Off Piste

Following on from my digression a week or two back regarding the Greek reparation issue, I feel the urge to go off piste again and this time it's the emerging issue of tax evasion, HSBC, Swiss bank accounts and rich people who either avoid or evade tax, or just don't bother paying any at all. This on the BBC website:- 

"Tax inspectors failed to prosecute a wealthy tax cheat who did not submit returns or pay any tax for 24 years, documents seen by BBC Panorama show. HM Revenue and Customs had concluded that Paul Bloomfield, a property investor involved in the redevelopment of Wembley Stadium, was a UK resident and liable for 20 years' tax. Mr Bloomfield was on a list of HSBC clients with secret Swiss accounts."

It has to be hats off to the BBC for once and Panorama for helping to open up this particular can of worms. A number of us cynics were beginning to think 'Auntie' was losing the plot and might be succumbing to some vaguely implied government pressure not to rock the boat too much, or de-criminalising non-payment of the Broadcasting Licence just might get pushed up the agenda sooner rather than later. 

We needn't have worried. It may just be coincidence, but that particular hot potato has just been pushed into the long grass (sorry) and will now be left to the next Charter Renewal in 2016. Of course it's right to de-criminalise, but potentially will result in a significant drop in income for the BBC and will open up all kinds of claims that some of the licence fee should go to other broadcasters in order to help fund the public service elements of their offerings. 

Anyway, I'd love to have been a fly on the wall during editorial meetings when some bright spark or other reminded the throng of this slight problem:-

HSBC files: Rona Fairhead declines to answer queries about activities at Swiss bank

"Rona Fairhead, the current head of the BBC Trust and chair of HSBC’s audit committee at the time covered by the HSBC files, has declined to respond to queries about how much she knew about activities at the bank’s Swiss subsidiary.

Fairhead, who took the chair of the BBC’s governing board in 2014, has been a non-executive director of HSBC since 2004, and was made the chair of the audit and risk committee – which bore responsibility for governance and compliance across the global bank – in May 2007."

As Home Secretary Theresa May knows to her cost, the Establishment is all-pervasive in Britain. Anyway, back to HSBC or the Hong Kong and Shanghai Banking Corporation. A British bank, second largest in the world, but having its roots in Hong Kong, only moving its HQ to London in 1993 in order to gobble up Midland Bank and before the Chinese took back control of the colony in 1997. Interestingly, HSBC did not need a government bail-out during the banking crisis and were quite sniffy about such matters, reputedly being only a 'boring' bank:-

"Michael Geoghegan has sprung to the defence of HSBC suggesting that the company's more conservative lending policies over the years have now proved to be perfect with HSBC relatively untouched in balance sheet terms from the ongoing worldwide slowdown. He also suggested that the UK government's £37 billion bailout package will encourage banks to return to more risky lending operations in due course as they now have the added backup of government assistance.

For many years HSBC was seen as one of the most "boring" in the sector but many investors do not mind boring investments in the current market conditions. High-growth banks such as the Royal Bank of Scotland and HBOS have really suffered over the last 12 months and many believe they are paying the price for above average risk taking over the last few years.

This is the first time that HSBC has commented upon the bailout, in which they were not involved, suggesting that rival banks have now been refloated and market conditions and competition do not reflect the underlying strength of the banks in question. Even though HSBC yesterday announced a number of substantial write-downs these were very much in relation to the worldwide economic slowdown as opposed to the credit crunch." 

Well, HSBC might have been a 'boring' bank, but now we know quite a bit more about their Swiss branch, possibly it's a little clearer why they didn't need any government cash. This from wikipedia:-

"In February 2015 the International Consortium of Investigative Journalists released information about the business conduct of HSBC under the title Swiss Leaks based on the 2007 hacked HSBC account records from whistleblower Hervé Falciani. The ICIJ alleges that the bank profited from doing business with dictators, tax evaders, dealers of blood diamonds, arms dealers and other clients."

If it all wasn't so deadly serious it would be laughable given this from January last year on the BBC website:-

"Some HSBC customers have been prevented from withdrawing large amounts of cash because they could not provide evidence of why they wanted it, the BBC has learnt. Listeners have told Radio 4's Money Box they were stopped from withdrawing amounts ranging from £5,000 to £10,000. HSBC admitted it has not informed customers of the change in policy, which was implemented in November.

Stephen Cotton went to his local HSBC branch this month to withdraw £7,000 from his instant access savings account to pay back a loan from his mother. A year before, he had withdrawn a larger sum in cash from HSBC without a problem. But this time it was different, as he told Money Box: "When we presented them with the withdrawal slip, they declined to give us the money because we could not provide them with a satisfactory explanation for what the money was for. They wanted a letter from the person involved."

It's quite obvious that David Cameron realises that the emerging story about 'tax cheats' is potentially quite toxic, especially the fact that they avoid prosecution by HM Revenue and Customs, in stark contrast to the fate of 'benefit cheats'. Hence this mornings attempt to move the news agenda onto the obese and ill and the threat to remove their benefits if they don't take up 'treatment'. This from the BBC website:-

Obese could lose benefits if they refuse treatment - PM

"People who cannot work because they are obese or have alcohol or drug problems could have their sickness benefits cut if they refuse treatment, the PM says. David Cameron has launched a review of the current system, which he says fails to encourage people with long-term, treatable issues to get medical help.

Some 100,000 people with such conditions claim Employment and Support Allowance (ESA), the government says. Labour said the policy would do nothing to help people to get off benefits. Campaigners said it was "naive" to think overweight people did not want to change their lives. There is currently no requirement for people with alcohol, drug or weight-related health problems to undertake treatment."

It's a favourite ploy of the Tories to attack the vulnerable of course. This is from the BBC website on 21st April 2011:- 

PM vows action to get addicts on benefits into work

"People on benefits due to drink and drug problems will be expected to work if they can, David Cameron has said. He promised "tough action" after government figures showed 80,000 people claimed incapacity benefits due to drink, drug or weight-related issues.

While it was wrong to leave people "trapped in long-term poverty", those unable to work would be supported. Labour said they backed efforts to get people off benefits but it was a "waste of time" if there were not enough jobs. The government wants to re-assess all current incapacity benefit claimants by 2014, including the 81,670 people claiming the allowance as a result of health problems stemming from alcohol, drug and obesity conditions."

I don't think it's going to work this time though because, just like the MP's expenses scandal, the HSBC tax evasion story has a lot more mileage in it yet, especially as the names begin to emerge and we discover more about the HMRC 'softly-softly' approach to the problem. You just can't make this stuff up:-

HMRC failed to prosecute tycoon over tax evasion

"Mr Bloomfield enjoyed luxury homes, a boat, helicopter and private jet. His personal fortune was estimated at £60m in 2006 but when the taxman finally caught up with him five years later Mr Bloomfield was not prosecuted.

His is the most extreme case of tax evasion to emerge following the HSBC scandal and is likely to lead to further questions about HMRC's treatment of wealthy tax cheats. The latest Panorama revelations came from the minutes of two meetings between Mr Bloomfield and HMRC investigators in 2011.

Mr Bloomfield told HMRC that, despite his lavish lifestyle, he did not own any property or have any income. The notes of the meeting say: "Bloomfield advised that he has never paid a bill and never received a bill and when he needed money it was sent to him."

"When pressed, Bloomfield confirmed that his living expenses are paid from wherever there is money. In his words there is a box somewhere which contains money and he arranges for the bills to be paid." Mr Bloomfield claimed an offshore company paid his rent and that another company paid for "the use of a Boeing 757, the use of a boat and a helicopter".

Some of the cash came from a Gibraltarian law firm, Marrache and Co, which closed in 2010 after the three brothers who ran the firm were arrested. Benjamin, Isaac and Solomon Marrache were jailed for fraud last year. Mr Bloomfield told HMRC that at one point he had a credit card from Marrache which allowed him to draw down £15,000 a month for living expenses. He claimed he had lived overseas, as well as in the UK, but the tax investigator concluded that Mr Bloomfield was resident in the UK and was liable for tax for the past 20 years.

The documents show the taxman also missed a straightforward opportunity to prove Mr Bloomfield's dishonesty. At one of the meetings, he told HMRC that "he had never had an account in an offshore bank". But the leaked HSBC files show Mr Bloomfield had an account at HSBC's Private Bank in Geneva in 1993. The taxman already had the HSBC files at the time of Mr Bloomfield's interview - so it should have been easy to show that he was lying."

Meanwhile heads have started to roll. Readers will recall Lord Green got a Peerage and minister's job from his mate David Cameron:-

Former HSBC head Lord Green has stepped down as chairman of the advisory council for banking body, The City UK.

"The BBC understands it was Lord Green's decision to resign due to the ongoing media interest in him. The move follows allegations made in a BBC Panorama report that HSBC's Swiss private bank may have helped wealthy clients avoid or evade tax.

Lord Green, who became HSBC chief executive in 2003 and was chairman from 2006 to 2010, has not commented. He was later made a Conservative peer and served as a trade minister until 2013. Chairman of The City UK's board, Sir Gerry Grimstone, said: "Stephen Green is a man of great personal integrity who has given huge service to his country and the City."

Finally, we can always rely on Margaret Hodge, Chair of the Public Accounts Committee to put the boot in:-

Margaret Hodge batters HMRC over tax evasion claims

‘I want to put a BOMB under you guys!’ Her principal victim was Lin Homer, Permanent Secretary at HMRC. A small, drawn, gaunt-looking creature, vaguely resembling an exhausted fieldmouse, Ms Homer endured the interrogation long-sufferingly, her sole weapon a tone of quivering passive aggression. “I would just ask you to understand… As I have already said… As I’ve said repeatedly…”

“Mrs Hodge” remained unimpressed. HMRC was “failing to serve the British tax-payer”. It should have done more to tackle British citizens hiding money in Swiss bank accounts. Its lack of urgency sent out “a terrible message”. 

“I can’t begin for the LIFE of me to understand that pathetic response, quite frankly!” she snapped. And: “Honestly, I want to put a BOMB under you guys!” And: “Are you telling me to BELIEVE that?” And: “That’s a different QUESTION!”

Hang on didn't Lin Homer used to run the Borders Agency?

'A catastrophic leadership failure': MPs launch scathing attack against ex-UKBA chief Lin Homer

"An influential group of MPs launched a scathing attack against the head of Britain's tax office today for her “catastrophic leadership failure” when she was in charge of the country's border controls.The Home Affairs select committee said it was "astounded" that Lin Homer was promoted to the £180,000-a-year role of chief executive of HM Revenue & Customs after her performance during the five years she spent at the top of the UK Border Agency (UKBA). But Ms Homer said it was "unfair" to blame her for matters that occurred after she left the Agency."