A pedestrian passes a branch of HSBC bank in London
The private-banking unit of HSBC Holdings Plc made significant profits for years handling secret accounts for an array of criminals, from drug cartels and arms dealers to tax evaders and fugitive diamond merchants, according to a report released Sunday by an international news organization.
HSBC is among a handful of banks to face criminal prosecution in recent years for its role in a Swiss banking system that allowed depositors to conceal their identities, and in many cases dodge taxes or launder ill-gotten cash. The report, prepared by the Washington-based International Consortium of Investigative Journalists, revealed for the first time the massive sweep of HSBC’s private-banking arm as of 2007, when it controlled USD100 billion in assets and served a swath of wealthy depositors from the elite to the illicit.
The report is based on a list of HSBC clients from around that time that a onetime employee took from the bank and turned over to European officials, sparking tax investigations from Argentina to France, Belgium and Greece. While some of the list’s names have emerged before, Sunday’s report drew from a more comprehensive list of accounts associated with more than 100,000 people and legal entities from more than 200 nations.
Depositors included royal families and convicted cocaine dealers, ambassadors and terror suspects, entertainers and elected officials, corporate executives and athletes. To these and other clients, the bank actively promoted its accounts as an efficient way to hide assets from tax collectors, according to the report.
HSBC, in a written response to the report, said its compliance efforts had been insufficient. It pointed out that the bank had undergone “a radical transformation” since 2007 and now enforced far more stringent reporting requirements.
The report said the bank held deposits for controversial figures such as the political operative for the late Haitian President Jean-Claude “Baby Doc” Duvalier, who was accused of embezzling hundreds of millions before fleeing his country, as well as fugitives like diamond dealers Mozes Victor Konig and Kenneth Lee Akselrod, whose names appear on the wanted list run by Interpol, the international police agency.
Among many entertainers who held accounts, according to the report, was rock star David Bowie, a Swiss citizen. It didn’t accuse him of wrongdoing. A spokesman for Bowie didn’t respond to e-mails seeking comment.
The accounts also attracted depositors eager to shield their money from creditors, ex-spouses, political opponents and law-enforcement agencies. David Kocieniewski, Bloomberg
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