Stuart Levey, HSBC’s chief legal officer, is understood to have ordered the inquiry into the current chief executive of the banking group’s Italian operations.
The small group of lawyers involved in the investigation, which has not been disclosed publicly, is examining the conduct of Marzio Perrelli, a former Goldman Sachs banker who joined HSBC’s Italian subsidiary in 2004 and became its CEO in 2008.
The Guardian understands the investigation is connected to a corporate scandal widely reported in the Italian press, involving the private equity dealings of the Generali insurance group. Italian police are understood to have visited HSBC offices in connection with their broader enquiries into the affair.
The revelation of HSBC’s high-level internal investigation is the latest public embarrassment for Europe’s largest bank, which is struggling to repair its reputation after a series of international scandals.
Disclosure of HSBC’s internal investigation comes amid renewed attention on HSBC’s global presence which currently spans over 70 countries and as chief executive Stuart Gulliver outlines plans to simplify and withdraw from some of its operations worldwide. Gulliver will present his latest strategy on Tuesday, and also set out the methodology by which the bank will decide whether to pull its headquarters from London, where it relocated from Hong Kong in 1992.
In December 2012 HSBC received one of the biggest fines in banking history, $1.9bn (£1.2bn), in a deferred prosecution agreement with the US Department of Justice over facilitating money-laundering for Mexican drugs cartels.
This was followed in February this year by the publication by an international consortium of news organisations – including the Guardian, BBC, Le Monde, Suddeutsche Zeitung and ICIJ – of evidence of HSBC’s Swiss operation facilitating mass tax-avoidance and evasion. This has led to subsequent criminal probes in France, Belgium, Argentina and elsewhere.
The bank has repeatedly and firmly stated that it has drastically reformed its management and compliance procedures since Stuart Gulliver took over as chief executive in 2011, and resisted claims it is “too big to manage”.
In April the Guardian revealed HSBC is struggling to clean up parts of its worldwide operations after a senior executive told external lawyers that it is “cast-iron certain” it will face another major regulatory breach in the future, while last week it was reported the bank had launched an internal review over its alleged role in Fifa corruption.
The Guardian contacted HSBC to give it an opportunity to comment on or amend the information that its chief lawyer was conducting an internal probe of the bank’s Italian CEO in connection with Italy’s criminal investigation of the Generali Group affair, and that HSBC executives had been summoned to give evidence to the internal panel. The bank declined to amend or challenge any of those specific points.
“We have no comment on these allegations,” a spokesman said in a statement.
Last year, the Financial Times reported that Italian police raided HSBC’s offices in Milan as part of an investigation into a complex financial deal involving the bank and Italy’s largest insurance company, Generali.
HSBC’s spokesman refused to comment on whether the internal probe is related to the Italian police raid in February last year.
HSBC’s role in the unusual, multimillion-euro deal in 2007 – which involved Generali and a boutique private equity firm based in Vicenza – has been subject of reports in the Italian media in recent years.
The deal is among a handful of investments made by Generali’s former management which since 2013 have been scrutinised by both Italian authorities and the insurance company’s new management.
Writing in the Corriere della Sera newspaper in late 2012, the Italian senator and journalist Massimo Mucchetti wrote of the “dark side of dealings” between Generali and the private equity firm called Palladio Finanziaria, whose CEO was sentenced last year over an unrelated bribery scandal.
Mucchetti, along with others in the Italian press, reported that HSBC were involved in one of the deals now under scrutiny.
It was reported earlier this year that Generali’s former finance director faces an investigation by Italy’s financial police, the Guardia di Finanza, over his alleged involvement in certain investment vehicles controlled by Generali. No individuals have been arrested or charged in connection with the investigation to date.
Following the police raid on HSBC’s offices in Milan last year, La Repubblica newspaper reported that Generali’s new management had asked the bank for documents related to the 2007 deal between the bank and a Generali-controlled investment vehicle registered in the Bahamas.
HSBC refused to hand over the documents, according to the report.
The Guardian contacted Generali Group about the police investigation and allegations made in UK and Italian press. A spokesman for the group said “we have no comment to make”.
HSBC began operating in Milan in 1995. The subsidiary focuses on corporate finance and investment banking, serving “top-tier” customers rather than offering retail high street banking.
This article was written by Harry Davies and James Ball, for theguardian.com on Monday 8th June 2015 16.54 Europe/Londonguardian.co.uk © Guardian News and Media Limited 2010