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February 10, 2015


I awakened this Monday morning in the hope of finding some relief from almost daily news of both civil and criminal misconduct practiced by our big Wall Street banks ranging from bribes in China to mortgage securities fraud in this country. Instead, I found that at least today’s latest known atrocity belongs not to an American-based bank but to the Swiss subsidiary of a foreign bank (with a subsidiary in our country), the British bank HSBC,  newly accused of helping clients (including Americans) hide billions of dollars in assets from international tax authorities before 2007 by its Swiss subsidiary. “International” includes our treasury, which was duped and underpaid by HSBC’s criminal shenanigans in Zurich, Basel, Geneva, or wherever such Swiss schemes were executed in fraud of American taxpayers, among others.

In my view, though such frauds were pulled off by a foreign-based bank’s Swiss subsidiary in a foreign country, such frauds nevertheless cost our treasury untold millions if not billions in yet-to-be-discovered frauds, and left to my own devices, I would revoke the British bank’s license to do business in the United States or with any American bank anywhere. For my money, this bank’s conduct is criminal and its “too big to fail” get out of jail free card should be cancelled. Simply put, banks or anyone else who connive to steal money from American taxpayers should be put out of business in this country, just as we put people in jail for stealing money. I don’t see any substantive difference in banks that facilitate stealing and humans that steal.

The report detailing how the bank pulled this off was publicized by the International Consortium of Investigative Journalists, a Washington-based organization, along with the French newspaper, Le Monde, the British newspaper, The Guardian, and CBS News’s 60 Minutes just yesterday. The tax evasion (I will not call it tax “avoidance”) of its clients cost our treasury untold millions and perhaps billions which you and I have to pay or be held accountable for in deficit.  Secret documents revealed that employees of HSBC’s Swiss subsidiary had reassured clients that HSBC would not disclose details of their accounts to tax authorities in their home countries and discussed options to avoid (I call it “evade”) paying taxes on those assets. In other words, they were actively conniving and aiding and abetting a felony under our internal revenue code, violations of which land many ordinary American tax evaders in federal prisons every year.

Their clients included politicians, actors, rock stars and individuals with ties to arms dealers and dealers of so-called blood diamonds, which are mined in war zones and sold in violation of international bans. As my followers know, I am no defender of banks and their criminal banking practices, but I here question why those would-be taxpayers who dealt with HSBC’s subsidiary in Switzerland in their mutual conspiracy to evade taxes have not been indicted for tax evasion and/or conspiracy to evade taxes. Have rock stars and the superrich become “too big to indict” as the Wall Street big banks have become “too big to fail?” Where is the Department of Justice in this burgeoning scandal, or is it so newly-discovered that the AG hasn’t had time to react? I, for one, will be closely watching any such reaction to see if such rich tax evaders are indicted and sent to jail just as ordinary American tax evaders are.

I also wonder why HSBC’s latest discovered criminal act (and I would give odds there are others which we don’t know about yet) which deprived our treasury of millions (or perhaps billions as we track the dimensions of our loss of tax revenue) took so long to discover. The schemes to hide assets from taxation actively pursued by the banks’ subsidiary would perhaps never be known but for a whistle-blower, one Herve Falciani, a former technology information employee of HSBC in Switzerland. He now lives in France where he turned over the incriminating documents to French authorities that led to the Swiss subsidiary’s outing. In a classic case of blaming the messenger for the message, Mr. Falciani faces criminal charges for breaches of Swiss bank secrecy laws.

Though these criminal acts of the bank’s subsidiary have just hit the news yesterday, the report also inexplicably notes that France has known of such criminal misconduct since at least 2010, when it shared the information with tax authorities in Britain, the United States and other countries, which means that we have in fact known of such conduct since at least 2010. Apparently these matters are kept under cover away from the public eye for reasons only the miscreants and our regulators can know, and if so, I, for one, resent the application of such a policy. It’s our money; not that of either the criminals or regulators involved.

Indeed according to the report, tax authorities in Britain, France and Spain have since recovered more than 500 million pounds (more in dollars) in back taxes and penalties from individuals. The report does not tell us that America has similarly moved to collect back taxes and penalties from individuals, so all I can report here is that I would find any such mysterious failure, if any, to be the appropriate subject for congressional hearings and possible indictment before the statute of limitations runs. Again left to my own devices, I would collect all money owed plus interest and penalties, AND indict all of such tax cheats irrespective of their fame and wealth. A thief is a thief. So far as I know, all we have collected from HSBC in this connection is a chump change fine of $12.5 million dollars and admission of wrongdoing for having solicited and advising American clients on how to cheat the rest of us taxpayers. That’ll show ‘em!

I have blogged more than once on this bank’s American subsidiary’s criminal activities such as the laundering of Mexican drug gang money and its movement of billions of dollars in prohibited financial transactions with Iran, for which it paid $1.92 billion in 2012 in fines to the United States along with a deferred prosecution agreement with the Justice Department – AND NOW THIS! It is time to cancel HSBC’s banking license to do business in this country and end the deferred in favor of active status of the prosecution agreement. Enough is enough!   GERALD   E


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