The Swiss private banking arm of HSBC profited from doing business with clients engaged in illegal activities, including concealing hundreds of millions of dollars from tax authorities.
Leaked documents obtained by the International Consortium of Investigative Journalists via the French newspaper Le Monde reveals that HSBC Private Bank (Suisse) dealt with "arms dealers who channeled mortar bombs to child soldiers in Africa, bag men for Third World dictators, traffickers in blood diamonds and other international outlaws."
The documents obtained by ICIJ are based on data originally smuggled by a former HSBC employee-turned-whistleblower.
ICIJ said the newspaper obtained material from the French tax authority investigation into the files and then shared the French tax authority’s material with ICIJ under the condition that ICIJ would gather a team of journalists from multiple countries that could sift through the data from all angles.
Tax evaders, terrorists and drug dealers
The leaked files provide a preview of the super-secret Swiss banking system, said the ICIJ. The files also documented "huge sums of money controlled by dealers in diamonds who are known to have operated in war zones and sold gemstones to finance insurgencies that caused untold deaths."
The bank had actively promoted its accounts as an efficient way to hide assets from tax collectors, according to the report.
Clients who held HSBC bank accounts in Switzerland include former and current politicians from Britain, Russia, Ukraine, Georgia, Kenya, Romania, India, Liechtenstein, Mexico, Lebanon, Tunisia, the Democratic Republic of the Congo, Zimbabwe, Rwanda, Paraguay, Djibouti, Senegal, Philippines and Algeria.
The report revealed that depositors included royal families and convicted cocaine dealers, ambassadors and terror suspects, entertainers and elected officials, corporate executives and athletes.
“We acknowledge that the compliance culture and standards of due diligence in HSBC’s Swiss private bank, as well as the industry in general, were significantly lower than they are today,” stated HSBC in a response to ICIJ's findings.
The written statement said the bank had “taken significant steps over the past several years to implement reforms and exit clients who did not meet strict new HSBC standards, including those where we had concerns in relation to tax compliance.”
The bank added that it had refocused its Swiss business and as a result its client base has been reduced by almost 70% since 2007.
The documents raise new questions about past public statements by HSBC that staff did not help customers engage in tax evasion, said the ICIJ.