The Tax Times: Another Offshore Whistle Blower

Thursday, July 11, 2013

Another Offshore Whistle Blower - Former HSBC Employee!

We first posted Whistleblower Exposes Massive Offshore Corruption! On May 6, 2013 where the enormous value of whistleblowers has once again been demonstrated with the release this of an investigation by the International Consortium of Investigative Journalists into off-shore holdings of people and companies in more than 170 countries and territories hiding trillions of dollars in income and assets.

The anonymous whistleblower sent to the ICIJ 2.5 million electronic files containing what the organization calls “the biggest stockpile of inside information about the offshore system ever obtained by a media organization.”

Now we have come to discover another whistleblower, an HSBC employee who passed data a former to French authorities about the bank’s Swiss arm has supplied a list of nearly 3,000 secret accounts belonging to French residents or entities, hiding up to $5 billion (CHF4.8 billion) in undeclared assets.

The figure was revealed on Wednesday July 10, 2013, in a French parliamentary report. The report also described a variety of legal, technical, diplomatic and procedural issues that began almost as soon as the French tax authorities received five DVDs of data.

The report, explaining why it had taken so long to act on the data, said that there were internal obstacles over the different remits of the tax authorities and the prosecutor's office, which in 2010 transferred responsibility for the case from the Mediterranean city of Nice to Paris.

The Swiss authorities have demanded the computer specialist’s extradition from France so he can be judged for violating Switzerland’s banking secrecy legislation.

Falciani was questioned by French lawmakers on July 2 to help tighten proposed rules against tax evasion. A Franco-Italian, he had just returned to France after taking refuge in Spain from the Swiss authorities.

The sheer size of the client list, which ran to 65 gigabytes over several formats, meant it took a year to extract the names behind each client account, according to the report, in a project dubbed "Operation Chocolate".

From an original list of nearly 9,000 names, there are now 2,319 cases still open. The list was however not purged of “embarrassing” names, notably those of politicians, according to lawmaker Christian Eckert, one of the report’s authors for the National Assembly's finance committee.

The list shrunk largely because duplicate names were removed, while more than 500 cases could not be pursued because of insufficient data or because there was no indication of ill-intent.

After the client names were extracted it was found that there were $5 billion in undeclared assets, 70 per cent of which belonged to physical persons.

France, like countries across the world, is cracking down on tax after the financial crisis, which has put government budgets under strain and increased the need to maximise tax receipts.

So far, €186.4 million (CHF232 million) in taxes and penalties have been recovered, while €950 million in assets have been regularised.

Undeclared Income from a Swiss Bank Account?