Labour is keeping up the pressure over the UK government’s response to the HSBC banking scandal in Switzerland, accusing ministers of a deliberate policy of minimising prosecutions.

The party has asked fresh questions about the inquiries David Cameron made before appointing Stephen Green, the former HSBC chief executive and chairman, as a trade minister.

Ed Balls, the shadow chancellor, told BBC Radio 4’s The World at One, that “we’ve heard nothing from George Osborne” on the revelations for 48 hours, as he accused the government of being in a state of utter confusion.

He said the prime minister’s spokesman was claiming ministers knew nothing of the scandal, despite David Gauke, the Treasury minister, telling MPs on Monday that relevant information was in the public domain for years.



He said it was understandable that ministers did not know about the individual tax allegations, but, stating his own government experience, he claimed “it beggars belief” that HM Revenue & Customs would not have told the Treasury that there was a systemic problem with HSBC.

He pointed out that Gauke had felt free to comment on the tax affairs of Barclays but now claimed ignorance of the activities of HSBC in Switzerland.

Balls added it was staggering that Lord Green could be appointed to government without anyone discussing or knowing about these allegations and for ministers to claim they had only heard of the issue in the past 48 hours.

He said Labour wanted to know whether and when ministers were informed of the scale of the wrongdoing that has been exposed and what the HMRC strategy had been for collecting revenue and why there had been so few prosecutions.



Facebook Twitter Pinterest Shabana Mahmood has written to George Osborne to challenge him over lack of prosecutions following the HSBC scandal. Photograph: Martin Argles

In a letter to Osborne, the shadow Treasury minister Shabana Mahmood challenged the chancellor again to explain why there had been only one prosecution despite 1,000 people being challenged by HMRC over tax evasion or tax avoidance.



She wrote: “In November 2012 a senior HMRC official told the Times that the government had adopted ‘a selective prosecution policy’ towards cases related to HSBC. Later that month HMRC told the public accounts committee that ‘another dozen’ criminal prosecutions were to follow. However, there have been none since. It seems HMRC took a deliberate strategy to minimise rather than pursue prosecutions, which would explain why just £135m has been recouped.”



Mahmood also asked about the due diligence undertaken in government before Green was made trade minister.

Green was chairman of HSBC between 2006 and 2010. He was appointed a Conservative peer in September 2010 before becoming trade minister in January 2011.

Mahmood wrote: “Given that, as the financial secretary [to the Treasury] David Gauke said yesterday, the government was made aware of allegations of wrongdoing against HSBC in May 2010, eight months before Mr Green’s appointment to government, failure to ask probing questions would have to be seen as wilfully negligent. As chairman of the bank, Mr Green would either have been aware of malpractice or, if not, surely questions would arise as to why not and his fitness for such a senior government post of trade minister.”



She added that it was essential the public heard an explanation from Green and urged Osborne to press him to make a statement.



The opposition is also seeking details of the terms on which the French authorities passed the HSBC caseload to HMRC in May 2010, including a requirement that the information was not passed to other government authorities even if criminal offences such as money laundering were apparent. Gauke said the French had only just lifted restrictions on this information being passed to other authorities.

She concluded: “Without clarity over these matters, people can only conclude that the government has failed to act over the deeply serious matter of tackling tax avoidance and evasion.”