Columnists Australia

Business/Robbery etc

The leaks that sank the tax havens

14 March 2015

9:00 AM

14 March 2015

9:00 AM

Bribery-prone foreign bank employees and do-gooder whistleblowers, we salute you! They, along with some long overdue international tax agreements, are at last bringing a sudden and, for many Australians an expensive, end to their risk-free access to the world’s illegal tax havens. With the international media (and Tax offices) inundated with unauthorised leaks from within the banks that have been making a motza out of this unscrupulous trade, rich-list tax dodgers should heed the warning of savvy private-sector-recruited new Australian Tax Commissioner, Chris Jordan, that ‘You can’t trust anyone anymore’ when trying to do a tax haven deal. Announcing the collection of $600 million in tax revenue from the 5,600 taxpayers who responded to an amnesty extended to those with ‘possibly illegal’ offshore tax evasion schemes who voluntarily paid their back taxes plus interest (but no penalties), Jordan foresees an end to the world’s illegal tax havens. This he attributes to internal bank leaks as well as international pressure on tax-haven nations like Switzerland, Cayman Islands, Bermuda and Luxemburg. And for Australia’s ATO there is more cash to come; Jordan says that a new tranche of leaks from a European bank has been handed to Australia by a foreign government, implicating 100 Australians with Swiss bank accounts, 14 of whom are now being investigated by the ATO. In this case, under the recently signed tax treaty with Switzerland, Australian officials went there to formally request the details. To those wealthy individuals still hiding money in foreign bank accounts, ‘it’s just a matter of time’ he says.

It’s not only high-minded whistleblowers who have brought about the destruction of the tax-haven code of silence. Paying cash for inside information is a powerful incentive for disaffected employees, crooked bank workers who have been caught as they made off with hot funds, those willing to sell confidential information ‘in a good cause’ and even IT contractors with the capacity to access valuable information. Jordan recounts that the US has paid multi-millions of dollars for inside information. So far Australia has remained pure, but benefits from other countries’ employee bribes.


Of the banks operating here, HSBC features unfavourably. In my days in the finance industry, HSBC (then the Hongkong and Shanghai Banking Corporation) was colloquially known as the Honkers and Shankers. Today the more appropriate Spoonerism would be the Shonkers and Hankers – full of shonky deals and hankering after a restoration of its old respectability. Last month, HSBC described the activities of its Swiss private bank as ‘a source of shame’ and in recent months, the ATO has been recovering $30 million in revenue from what the Australian describes as ‘the high profile leaks of HSBC Swiss bank account holders’. There remains $1.25 billion in HSBC’s Swiss bank that is linked to Australians, to whom the ATO will no doubt be talking. But HSBC’s problems are not only in Australia; according to the Wall Street Journal ‘the bank’s once solid reputation has taken a battering’. Apart from settling with US authorities over claims that HSBC laundered drug-trafficking money, the bank is now putting aside $US1.2 billion to deal with allegations of rigging foreign exchange markets. The WSJ reports ‘a cache of client information was made public via the media describing ways HSBC allegedly advised clients on avoiding paying taxes and listing clients who are on US sanctions lists or were ousted in the Arab Spring. Swiss prosecutors raided HSBC’s Swiss offices and a British regulator is also investigating’. It has been fined for miss-selling payment-protection insurance and interest rate swaps in the UK, with investigations proceeding into the alleged fixing of LIBOR, the rate at which banks lend each other short term money. In February George Osborne told Parliament allegations against HSBC emerging from documents were ‘extremely serious’.

The local crowning indignity, however, came last year when, after many years sponsoring the famously almost-but-never-quite-successful NSW Rugby Waratahs, HSBC gave way to Volvo resulting in the ‘Tahs at last winning the Super Rugby competition for the first time ever. The ‘curse of the ‘Tahs’ departed with the sponsor; it is now completely at home at HSBC.

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