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HSBC Again Comes Under Fire From British Lawmakers HSBC Again Comes Under Fire From British Lawmakers
(4 days later)
LONDON — A parliamentary committee grilled HSBC executives on Monday about leaked documents showing the bank helped clients evade taxes from 2007 and before.LONDON — A parliamentary committee grilled HSBC executives on Monday about leaked documents showing the bank helped clients evade taxes from 2007 and before.
Margaret Hodge, the chairwoman of the Public Accounts Committee, said that she refused to believe that the executives present were in the dark about what she dubbed “industrial scale” tax avoidance.Margaret Hodge, the chairwoman of the Public Accounts Committee, said that she refused to believe that the executives present were in the dark about what she dubbed “industrial scale” tax avoidance.
“Either you’re completely incompetent in your oversight duties or you knew about it,” she said.“Either you’re completely incompetent in your oversight duties or you knew about it,” she said.
“I don’t believe you didn’t know,” she added.“I don’t believe you didn’t know,” she added.
Those in the line of fire on Monday included Stuart Gulliver, the chief executive, Rona Fairchild, chairwoman of the BBC Trust and the former chairwoman of HSBC’s audit committee until 2010, and Chris Meares, the former head of global private banking. Those in the line of fire on Monday included Stuart Gulliver, the chief executive, Rona Fairhead, chairwoman of the BBC Trust and the former chairwoman of HSBC’s audit committee until 2010, and Chris Meares, the former head of global private banking.
Ms. Hodge went after all of them, though she saved a great deal of ammunition for Ms. Fairchild, whose role as chairwoman of the BBC Trust is among the most coveted in Britain. Ms. Hodge went after all of them, though she saved a great deal of ammunition for Ms. Fairhead, whose role as chairwoman of the BBC Trust is among the most coveted in Britain.
“I don’t think that the record that you have shown in your performance here as a guardian of HSBC gives me the confidence that you should be the guardian of the BBC license fee payers’ money,” Ms. Hodge said to Ms. Fairchild, who repeatedly denied Ms. Hodge’s accusations. “I really do think that you should consider your position and you should think about resigning and if not, I think the government should sack you.” “I don’t think that the record that you have shown in your performance here as a guardian of HSBC gives me the confidence that you should be the guardian of the BBC license fee payers’ money,” Ms. Hodge said to Ms. Fairhead, who repeatedly denied Ms. Hodge’s accusations. “I really do think that you should consider your position and you should think about resigning and if not, I think the government should sack you.”
Ms. Fairchild categorically denied that she knew about the evasion. She argued throughout the session that her committee’s role was oversight and that it depended on experts to inform it. She said that the committee was tough on all who came before it and that it was “unyielding” when problems arose. Ms. Fairhead categorically denied that she knew about the evasion. She argued throughout the session that her committee’s role was oversight and that it depended on experts to inform it. She said that the committee was tough on all who came before it and that it was “unyielding” when problems arose.
“In my role in oversight it is reasonable for a nonexecutive director to rely on the policies, the management structures in place, and to rely on industry experts” she said. “That is what we insisted on.”“In my role in oversight it is reasonable for a nonexecutive director to rely on the policies, the management structures in place, and to rely on industry experts” she said. “That is what we insisted on.”
She also said she had been a driving force behind changes in compliance and structure at the company.She also said she had been a driving force behind changes in compliance and structure at the company.
Mr. Gulliver was asked whether he was fit to stay in his job, considering how much time had been spent in recent weeks untangling why he created a Panamanian shell company to channel his bonuses into a Swiss bank account, which was closed in 2009. He reiterated that there was “no tax advantage” to having such a structure and that it was set up for privacy reasons. He also acknowledged that his tax affairs had caused reputational damage to the bank.Mr. Gulliver was asked whether he was fit to stay in his job, considering how much time had been spent in recent weeks untangling why he created a Panamanian shell company to channel his bonuses into a Swiss bank account, which was closed in 2009. He reiterated that there was “no tax advantage” to having such a structure and that it was set up for privacy reasons. He also acknowledged that his tax affairs had caused reputational damage to the bank.
Mr. Gulliver is domiciled in Hong Kong, making him a so-called resident non-dom in Britain. That means he pays all his taxes on his British income but is legally permitted to keep all the money he made before he moved back to Britain abroad, including in Switzerland, where he pays lower Swiss tax rates on it.Mr. Gulliver is domiciled in Hong Kong, making him a so-called resident non-dom in Britain. That means he pays all his taxes on his British income but is legally permitted to keep all the money he made before he moved back to Britain abroad, including in Switzerland, where he pays lower Swiss tax rates on it.
“I would like the chance to finish what I’ve started,” he said. He repeated what he said at an earlier hearing before the Treasury Select Committee about reconfiguring the bank from a loosely controlled federation to a more centrally controlled organization with better compliance procedures.“I would like the chance to finish what I’ve started,” he said. He repeated what he said at an earlier hearing before the Treasury Select Committee about reconfiguring the bank from a loosely controlled federation to a more centrally controlled organization with better compliance procedures.
Ms. Fairchild said that when she first learned the extent of the tax activities by HSBC’s Swiss private bank she was “horrified” and that an independent review was ordered. Ms. Fairhead said that when she first learned the extent of the tax activities by HSBC’s Swiss private bank she was “horrified” and that an independent review was ordered.
Alan Rusbridger, editor of The Guardian newspaper, tweeted on Monday that the bank’s first response was to order The Guardian to destroy the leaked documents.Alan Rusbridger, editor of The Guardian newspaper, tweeted on Monday that the bank’s first response was to order The Guardian to destroy the leaked documents.
None of the executives would take direct responsibility for the affair, which appeared to deeply irritate many of the members of the committee.None of the executives would take direct responsibility for the affair, which appeared to deeply irritate many of the members of the committee.
“Neither of you, nobody in the bank, either at this hearing or at the hearing at the Treasury Select Committee, has deigned to accept responsibility for what was a massive, massive, illegal, terrible tax evasion,” Ms. Hodge said.“Neither of you, nobody in the bank, either at this hearing or at the hearing at the Treasury Select Committee, has deigned to accept responsibility for what was a massive, massive, illegal, terrible tax evasion,” Ms. Hodge said.