Tag: Big Four Accounting Firms and Tax Evasion

Swiss Bank HSBC: World’s 2nd Largest Has Titanic Public Relations Problem.

On By Jerry AlataloIn Earth Matters, Money / Banks, Tax Havens, Wall Street Corruption1 Comment

Posted on February 9, 2015

by Jerry Alatalo

(Comment: The question to consider while reading the following information about recently revealed Swiss banking secrecy is this: “Why has it seemingly become the job of journalists from 45 countries around the world, instead of governments, to investigate the multi-billion dollar, decades-old global tax haven/evasion industry?” Perhaps if governments got serious by offering university law and accounting graduates student loan forgiveness, adequate pay and tools to end the world’s massive tax evasion industry – enabled by the world’s largest accounting and legal firms – the world would be a better place.)

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(Thank you to the International Consortium of Investigate Journalists for the following article. For more information on Swiss Leaks, visit: www.icij.org)

Swiss Leaks lifts the veil on a secretive banking system

Gerard Ryle, Marina Walker, Gérard Davet and Fabrice Lhomme.ICIJ’s Gerard Ryle, left, and Marina Walker Guevara with Le Monde reporters Gérard Davet and Fabrice Lhomme. Photo: Melissa Golden/Le Monde

Secret documents reveal that global banking giant HSBC profited from doing business 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, a new International Consortium of Investigative Journalists investigation has found.

The leaked files, based on the inner workings of HSBC’s Swiss private banking arm, relate to accounts holding more than $100 billion.

“We hope this will help the public understand the perils and the potential downside of so much secrecy,” said Gerard Ryle, the director of ICIJ. “What we are exposing is a world most people never get to see.”

The documents, obtained by ICIJ via the French newspaper Le Monde, show the bank’s dealings with clients engaged in a spectrum of illegal behavior, especially in hiding hundreds of millions of dollars from tax authorities. They also show bank records of famed soccer and tennis players, cyclists, rock stars, Hollywood actors, royalty, politicians, corporate executives and old-wealth families.

Find out how you can support collaborative cross-border journalism and help ICIJ continue its work.

The disclosures shine a light on the intersection of international crime and legitimate business, and they dramatically expand what’s known about potentially illegal or unethical behavior in recent years at HSBC, one of the world’s largest banks.

“The Consortium is at the forefront of exposing global tax avoidance, a problem world leaders recognize as a factor in growing inequality,” said Peter Bale, chief executive of the Center for Public Integrity. “The global reach of the Consortium’s network, the sophistication of its analytical tools and the rigor of its journalism allow it to tackle complex and far-reaching stories of this nature.”

HSBC, which is headquartered in London and has offices in 74 nations and territories on six continents, initially insisted that ICIJ destroy the data. Late last month, after being informed of the full extent of the reporting team’s findings, HSBC gave a final response: “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.”

How the offshore banking industry shelters money and hides secrets has enormous implications for societies across the globe. Academics conservatively estimate that $7.6 trillion is held in overseas tax havens, costing government treasuries at least $200 billion a year.

The secret files analyzed by ICIJ and its media partners — covering accounts up to 2007 associated with more than 100,000 individuals and legal entities from more than 200 nations — are a version of the ones the French government obtained and shared with other governments in 2010, leading to prosecutions or settlements with individuals for tax evasion in several countries.

ICIJ enlisted more than 140 journalists from 45 countries, including reporters from Le Monde, BBC, The Guardian, 60 Minutes, Süddeutsche Zeitung and more than 45 other media organizations.

The reporters found in the nearly 60,000 leaked files the names of current and former politicians from Britain, Russia, Ukraine, Georgia, Kenya, Romania, India, Liechtenstein, Mexico, Tunisia, the Democratic Republic of the Congo, Zimbabwe, Rwanda, Paraguay, Djibouti, Senegal, the Philippines and Algeria, among others.

“The world of offshore finance and secret bank accounts is deliberately complex, driven by an intricate network that crosses multiple jurisdictions. Large-scale cross-border investigations are the only way to investigate this world in depth, and uncover the layers of secrecy,” Ryle said.

“ICIJ’s model of collaborative journalism links reporters around the world to dig deeper and tell these stories in greater detail than ever before.”

ICIJ is a non-profit news organization that provides its services to newsrooms around the world. You can support ICIJ’s work in a number of ways:

“Big Four” Accounting Firm Whistleblower Speaks Out.

On By Jerry AlataloIn Earth Matters, Money / Banks, Tax Havens1 Comment

(Cross-posted from The International Consortium of Investigative Journalists on January 16, 2015)

(For more information visit: icij.org)

‘I acted from conviction:’ PwC whistleblower speaks out

Whistleblower Antoine Deltour.

PwC whistleblower Antoine Deltour spoke with French newspaper Libération. Image: Libération   

A former PricewaterhouseCoopers employee has been charged by Luxembourg authorities following the leak of hundreds of confidential tax rulings that revealed large-scale tax avoidance by some of the world’s biggest multinational companies.

The whistleblower, 28-year-old French citizen Antoine Deltour, was indicted in the Grand Duchy on December 12 on multiple charges including theft, violation of trade secrecy, and fraudulent access to data.

On Monday he spoke out in an interview with French newspaper Libération, and revealed that he was motivated by his disillusionment with the tax system.

“Since the start, I have acted by conviction, for my ideas, not because I wanted to be in the media,” he said.

Deltour started as an intern at PwC, and then worked as an auditor from 2008 to 2010 – a job he thought meant “being on the side of the regulator.”

He quit after two years because, he said, he was feeling out of place.

“I progressively discovered the reality of the system is its radicalism: a massive practice of fiscal optimization. I didn’t want to contribute to that,” he told Libération.

“I can’t believe I could be convicted as an example,” he said. “My action is in the natural course of history, initiated by other whistleblowers and NGOs. I never asked for any compensation.”

He said he copied the documents before leaving the firm in 2010 but had no clear idea of what he might do with them.

“I copied training documents but, while I was looking into the PwC database, I found the famous tax rulings,” he said. “Without any particular project in mind, I copied those too because I was dismayed by their content.”

After unsuccessfully reaching out to NGOs, he says he was contacted by a French journalist, who was working on a documentary about tax avoidance for the France 2 TV program Cash Investigation.

The documentary, produced by journalist Edouard Perrin, aired in May 2012 and one month later, PwC submitted a complaint in the Luxembourg court.

In November and December this year the secret Luxembourg tax agreements were again brought to the world’s attention by a cross-border investigation coordinated by ICIJ in 26 countries, with more than 30 media partners. ICIJ’s Luxembourg Leaks project, based on leaked tax rulings, has since prompted widespread political debate and pressure for significant tax reform around the world.

Deltour said he has had no contact with ICIJ.

“In my mind, these documents didn’t have any other goal than being used for the preparation of that [Cash Investigation] program.”

He also pointed out that the ICIJ LuxLeaks investigation had revealed documents from dates after he had left PwC and in relation to the other Big 4 accounting firms, such as KPMG, Ernest & Young and Deloitte.

“I am just one element in a larger movement,” he said.

Deltour added that he regrets the focus on PwC or Luxembourg, since aggressive tax planning practices “on an industrial scale” are widespread and happen in several countries.

“Regulation will always be behind financial engineering, and the disappearance of those fiscal revenues becomes crucial in times of economic turmoil,” he said.

Yet he welcomed the results of the LuxLeaks revelations. “The political repercussions of LuxLeaks are beyond what I had hoped for: there will finally be talk of tax harmonization in Europe.”

ICIJ director Gerard Ryle says Luxembourg’s decision to indict the young man is a threat to transparency and accountability in the jurisdiction and elsewhere.

“ICIJ does not comment on sources. However, ICIJ does believe whistleblowers should be protected, not prosecuted,” he said in a statement.

“Protection of whistleblowers and sources is as important to society as the freedom of the press. Any prosecution against journalists or journalists’ sources has a dangerous chilling effect on the pivotal role these brave individuals play in ensuring the powerful are held accountable.”