HSBC debacle highlights the need for deep financial reform

By staff writers
February 10, 2015

Proper regulation, accountability, transparency and rescaling are vital for the future of a banking sector that delivers for public good, say fair finance advocates in the light of the emerging HSBC scandal.

In response to widespread, documented reports that HSBC helped large corporate clients dodge tax, David Hillman, spokesperson for the Robin Hood Tax campaign, commented: "This exposes once again the rotten core of banking - it would be shocking if it weren't for the frequency with which we hear of such scandals.

"It shows a sector not content with dodging its own obligations, but also conniving to help the richest people shirk their responsibilities to society as well.

"It's clear our softly softly approach to the banking sector is wholly inadequate – it's time we ensured banks were working in the public's interest instead of conspiring against us."

On 9 February 2015, the International Consortium of Investigative Journalists (ICIJ), and a range of international media organisations from Le Monde and The Indian Express to the BBC and CBS, broke publicly a leak of documents from HSBC’s Swiss bank, dating back to 2005-2007 – before the 2008 global credit crunch.

"Much of this data has been in the hands of tax authorities for five years. Many of the questions raised relate to individuals and to particular regulators and governments – but there’s also a broader question that goes to the type of solutions that will address the broader loss of trust in tax authorities’ effectiveness and independence. Clear policy changes are needed to recover trust and accountability", said expert Alex Cobham from the Tax Justice Network last night.

Dave Hartnett was a HMRC manager who negotiated a notorious tax deal that granted HSBC’s bankers virtually guaranteed immunity from prosecution for any crimes they might have committed relating to tax fraud in Switzerland. Then in January 2013 he went on to work for HSBC.

"You couldn't make it up", commented tax expert, finance reformer and Quaker Richard Murphy of Tax Research UK. "Last year more than 200,000 people were prosecuted for not having a TV licence. More than fifty – many of them women – went to prison for it. But HMRC say it is not in the public interest to prosecute tax criminals and the bankers and accountants who set arrangements for them. How can that be?"

The scandal surrounding HSBC, following on from the extended RBS debacle documented by doyen financial journalist Ian Fraser in his book Shredded: Inside RBS, The Bank That Broke Britain, gives added weight to an initiative from a range of NGOs seeking a tax dodging bill for the UK within one hundred days of a new parliament following the 7 May General Election.

“Voters – and consumers – are demonstrating their anger about this issue every day. Whoever is in office after the next election needs to grasp this issue and change UK laws that allow companies avoid their responsibilities,” said Sir Michael Darrington, ex CEO of Greggs, recently.

The Robin Hood Tax campaign is a coalition of 119 UK organisations including Barnardo’s, Comic Relief, Oxfam, Friends of the Earth, Stamp Out Poverty, the TUC an the politics and beliefs think tank Ekklesia.

The RHTC has more than 250,000 supporters and is endorsed by over 1,000 economists and politicians from across the political spectrum. It is calling for financial transaction taxes to help tackle poverty and climate change, domestically and internationally.

The Tax Justice Network, to which Ekklesia is also affiliated, is an independent international network launched in 2003. It is dedicated to high-level research, analysis and advocacy in the field of international tax and the international aspects of financial regulation.

The NGO maps, analyses and explains the role of tax and the harmful impacts of tax evasion, tax avoidance, tax competition and tax havens. The world of offshore tax havens is a particular focus of its work.

"Tax justice has become a major moral and economic concern in recent months, and not before time," commented Simon Barrow, co-director of the politics and beliefs thinktank Ekklesia, which has been working on issues of financial justice since its inception in 2002.

"Proper regulation, the break-up of monopolies, thoroughgoing transparency, anti-tax haven rules, a review of tax breaks, proper deployment of the criminal and civil law, public investment in local banking, mutualism and cooperative finance are among the many measures needed – nationally and internationally – to bring the sector into line with the needs of people and planet."

* Report reveals extent of tax dodging by HSBC global clients: http://finance.yahoo.com/news/report-reveals-extent-tax-dodging-12303808...

* Tax Dodging Bill campaign: http://taxdodgingbill.org.uk

* Via Ekklesia - Tax Dodging Bill: time for change: http://www.ekklesia.co.uk/node/21385

* Robin Hood Tax Campaign: www.robinhoodtax.org.uk

* Tax Justice Network: http://www.taxjustice.net/

* Tax Research UK: http://www.taxresearch.org.uk/

* Ian Fraser on RBS: http://www.ianfraser.org/shredded/

* More General Election issues and commentary from Ekklesia: http://www.ekklesia.co.uk/generalelection2015

Although the views expressed in this article do not necessarily represent the views of Ekklesia, the article may reflect Ekklesia's values. If you use Ekklesia's news briefings please consider making a donation to sponsor Ekklesia's work here.