Top UK tax officials will be probed by MPs on Wednesday over the tax evasion scandal that has engulfed banking giant HSBC. Experts say government pledges to get tough on tax dodging are meaningless, and have called for concrete reforms.
Amid global controversy
over the bank’s alleged facilitation of industrial scale tax
evasion and avoidance, Her Majesty’s Revenue and Customs (HMRC)
chief Lin Homer will be questioned by Britain’s Public Accounts
Committee in the House of Commons.
MPs on the influential committee will challenge Homer on why HRMC
failed to take significant action against 6,000 former clients of
HSBC’s Swiss operation, whose details were leaked to the tax
authority in 2010.
Committee sources told The Telegraph that the hearing will prove
challenging for Homer, who took up her role as HMRC chief in
2011. Previously, she held the position of Permanent Secretary of
the Department of Transport.
Commenting on the HSBC scandal, Joel Benjamin, of UK-based
ethical finance think tank Move Your Money, said the banking
giant had yet again breached international law, and will
consequently face criminal investigation.
He expressed little faith in Britain’s Financial Conduct
Authority (FCA) or tax authorities to adequately handle the most
recent allegations leveled at the scandal-ridden bank.
Edward Troup, HRMC’s second permanent secretary, is also due to
give evidence to the accounts committee. The tax chief told
parliament in 2012 that while criminal proceedings had only been
brought against one of HSBC’s clients contained in the cache of
leaked files handed to the HRMC, a further dozen were planned.
Another civil servant, Jim Harra, will also offer evidence on
recent allegations brought against HSBC. Harra is HRMC’s director
general of business tax.
The revolving door of #HSBC and the
tax office. Cameron signed off taxman to work for tax avoidance
bank http://t.co/F8jFEUTleC
— Saggydaddy (@Saggydaddy) February
10, 2015
Following the hearing, the accounts committee will decide whether
to call one of Homer’s influential predecessors, Dave Harnett, to
give evidence.
Harnett was HMRC’s chief executive when it dealt with leaked
evidence of HSBC’s alleged tax dodging. He worked at the tax
authority between 1976 and 2012.
Harnett told MPs in 2011 that the whole nation is probably aware
that HRMC had in its possession a disc from the “Geneva
branch of a major UK bank – with 6,000 names, all ripe for
investigation.”
Following his departure from the government tax authority, he was
hired by HSBC to head its newly formed in-house financial crime
committee. As part of the role, Harnett was responsible for
reporting to the banking giant’s board.
Harnett goes HMRC to HSBC. Green goes HSBC to Govt. Only 1 HSBC
tax evader is prosecuted in UK? All seems very cosy at the top,
doesn’t it?
— Andrew Sharpe (@TMT_Lawyer) February
11, 2015
The bank founded the financial crime committee after it was
forced to pay American authorities a colossal £1.2 billion,
following allegations it facilitated the laundering of Mexican
drug cartels’ ill-gotten gains.
Benjamin said Harnett’s transition from chief of Britain’s
government tax authority to head of HSBC’s financial crime
committee was a damning indictment of a revolving door culture
that blackens British banking.
“The move highlights the rotten core of the UK’s financial
services sector, and the all too cozy links between the
government, the big four banks and accountancy firms,” he
told RT.
As controversy over HSBC’s role in facilitating tax evasion and
avoidance gathers momentum, the bank’s former chairman and chief
executive, Lord Green of Hurstpierpoint, has come under
increasing pressure to disclose what he knows. He has so far
remained silent on the issue.
The Public Accounts Committee is due to hear evidence from Green
on Wednesday.
The Treasury’s Financial Secretary, David Gauke, claimed on
Monday that there was absolutely no evidence indicating that
Green was “involved or complicit with tax evasion
activities.” But the opposition Labour party is calling on
Prime Minister David Cameron to make an official statement on the
former HSBC’s chairman’s role at the bank, and his subsequent
appointment as a minister in 2011.
Stephen Green earned £3m a year as the boss at #HSBC, then was
appointed a minister in the House of Lords. pic.twitter.com/eJcfVRMKX7
— BBCPanorama (@BBCPanorama) February
9, 2015
Shadow Chancellor Ed Balls said the government appears utterly
confused over the leaked HSBC documents.
Downing Street recently claimed no record exists of a government
minister being told HSBC’s Swiss banking branch had facilitated
wrong doing of any form. But the Treasury subsequently conceded
the government became aware of allegations against HSBC in May
2010.
Joel Benjamin, of Move Your Money, says he has little hope that
the accounts committee’s inquiry will prove fruitful.
“Our politicians can’t be trusted to clean up HSBC, when
tainted individuals like Lord Green are personally invited by
David Cameron into the heart of the UK government,” he told
RT.
“Rather than platitudes from MPs about getting tough on tax
avoidance, it’s high time something was done about it.”
HSBC has conceded it was
“accountable for past control failures.” It claims it has now
“fundamentally changed,” and is “cooperating with
relevant authorities.”