Scores of its Swiss clients are already under criminal investigation

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Swiss banks often get mentioned in crime thrillers. They are depicted as shady havens for James Bond types, super-villains and African dictators. Outside the pages of fiction, however, it has been virtually impossible until now to get at the reality.

Rigid laws protecting bank secrecy have attracted billions from all over the world. Canny Swiss bankers charged high prices in return for their silence.

HSBC, headquartered in Britain and led at the time by Sir John Bond, decided to get in on this lucrative act in 1999. It bought up an existing Swiss bank which chased fresh customers.

But details of the Swiss operation’s 30,000 accounts were hacked in 2007 by its IT expert, Herve Falciani, who fled with them to France. The files have since been reconstructed and their contents confidentially distributed around the world by French tax authorities.

As one of German dramatist Bertolt Brecht’s characters famously said in The Threepenny Opera: “What is robbing a bank compared to founding one?” The leaked files, as the bank now concedes, reveal considerable wrongdoing. But does that make it right for The Guardian to expose the names of HSBC’s Swiss-account holders? Not all HSBC’s Swiss private bank customers are public figures and many are not dishonest. Some want secrecy for family reasons. The files disclose, for example, how a Finnish teacher set out to hide money from her husband. The history of the Holocaust may explain why some Israeli clients like their wealth to be in a safe place. One British banker even told us that he hid £5 million in his Swiss Bank account merely in order to conceal from colleagues the size of his bonus. The Guardian is not naming such individuals. However, others emerge, according to the files, as would-be — though legal — tax avoiders of one kind or another, who would have deprived the U.K. and other countries of revenue to provide public services. The then head of the U.K. tax authority, Dave Hartnett, told an accountants’ gathering in 2011 that most Swiss-accountholders were suspected tax-dodgers: “Potentially innocent people are relatively small in number — maybe no more than 20% of U.K. residents investing in Switzerland.” He told parliament that the thousands of names in the leaked HSBC data were “all ripe for investigation”.

So, the public should be entitled to know what has been going on in Switzerland. But the full range of behaviour also deserves to be made clear. Some rich clients merely try to use artificial loopholes — for example, offshore trusts or historic quirks such as Britain’s notorious “non-dom” tax breaks. To critics, they may have sometimes exploited or even stretched the law, but they have not broken it.

Such typical British businessmen such as Rod Aldridge and Paul Pindar, respectively founder and former chief executive of Capita, grew fat on government contracts while setting up Swiss-based trusts with HSBC that were perfectly legal (and ironically, turned out in the end not to have saved them any tax).

Pindar put £16m of his shares offshore, but when regulations tightened, he abandoned Switzerland. The bank recorded: “He mentioned that the tax laws in the U.K. have much changed to his disadvantage and that he could no longer save much taxes with his two trusts. He was only paying fees for not getting much advantage.” Pindar told The Guardian that the device “was a very common pre-public flotation practice 25 years ago”, but he had saved nothing in the event: “Dissolving the trusts created a substantial tax liability which I paid in full and on time.” Aldridge says his similar move in 1988, setting up Swiss structures worth up to £60m, was also “a common pre-flotation measure”. It did not save him capital gains tax, because the regulations were later changed. Neither man ever broke any rules, nor did they in fact avoid any tax.

Other clients of the Swiss operation, however, may have been downright tax cheats, holding secret accounts, while some carried cash out of their bank’s Geneva doors in bundles of non-Swiss currency that could not be spent locally.

Following the HSBC leak, scores of its Swiss clients are already under criminal investigation, in Britain and globally. Many others have paid civil penalties. Only one Briton has previously been publicly identified — Michael Shanly, a millionaire property developer, whose failure to pay inheritance tax on his late mother’s £800,000 has cost him £850,000 in criminal penalties. Other clients of HSBC now turn out to be unsavoury characters, attracted by the secrecy on offer. Evidence exists that some may have been smuggling drugs, handling bribes, committing fraud, helping to finance terrorists, or looting their own countries. Others have done nothing unlawful but have kept untaxed money in Switzerland while making political donations in Britain or the United States.

In these cases, The Guardian believes the public has a right to know.

(c) Guardian News & Media Ltd, 2015