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HSBC boss says his tax affairs caused 'damage' HSBC boss says his tax affairs caused 'damage'
(35 minutes later)
Stuart Gulliver, the chief executive of HSBC, admitted that his personal financial arrangements led HSBC to suffer reputational damage.Stuart Gulliver, the chief executive of HSBC, admitted that his personal financial arrangements led HSBC to suffer reputational damage.
During testimony in front of MPs on the Public Accounts Committee (PAC), Mr Gulliver blamed "media innuendo" for the damage.During testimony in front of MPs on the Public Accounts Committee (PAC), Mr Gulliver blamed "media innuendo" for the damage.
He said his banking arrangements, which included a Panamanian shell company, were not set up for tax avoidance.He said his banking arrangements, which included a Panamanian shell company, were not set up for tax avoidance.
He further insisted he was fit to stay on as head of HSBC.He further insisted he was fit to stay on as head of HSBC.
"I would like the chance to finish what I've started," he said, citing his efforts to bring HSBC's compliance procedures into the "highest standards of money laundering controls" during his five years as head of the firm."I would like the chance to finish what I've started," he said, citing his efforts to bring HSBC's compliance procedures into the "highest standards of money laundering controls" during his five years as head of the firm.
He defended his personal financial structure - which includes being domiciled in Hong Kong, a Swiss bank account, and a Panamanian shell company he once held for privacy reasons - by saying when the accounts were created, he was a junior employee in Hong Kong.He defended his personal financial structure - which includes being domiciled in Hong Kong, a Swiss bank account, and a Panamanian shell company he once held for privacy reasons - by saying when the accounts were created, he was a junior employee in Hong Kong.
"I pay millions of pounds of tax to [the UK tax authority] at the top rate each year," he said."I pay millions of pounds of tax to [the UK tax authority] at the top rate each year," he said.
'Not accountable''Not accountable'
The former head of HSBC's private banking division Chris Meares was also questioned, and refused to take responsibility for Swiss employees, claiming he did not know "what they were up to". MPs were harsh in their questioning, insisting that HSBC executives should be held responsible.
"Either you're completely incompetent in your oversight duties or you knew about it," said Margaret Hodge, chair of the PAC.
"I don't believe you didn't know," she added.
Ms Hodge had sharp words for Chris Meares, the former head of HSBC's private banking division, about his role.
Mr Meares refused to take responsibility for Swiss employees, claiming he did not know "what they were up to".
Although he acknowledged he was "fairly responsible" for employees in global private banking, he attributed the lax oversight to "control failings". He added he was unaware of clients taking "bricks" of millions of pounds of cash out of the HSBC private bank in Switzerland.Although he acknowledged he was "fairly responsible" for employees in global private banking, he attributed the lax oversight to "control failings". He added he was unaware of clients taking "bricks" of millions of pounds of cash out of the HSBC private bank in Switzerland.
He attempted to refute claims from MPs that he was being pushed to be the "fall guy" for HSBC's tax avoidance behaviour.He attempted to refute claims from MPs that he was being pushed to be the "fall guy" for HSBC's tax avoidance behaviour.
Two weeks ago, HSBC's chairman, Douglas Flint, appeared to blame Mr Meares for alleged collusion between the Swiss private banking division and its clients to evade tax.Two weeks ago, HSBC's chairman, Douglas Flint, appeared to blame Mr Meares for alleged collusion between the Swiss private banking division and its clients to evade tax.
Mr Flint told MPs on the Treasury Committee Mr Meares and Clive Bannister, who was boss of HSBC's private banking operations until 2006, "certainly bear fairly direct responsibility for what went on in the private bank during their stewardship".Mr Flint told MPs on the Treasury Committee Mr Meares and Clive Bannister, who was boss of HSBC's private banking operations until 2006, "certainly bear fairly direct responsibility for what went on in the private bank during their stewardship".
More questions No common sense
BBC Trust boss Rona Fairhead is also facing questions about her role at HSBC. BBC Trust boss Rona Fairhead also defended her role at HSBC, where she was chair of its audit committee until 2010 and led the bank's risk committee following that.
Mrs Fairhead has been a member of the bank's board since 2004. She is currently chair of HSBC's North American division, and has been a member of the bank's board since 2004. She took over as the chair of the BBC Trust last year.
She took over as the chair of the BBC Trust last year. Ms Fairhead said HSBC had the proper structures in place while she was in charge of the audit committee, but the realities of the banking industry changed.
Mrs Fairhead was a member of HSBC's audit committee until 2010 and of its risk committee following that. She is currently chair of HSBC's North American division. "As we acquired more businesses it became more complex and there were a huge number of standards on money laundering and tax that we were complying with," she said.
"We got to the stage where a 130-year-old, 140-year old structure was no longer fit for purpose."
She said the board relied on information from local managers, and blamed Swiss employees for lax oversight.
In response, Ms Hodge chastised Mrs Fairhead and Mr Meares, saying the bank's procedures were "rich in bureaucracy and short of common sense".
"When things go wrong in the public sector on your watch you resign. No one has deigned to accept responsibility," she added.
Information about some 30,000 accounts at the Swiss private bank operation were leaked in 2007 to French tax authorities who passed it on to the UK tax authorities (HMRC).Information about some 30,000 accounts at the Swiss private bank operation were leaked in 2007 to French tax authorities who passed it on to the UK tax authorities (HMRC).
HSBC has been involved in a range of banking scandals, including foreign exchange manipulation and rigging of international interest rate benchmarks.HSBC has been involved in a range of banking scandals, including foreign exchange manipulation and rigging of international interest rate benchmarks.