by Graham Vanbergen
There are a number of interesting facts and figures emanating from the various offshore leaks of recent times. One of them involves Britain’s tax office HMRC, where there is a history of double dealing when it comes to tax haven transparency.
Last February HSBC’s Swiss banking arm got caught ‘red-handed’ assisting wealthy customers concealing millions of dollars of assets and then literally and quite unbelievably found to be handing out bricks of untraceable currency to them. HSBC was, at the same time, providing these clients the facilities and information needed to circumvent domestic tax authorities, according to a huge cache of leaked secret bank account files.
The leak clearly demonstrated that HSBC was providing account facilities to international criminals, corrupt businessmen and other high-risk individuals from all over the world, Britain included.
The leaked HSBC files, which covered the period 2005-2007, amounted, at the time, to the biggest banking leak in history, shining a very bright light on about 30,000 accounts holding almost $120bn (£78bn) of assets, an average of £2.6 million per account. After the files had been thoroughly checked out, the number of accounts held escalated to 130,000 individuals and organisations.
The revelations amplified calls for government’s the world over to take action and crackdown on offshore illegal tax havens. Politicians got on the bandwagon in an attempt to demonstrate they were on the side of law abiding citizens. HMRC recently issued a statement straight after the Panama papers scandal:
HMRC is committed to exposing and acting on financial wrongdoing and we relentlessly pursue tax evaders to ensure that they pay every penny of taxes and fines they owe”
The hypocrisy of politicians across Europe and America and HMRC in Britain demonstrates the level of lawlessness both are prepared to accept in every day life.
This is demonstrated best by the reactions of authorities when it came to the leak itself. The Swiss leak happened when Hervé Falciani, an IT expert at HSBC’s Swiss bank, hacked into its customer files in late 2007. He fled to France, with the Swiss police in hot pursuit, for breaching Switzerland’s rigid bank secrecy laws. The French authorities apprehended him once over the border and it appeared Falciani was done for. However, when the French authorities realised how many thousands of French citizens, especially wealthy and powerful ones, were named in the leak, they decided not to extradite him back to Switzerland. The French then defied the European Convention on Extradition much to the anger of the Swiss.
Falciani now lives comfortably under the full protection of the French authorities even though last November a Swiss court convicted him for aggravated industrial espionage, data theft and violation of commercial and banking secrecy. The Swiss were clearly aggrieved as they handed out the longest sentence ever demanded by the confederation’s public ministry in a case of banking data theft. As Falciani was not present, the trial was also the first ever conducted by the country’s federal criminal court in which the accused had not been present.
HMRC, Britain’s tax authority, also received a list from the same Swiss leaks in 2010. From which, it was able to identify the details of more than 1,000 British tax evaders. Given the serious nature of tax evasion and mounting public pressure you would have thought that HMRC could have prosecuted more than the one person it did. HMRC never revealed any of the 1,000 names other than that one scape-goat, no-one else was prosecuted and no legal action taken against HSBC.
Indeed, Downing Street was forced to defend David Cameron’s appointment of HSBC chairman, Stephen Green as trade minister in 2011 after the Swiss leaks revelations. Especially as HMRC had a cache of evidence of the scandal the year before his appointment. During Green’s 5-year tenure over HSBC, during which he was purportedly paid £25million, Bloomberg Markets accused the bank of laundering cash for state sponsored terrorists and being involved in handing cash to the Afghan Taliban amongst many other financial crimes.
Lord Green of Hurstpierpoint is now a tory peer in the House of Lords.
Back in 2001, Britain’s chancellor of the exchequer of the time, Alistair Darling, authorised a privatisation deal by selling around 600 of HMRC’s buildings. One could argue that selling off state owned assets only to be charged with exponentially rising rent is a bad deal for the taxpayer and makes no common sense whatsoever. In the meantime this story goes from farce to tradegy.
At the time HMRC said it had signed a private finance initiative (PFI) deal with the UK-registered Mapeley Limited, transferring “ownership and management” of the entire estate. The truth was that HMRC had sold the properties to a Bermuda-based sister company called Mapeley Steps Limited for £220m, while paying rent to a UK company called Mapeley Steps Contractors Limited. The former off-shored huge profits, the latter posted losses to HMRC and therefore paid no taxes to the treasury. This in itself should be a scandal.
Inland Revenue said that the precise details of contract structure that bought the estate was not revealed until late into the process. HMRC also stated that their, at best misleading press release, was simply a mistake – “There was no intention to mislead.”
I am at a loss to understand how a property portfolio of 600 buildings was worth only £220 million, an average price of just £365,000 even then. Since then of course, property values have at least doubled in the UK but trebled in London and rental prices have rocketed.
As mentioned, the sale of HMRC’s property estate went to Bermuda-based Mapeley Holdings Limited, a company ultimately owned by George Soros and US group Fortress Investment, which describes itself as an “alternative investment” company. This was the same man who broke the Bank of England by shorting Britain’s currency in 1993 on what is now famously known as ‘Black Wednesday‘ which personally made him $1.5billion in less than a month, whilst at the same time costing the treasury and therefore the taxpayer another £3.4 billion.
In an irony totally lost on our politicians, Britain sold an entire state owned property portfolio to become a tenant of the man who pillaged the country years earlier, who has located that portfolio off-shore to ensure no tax is paid to the treasury. In the last nine months of 2001, HMRC paid £165 million in rent to Maperley. Today, that annual rent bill likely to exceed £400 million.
And when you wonder why such unbelievable acts of stupidity, incompetence or criminality occurs, you then find out one last fact that will make your eyes roll as the penny drops, and this is no better explained than from zerohedge:
With all the anti-one-percenter rhetoric and tax-evading-evil-doer narratives spewing forth from the mainstream media mouthpieces of the establishment since The Panama Papers were exposed for all to see, it may come as a surprise to some to find out which cohort of the elites are the most populous among the tax-haven-creating documents…
…The Politicians themselves!