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It's all in the Genes
HSBC files: Swiss bank hid money for suspected criminals
Thursday 12 February 2015 18.21 GMT
Last modified on Thursday 23 April 2015 14.48 BST
HSBC’s Swiss bank concealed large sums of money for people facing
allegations of serious wrongdoing, including drug-running, corruption
and money laundering, leaked files reveal.
Despite being legally obliged since 1998 to make special checks on
high-risk customers, the bank provided accounts for clients implicated
in six notorious scandals in Africa, including Kenya’s biggest
corruption case, blood diamond trading and several corrupt military
sales.
HSBC also held assets for bankers accused of looting funds from former
Soviet states, while alleged crimes by other account holders include
bribery at Malta’s state oil company, cocaine smuggling from the
Dominican Republic and the doping of professional cyclists in Spain.
The Swiss bank also held accounts for “politically exposed people” – defined as senior political figures or their relatives at heightened
risk of involvement in corruption, money laundering, or avoiding
international sanctions – with little evidence of any extra scrutiny
of their activities.
The bank’s involvement varies from case to case, the files show.
Sometimes, the secret accounts appear to have been directly used for
allegedly corrupt transactions. In others, HSBC continued to provide
banking services to individuals facing public allegations of
wrongdoing. Other examples merely highlight how the secrecy of the
Swiss banking system attracted people engaged in wrongdoing.
Presented with this evidence by the Guardian, HSBC now admits that
after it purchased the Geneva bank in 1999 “too many … high-risk
accounts were maintained” and the “compliance culture and standard of
due diligence” were low.
The bank refused to discuss the details of individual clients, but
said it had taken action to address the problems. It had closed the
accounts of people who could not demonstrate compliance with tax
obligations, stopped offering accounts in jurisdictions where proper
due diligence was impossible and tightened up its “know your customer”
and anti-money laundering procedures to “ensure a more complete
consideration of a new client’s source of wealth”.
Fugitives, aides and bagmen: HSBC's 'politically exposed' clients
David Leigh, James Ball, Juliette Garside and David Pegg
Read more
This is not the first time HSBC has been criticised for failing to
check its clients properly. In the US, a 2012 US Senate committee
report was highly critical of HSBC’s poor money laundering controls,
accusing managers of disregarding links to terrorist financing. They
singled out the group’s dealings with wealthy Saudis.
One of the most striking cases detailed in the leaked Swiss files
involves a Kenyan businessman involved in corruption probes whose
accounts were kept open by HSBC despite him being named in a highly
publicised anti-corruption report in 2006.
Investigator John Githongo, who later fled Kenya after ministers
failed to support him, alleged the man was the beneficiary of
contracts signed off by Kenyan politicians.
Notes on the account of Deepak Kamani show bankers discussing
“compliance” issues with an account he shared with a relative but
opting to keep it open.
“We spent some time discussing the ‘compliance’ issue facing this account. The clients again reiterated that there was no substance to
the press reports that have been appearing in the press over the past
nine months. They mentioned that only UBS and HSBC had raised the
compliance issue in any meaningful way,” the notes state.
“UBS have now closed the accounts for the client and the clients
seemed pretty upset with this development. We explained to the clients
that while we had discussed with compliance the issue, we continue to
operate the account as has been normal over the past three years.”
Swiss and Kenyan investigators are still probing the deals. Requests
for comment to Kamani were not returned.
In another African corruption case, HSBC handled £20m in accounts
controlled by Jeffrey Tesler, a small-scale London lawyer. Tesler, who
was eventually jailed in the US, was fronting for the then president
of Nigeria, General Sani Abacha, and other local politicians in a
corrupt gas plant deal.
Tesler’s HSBC account for Tristar Investments Ltd had an obscure
address in the Seychelles. He was publicly named as a bribery suspect
in 2004. But in 2007, HSBC was still operating Tristar and Tesler
family accounts.
Jeffrey Tesler, photographed in 2010.
Jeffrey Tesler, photographed in 2010. Photograph: Stefan Rousseau/PA
In Malta, Tancred Tabone, ex-head of the state oil company, was
charged in 2013 with alleged corruption dating back to 2005. Two HSBC
accounts are named in the allegations.
HSBC also set up a Jersey offshore trust into which Tabone deposited
$1m (£650,000). He planned to transfer in more funds, the bank wrote enthusiastically, noting “the potential is evaluated [at] over
US$10m”, noting Tabone was “personally known by … HSBC Malta”.
Tabone’s lawyer said: “Insofar as the criminal proceedings are
concerned, he denies all charges against him.” She added that Tabone
has “formally authorised the Swiss authorities to provide all that information … His fiscal affairs in that respect are in order.”
The HSBC files also contain details of accounts held by other
unsavoury individuals engaged in a broad range of activity.
Diamonds
The files show the bank provided services to a circle of African
diamond traders who broke the law. They included Emmanuel Shallop,
jailed for six years by an Antwerp court for importing illicit Angolan
conflict diamonds in 2001-02. Shallop, also alleged to have dealt with
Sierra Leone rebels, hid almost £2m in an HSBC account. Shallop had
been named in connection with illicit diamond trading activities as
early as 2001, in a UN report on conflict diamonds discussing his
receiving payments “through a bank in Geneva”.
When he visited Geneva to switch cash into a Dubai-registered entity
in 2005, HSBC openly noted: “The customer is currently being very
careful, because he is under pressure from the Belgian fiscal
authorities investigating his activities in the field of diamond tax evasion.”
HSBC also provided general accounts for directors of Omega Diamonds, a
Belgian firm named in the same 2001 UN report. Two directors’ accounts contained at least £860,000 and £1.75m respectively. A third Omega shareholder was linked to general accounts with values totalling £47m.
The company paid $195m (£126m) to Belgian tax authorities in March
2013 after being found to have shifted profits from the import of
misvalued diamonds from Congolese mines and Angola into Dubai.
Their lawyers say there was a civil, not a criminal, settlement of the
tax dispute, which was with the Omega firm, not any of the three
individuals.
“The tax settlement does not refer to or constitute any illicit
activity on the part of Omega Diamonds and is based on the
international principles of profit allocation,” the lawyers said. They
added that neither the directors nor Omega “have admitted or been
found guilty of any criminal wrongdoing, and the settlement with the
Belgian authorities does not constitute any admission of criminal
guilt.”
Belgian official sources say HSBC has now entirely shut down its
special unit previously targeting diamond dealers, called Medis.
Banks
A number of east European bankers accused of misconduct were given
Swiss accounts by HSBC. They include Vladimir Antonov, currently
fighting extradition from the UK, who is accused of looting £400m from
the Lithuanian Snoras bank.
HSBC files record Antonov as being “in negotiation to buy an executive jet”. Snoras assets of $63m (£41m) were also shifted into to an HSBC account, according to the leaked files. They were then used to back a
loan to Antonov’s own Cyprus company, Panatrones Holdings. His lawyers
said: “Mr Antonov is subject to several restraining orders and … injunctions.” They added that he held his Swiss accounts “for business reasons and because Swiss banks provide a better level of client care
and are much more flexible than any UK banks”.
Margulan Seisembayev, a Kazakh banker, was accused by the Alliance
bank in 2011 of misusing its assets, allegedly in an attempt to boost
the bank’s share price. Offshore entities with HSBC Swiss accounts
were allegedly used to obtain loans, and up to $184m was held by HSBC
in Switzerland. Alliance announced in 2012 it would seek to recover
its assets in civil proceedings both in Kazakhstan and overseas.
Seisembayev did not respond to requests for comment.
A third banker is Sergey Maksimov, from Ukraine, who has faced
attempts by the VAB bank in the UK and the US to recover $78m
following allegations that he arranged loans to his own connected
companies. Maksimov had almost $1.5m in an HSBC account in Geneva. His
lawyer told us: “My understanding is that there are no criminal
charges.”
In Greece, prominent businessman Lavrentis Lavrentiadis is facing
trial in absentia for allegedly looting loans from the Proton bank and
for attempting to murder a business associate with a bomb in a flower
pot.
He was provided with two HSBC Swiss accounts worth up to $4m, for
entities registered in the Bahamas and in the remote Pacific island of
Niue.
Arms dealers
HSBC accounts also played a role in the notorious BAE corruption cases involving arms deals.
Turki bin Nasser, a member of the ruling Saudi family, and his
“business manager”, the Lebanese politician Mohammad Safadi, had more
than $60m of assets in HSBC accounts. Prince Turki, as head of the
Saudi air force, was named in 2004 as the biggest secret beneficiary
of a $92m BAE slush fund.
The arms giant oiled the wheels of the vast al-Yamamah arms deal with
gifts, cars, holidays and cash. The UK’s Serious Fraud Office
attempted in 2006 to access the Swiss accounts held by Safadi and
others, but that led to a scandal when the then prime minister, Tony
Blair, ordered the criminal investigation closed down.
In another case, BAE secretly passed $10m via HSBC to a local
middleman, Shailesh Vithlani, to obtain a radar contract. “It stank
and was always obvious that this useless project was corrupt,”
protested Claire Short, the UK’s development secretary at the time.
BAE moved money into Vithlani’s Panama entity, Envers Trading
Corporation. As the cash flowed in, an HSBC manager met Vithlani in
Dar es Salaam, Tanzania, and advised him how best to invest it. BAE
was subsequently convicted of accounting offences in relation to the
Vithlani transactions, and paid a £30m ($46m) penalty.
In a third case, Fana Hlongwane – close to South Africa’s ANC
government – was named in 2008 by the Serious Fraud Office as a
confidential BAE agent. The SFO said in published statements sent to
South African prosecutors that Hlongwane received BAE money through
disguised offshore intermediaries to promote arms deals. The South
African government decided not to pursue the case.
HSBC is now revealed to have operated Swiss accounts for Hlongwane as
an agent for three other US multinational companies. They contained
more than $10m in 2006.
In 2014, Hlongwane provided an affidavit to an inquiry into the
contracts, denying “any evidence implicating myself and/or my
companies in any corruption or wrongdoing”.
In a separate arms case unrelated to BAE, an Italian businessman of
Syrian origin, Fouzi Hadj, was accused in 2003 by the UN and Human
Rights Watch of gun-running for Liberian rebels.
His Guinean company, Katex Mines, had an HSBC account in which assets
of more than $7m were hidden. The account was not blocked until May
2005 and closed in 2006. Fouzi was arrested in 2011 and sentenced to
six years in Italy for a separate fraud.
Drugs
Drug-running was carried out by some HSBC clients, both in the
Caribbean and in Mexico.
Arturo del Tiempo Marques was a Spanish property developer operating
in the Dominican Republic and a valued HSBC customer controlling up to
19 separate accounts, which in 2006-07 contained assets equivalent to
£2.5m.
However, one of his shipping containers of construction materials,
sent from the Dominican Republic to Spain, was found in 2010 to
contain more than a tonne of cocaine, hidden behind a false panel. He
is currently serving a seven-year prison sentence in Spain.
Marques was one of a number of HSBC customers regularly making large
cash withdrawals from the Swiss bank. In May 2005, he withdrew €55,000 (£40,000) in cash. Just two weeks later in June he took out $50,000 (£32,000). A few months later in December that year, he took out still
more bricks of cash, totalling €60,000.
HSBC files show how Swiss bank helped clients dodge taxes and hide
millions
Data in massive cache of leaked secret bank account files lifts lid on questionable practices at subsidiary of one of world’s biggest
financial institutions
Read more
Because HSBC’s Mexican division allowed drug cartels to launder $881m (£572m) in cash, the bank has already paid $1.9bn penalties in the US
in 2012. The bank even widened the windows at some of its branches so
that larger boxes of money could fit through. The bank’s “stunning
failures of oversight”, the US Department of Justice said, “caused it
to be the preferred financial institution for drug cartels and money launderers.”
Doping
Another client with a lucrative sideline was Eufemanio Fuentes, from
Spain – described in bank records as a “doctor for cyclists”. He was granted an HSBC account in 2003 for his British Virgin Islands
offshore entity Codes Holding Ltd, an account which had amassed more
than £200,000 by 2006.
However, as early as 2004, Fuentes was named among a group of doctors
allegedly re-injecting racing cyclists with souped-up blood, the same
practice Lance Armstrong admitted to last year after years of denial.
Fuentes was raided in 2006 and eventually convicted in Spain of
running a doping business through Codes Holding.
Waste disposal
UK waste disposal operator Adrian Kirby, who illegally conspired to
spy on his environmental critics, was first interviewed by London
police in February 2005. In May, he went to Switzerland to set up an
HSBC trust structure registered in the Cook Islands that would
“[p]rotect his assets from future creditors wishing to sue him
personally” and from inheritance tax.
There is no suggestion that Kirby was using his Swiss account to
engage in tax avoidance or evasion.
Later he moved £1m from the sale of the waste firm into his Swiss
account, “as he wants to take all his cash out the UK asap. This is in relation to his official move out of the UK (residency in
CH[Switzerland]).”
Two years later he was sentenced to six months in prison for
conspiracy to intercept phone calls.
http://www.theguardian.com/news/2015/feb/12/hsbc-files-swiss-bank-hid-money-for-suspected-criminals
--
Steve Hayes
Web:
http://hayesgreene.wordpress.com/
http://hayesgreene.blogspot.com
http://groups.yahoo.com/group/afgen/
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