'It couldn't happen now' – HSBC boss claims tax scandal is all in the past

HSBC HQ London 3

On a normal balance sheet, there’s a profit and loss account.

In Wednesday afternoon, the Treasury select committee asked Stuart Gulliver, HSBC’s chief executive, and Douglas Flint, HSBC’s chairman, to explain why they both had so few entries in their own personal red columns when their bank had been engaged in widespread criminality over a long period of time.

Gulliver did not look up as the committee chairman, Andrew Tyrie, thanked them both for attending. He is not a man much given to social niceties. Or openness, for that matter. Instead he picked at his fingers, trying to keep his expression as opaque as his own financial affairs. Could he just start by explaining why he had his salary paid into a Panamanian bank account while being head of the Hong Kong operation, Tyrie asked?

There was nothing Gulliver would rather have done less, but since the details were already in the public domain he had little option. It had all been a matter of privacy not tax advantage, he insisted. “I didn’t choose Panama,” he insisted. Panama was just a coincidence: the nominee entity account could have been anywhere. The Cayman Islands. Monaco. “I have always paid everything I owe in UK tax,” he went on to point out. “But you have always pursued the most aggressive tax avoidance schemes,” said Labour’s Andrew Love. Gulliver picked another chunk out of his fingers. Duh! Of course he had. He was a top banker. He had a reputation to protect.

Apart from one minor strop – How dare the committee suggest he had felt no personal pain for any of the bank’s failures? “I gave back a £1.75m bonus,” he spat, his voice choking on the memory; that loss clearly still rankles – Gulliver mostly maintained a sullen silence, happy to let Flint take most of the flak. Flint had been the bank’s finance director in the late 90s and signed off some of HSBC’s dodgiest acquisitions, including the private Swiss bank at the centre of the most recent allegations.

Why did he imagine a man later convicted of international drug trafficking might have wanted to take £50,000 in cash out of the Swiss branch of HSBC week after week, asked the SNP’s Stewart Hosie. Flint shrugged. He could not possibly speculate. “Different times,” he said eventually. “Your fingerprints are all over this,” suggested Labour’s Mike Kane. Gulliver looked down to check he had just picked away the last traces of his own dabs.

“It couldn’t happen now,” Flint assured the committee. “Since Stuart became chief executive in 2011, we have been doing a big clean-up operation.” That’s odd, Labour’s John Mann pointed out, because HSBC was currently being investigated for gold fixing and tax fraud. “Ah, that,” sighed Flint. “It really all goes back to 1865. It’s very tricky to sort everything out.” And not always entirely desirable. Besides, some of it was only suspected criminality rather than proven criminality.

Conservative Alok Sharma vaguely wondered why Flint and Gulliver had not resigned or been sacked. Flint looked at him as if he was mad before explaining the small print of the banking code. Banks do not operate on personal responsibility; everything is run on collective responsibility so nothing can ever be one person’s fault. Banking was all about minimising the downside for the bankers, he explained. Why did the committee ever imagine bonuses might be linked to performance? If they were, then they might not always be paid.

Warming to his theme, Flint finally let rip. “You know what’s the scandal here?” he said. “It’s that all our data was stolen.” Mann was incredulous. “You mean that the whistleblower who handed over the tax files was in the wrong?” Flint by name, Flint by nature. That’s precisely what he meant.

Powered by Guardian.co.ukThis article was written by John Crace, for theguardian.com on Wednesday 25th February 2015 19.40 Europe/Londonguardian.co.uk © Guardian News and Media Limited 2010

 

JefferiesAnd the Best Place to Work in the global financial markets 2017 is...

Register for Financial Markets News Alerts