
investigation after it opened offshore accounts in Jersey for serious
criminals living in this country, The Telegraph can disclose.



The disclosures raise serious questions about HSBC’s procedures in Jersey Photo: ALAMY/REUTERS

By
Holly Watt, Robert Winnett and Claire Newell

9:52PM GMT 08 Nov 2012

The tax authorities have obtained details of every British client of HSBC in
Jersey after a whistleblower secretly provided a detailed list of names,
addresses and account balances earlier this week.

The Telegraph understands that among those identified on the list are Daniel
Bayes, a drug dealer who is now in Venezuela; Michael Lee, who was convicted
of possessing more than 300 weapons at his house in Devon; three bankers
facing major fraud allegations and a man once dubbed London’s “number two
computer crook”. A series of other accounts containing six-figure deposits
are also registered to modest addresses in relatively poor parts of the
country.

The disclosures raise serious questions about HSBC’s procedures in Jersey,
with the bank already preparing to pay fines of around $1.5 billion in
America for breaking money laundering rules.

The bank is legally obliged to report to the authorities any suspicions about
the source of money deposited in its accounts.

HM Revenue and Customs is now understood to be trawling through a list of the
names and addresses of more than 4,000 people based in Britain who had bank
accounts at HSBC in Jersey.

This work is expected to lead to the identification of hundreds of people who
are evading tax as the accounts have not been previously disclosed.

Last night, a spokesman for HMRC said: “We can confirm we have received the
data and we are studying it. We receive information from a very wide range
of sources which we use to ensure the tax rules are being respected.

“Clamping down on those who try to cheat the system through evading taxes and
over claiming benefits is a top priority for us and we value the information
we receive from the public and business community.”

The Telegraph has established from public records that HSBC has opened bank
accounts in Jersey for several people who are wanted by the police or have
serious criminal convictions.

The information obtained by HMRC is thought to be the biggest data leak
identifying holders of offshore accounts ever obtained by the British tax
authorities.

The list identifies 4,388 people holding £699 million in offshore current
accounts and they are also likely to have billions of pounds more in
investment schemes. Several celebrities and other well-known figures are
understood to be identified in the client data.

Tax authorities around the world are involved in an increasingly aggressive
race to obtain details of their citizens with offshore bank accounts, many
of which are suspected to be linked to tax evasion or other criminal
activity. An insider at HSBC in Switzerland has already sold details of the
bank’s clients in Geneva to tax authorities in 2008. This led to the
creation of the so-called “Lagarde list”, named after the then French
finance minister, with about 2,000 Britons identified. Last week, a Greek
journalist was threatened with prosecution after disclosing details of Greek
account holders on the Lagarde list.

The leak of the Jersey data, which is understood not to have involved HMRC
paying for the list, is expected to have global ramifications as more than
4,000 residents of other countries are identified, although British
residents account for more than half of all the clients.

The HSBC Jersey client list is understood to be heavily dominated by senior
figures in the City. Dozens of bankers are understood to have deposited
six-figure sums offshore with some institutions said to have “clusters” of
employees taking advantage of the accounts.

Doctors, mining and oil executives and oil workers are also heavily
represented in the list. More unexpectedly, a greengrocer in the East End is
understood to have more than £80,000 in his HSBC current account in Jersey.

Although some of the individuals may have declared the offshore holdings, HMRC
is currently understood to be comparing the new documents with tax records
to identify anomalies.

One investment manager has more than £6 million in his account, while the
average amount held is £337,000. Under Britain’s non-domicile rules, those
with foreign roots only have to pay tax on money entering Britain – provided
it is earned abroad. However, more seriously for HSBC, dozens of people with
no obvious legal source of substantial income are holding large sums in
Jersey.

Daniel Bayes was branded “monstrous” for refusing to return from Venezuela
after £500,000 of cannabis was found growing at his farm in 2006.

His father was jailed for three years in his absence. Mr Bayes is understood
to have deposited £250,000 in an offshore account, although police said they
would still like to question him.

A couple who live in a small house in Teignmouth, Devon, deposited £85,000 in
an offshore account. More than 300 firearms, including Israeli Uzi
submachine guns and pump-action shotguns, were found in their house after a
police raid in 2001. Michael Lee was jailed for two years in 2002.

Around the world, HSBC has faced repeated accusations that it was not
maintaining sufficient controls over the source of money deposited in its
accounts. Money laundering rules demand that banks monitor the source of
money and report any suspicions to the relevant authorities. Most banks take
an active approach to this duty.

In July, a US Senate investigation found that money-laundering controls were
largely absent in HSBC’s operations in Mexico. The bank has also faced
serious criticism for hiding Iranian transactions.

One analyst called HSBC’s practices “a wink/nod business model” that showed “a
profound lack of controls”.

Stuart Gulliver, the chief executive of HSBC, previously admitted: “We failed
to spot and deal with unacceptable behaviour.” He insisted the bank would
begin to operate at “a single standard globally that is determined by the
highest standard we must apply anywhere”.

A spokesman for the bank said last night: “HSBC has a duty of confidentiality
and cannot comment on clients even to confirm or deny they are clients. We
have good relationships with our regulators and co-operate with
investigations when required to do so.”

Whistle-blowers helping authorities chase tax evaders

TAX authorities around the world are involved in an increasingly aggressive
and often clandestine race to gain information on the identities of those
with offshore bank accounts.

HM Revenue and Customs (HMRC) has paid hundreds of thousands of pounds to
whistle-blowers in return for information about offshore account holders.
German authorities reportedly paid €2.5 million (£1.9 million) to an unnamed
individual for a CD containing details of HSBC clients in Switzerland in
2010.

The data contained information that led prosecutors to believe that more than
£1 billion of undeclared income had been deposited by 1,100 wealthy Germans.

Last week, a Greek magazine published a list of HSBC’s Swiss bank account
holders. It is known as the “Lagarde List”, because the then French finance
minister Christine Lagarde — now the International Monetary Fund director —
handed it to Greek authorities in 2010.

HMRC also received details of British residents from this list and has
investigated 500 of those identified.

HMRC is understood not to have paid for information about HSBC’s Jersey
clients but the data it has received is thought to be the single biggest
disclosure of a bank’s offshore customers.

The Daily Telegraph understands that the whistleblower who has obtained the
information also has further lists of offshore HSBC clients with addresses
outside Britain, including 602 in Israel, 527 in France, 333 in Spain and
117 in the US. In total, the leaked HSBC Jersey client list is thought to
contain the names and addresses of 8,474 people. More than half are based in
this country.

The use of tax havens by British residents and citizens to minimise tax is
legal but subject to a range of complex rules and regulations. British
taxpayers have a duty to report to HMRC details of money held offshore that
is liable to tax.


Source:-
http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/9665741/HSBC-investigation-Drug-dealers-gun-runners-and-Britains-biggest-bank.html