In early February 2015, the Washington based International Consortium of Investigative Journalists ("ICIJ") released its latest report on the depths of HSBC's involvement with clients in a wide array of illegal activities primarily aimed at hiding hundreds of millions of dollars from national tax authorities. The ICIJ had a team of journalists from 45 countries dig up information on secret bank accounts that were maintained for criminals, drug traffickers, tax dodgers, politicians and celebrities. The documents were initially obtained by the ICIJ from the national French newspaper, Le Monde. The documents demonstrate the nexus between international crime and legitimate business. The latest revelations significantly expand the public's knowledge of what tax authorities have likely known for several years regarding the scope of the HSBC's allegedly and potentially illegal and unethical behaviour.

There are a number of key findings of the journalists' latest Report and they are worth enumerating. According to this Report, HSBC Private Bank continued to offer banking services to clients who had been unfavourably named by the UN, in court documents and in the media as connected to arms trafficking, bribery and blood diamonds. HSBC also acted on behalf of discredited political figures such as former Egyptian President Hosni Mubarak, former Tunisian President Ben Ali and the current President of Syria, Bashar al-Assad. Perhaps the most galling revelation of this latest documentary analysis is the bank's repeated reassurance to its clients that it would not disclose details of accounts to national authorities, "even if the evidence suggested that the accounts were undeclared to tax authorities". Furthermore, the documents indicate that bank employees discussed with clients options to avoid the payment of tax in their home countries. (For a complete review of this report see — www.icij.org/swiss-leaks/bankinggiant- hsbc-sheltered-murky-cash-linked-to-dictators-and-arms.)

In pure numbers, there were 60,000 leaked files and the total value of monies held in the bank accounts exceeds an estimated $100 billion for more than 100,000 wealthy clients from around the globe (Martin Arnold, "Leaked HSBC files damage bank and lift veil on banking secrecy", Financial Times, February 9th, 2015).

Like everyone that becomes aware of this information, one's immediate reaction is to wonder what are governments "in the know" doing about this situation? The fact of the matter is that this information has been in the hands of a number of governments for sometime ... over years ... in some cases, as much as five years ... as the data, itself, goes back to the 2005 to 2007 period. This data was originally taken from HSBC by an IT engineer, Herve Falciani back in 2007 and was shared with the British and French governments in 2010. Apparently, the French government obtained a concession from the Brits that they would not share the data with other law enforcement agencies. However, we do know that the French Finance Minister at that time, Christine Lagarde (yes, that same person that now heads the IMF), prepared a list of names for other countries of people mentioned in the leaked documents supplied by Mr. Falciani. The list became known in some circles as the Lagarde List and it did lead to the arrest of tax evaders in Greece, Spain, the United States, Argentina and Belgium. However, in Great Britain, Her Majesty's Revenue and Customs authority has recovered more than 135 million pounds but only one individual has been prosecuted. And, as for HSBC ... well, Britain has yet to take legal action against the bank. You can draw your own conclusions.

What about Canada? How are we doing here with the pursuit of tax evaders, especially those with Swiss accounts that have been unearthed by whistleblowers, opportunists and simple thieves? I would suggest that we are doing poorly. To my knowledge, we have yet to see a successful prosecution involving tax evaders with, now not so hidden, accounts overseas. Yes, the Canada Revenue Agency has had success with the Voluntary Disclosure Program and yes, lots of money has been obtained through this program. Just like the current political will of the British government to catch and try tax evaders must be challenged, so too can the same questions be asked of our government. Does it have the political will? Do the agencies and departments have the necessary resources? And if the answers are yes, then where is the evidence because in the end, we, Canadians, all want the same thing. That is, everyone should pay their fair share of tax as determined by policy makers and instituted by the law.

Originally published by Taxes & Wealth Management, March 2015 | Issue 8-1.

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