In Like Flint - PAC's Chat With HSBC and HMRC

PAC had a busy day yesterday, having a wee chat with the "great and the good" of both HSBC and HMRC.

HSBC chief executive Stuart Gulliver apologised to MPs for "unacceptable" practices at HSBC's Swiss subsidiary. Alongside Gulliver was HSBC chairman Douglas Flint.

Gulliver also defended his personal decision to be paid by the bank via a Panamanian company with an account in the Swiss private bank, insisting that the arrangement was not designed to avoid tax, but to protect his privacy against other members of staff who were able to view employees' accounts via the company computer system.

Gulliver is quoted by the Telegraph:

"There was no tax advantage or purpose whatsoever.

I would like to put on the record an apology from both myself and Douglas for the unacceptable events that took place at our private bank in Switzerland in the mid-2000s. It is an apology we would like to make to you, our customers, our shareholders and the public at large. 

It clearly was unacceptable. We very much regret this, and it has damaged HSBC's reputation."

Asked precisely what he was apologising for, Gulliver said:

"The lack of controls and practices which now - judged with the benefit of hindsight - we would not be at all comfortable with if they were happening today, and which have clearly resulted in damage to trust and confidence in HSBC and created further reputational damage to our firm and have therefore hurt clients, customers, shareholders, our staff and people at large." 

Flint told the Treasury select committee that he blamed the failings at the Swiss unit on its management, and said secrecy surrounding banking in the country made it difficult for him to have a direct line of sight of what has happening at the bank (funny way to run a bank!). Chairman of the bank since the end of 2010, Flint was finance director at the time the Swiss subsidiary was purchased by HSBC.

Homer, for her part, admitted that she is concerned by the perception that HMRC is soft on the rich and tough on the poor. The fact is that low hanging fruit, unprotected by lawyers and tax professionals, are an easy target for HMRC.

John Mann asked her:

"What would you do if you discovered any parliamentarians were dodging tax?"

Lin Homer replied that she’d have to check “whether I had an obligation, or an ability, to refer” them to the parliamentary authorities.

She went on to assure PAC that where there are people in positions of responsibility, HMRC does act.

Homer repeated that HMRC doesn’t expect a ‘waterfall’ of new prosecutions, even though it can now share the Swiss data with other agencies.

Homer denied that Hartnett has any inside information on HSBC’s Swiss bank, or HMRC’s systems etc etc.

Here is the transcript.

So everything is basically fine, nothing to see here move along please!

Tax does have to be taxing.

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