HSBC chief hid millions abroad
February 23, 2015
The scandal-hit bank HSBC announced lower-than-expected annual earnings on Monday, a day after a British newspaper revealed that its chief executive had made use of a secret Swiss account to hold his bonus payments and was domiciled in Hong Kong for tax purposes.
The bank said its net profits sank to $13.7 billion (12 billion euros) in 2014, down from $18.7 a year earlier. Operating costs had also risen 6.1 percent to $37.9 billion. HSBC's bottom line took a hard hit when it agreed to pay hefty fines to settle charges of foreign exchange rate rigging last year.
On Sunday, the Guardian newspaper reported that Stuart Gulliver, HSBC's chief executive, was a client of the bank's Swiss subsidiary. Those revelations came as the Geneva-based institution faces intense scrutiny from British and Swiss authorities over media allegations it helped wealthy clients from around the world avoid paying taxes.
Gulliver, an executive who has promised to reform the scandal-hit bank, was the principal owner of an anonymous account registered to Panama-based Worcester Equities, the Guardian said. In 2007, that account had a balance of about 5 million pounds ($7.69 million, 6.7 million euros).
Lawyers deny wrongdoing
Legal representatives for Gulliver said he had used the account HSBC Suisse to hold his bonus payments before 2003, when Gulliver moved from Hong Kong to London, where HSBC is based. Gulliver was tapped to head HSBC in January 2011.
When asked by journalists why the executive felt it necessary to funnel his funds through a Panamanian company when Swiss bank accounts already offer secrecy, Gulliver's lawyers refused to comment.
Gulliver's representatives also said British authorities had been informed of the Swiss bank account, although it wasn't clear if the executive was obliged to pay taxes on the account's balance under generous remittance laws that shield foreign-domiciled citizens from paying tax on investments held outside the United Kingdom.
On Monday, HSBC again apologized for the transgressions of its Swiss subsidiary. Last week, the bank took out full-page advertisements in several British papers to underscore its remorse.
cjc/ng (AFP, dpa, Reuters)