HSBC boss says bank 'shamed' by Swiss tax avoidance

Stuart Gulliver issues a fresh apology but defends his own tax status as bank reveals 17% slump in profits

The bosses of HSBC admitted they were shamed and humbled by the tax avoidance activities of the group’s Swiss banking arm as the bank revealed its chief executive, Stuart Gulliver, received £7.6m in pay and bonuses last year.

Gulliver, speaking for the first time since the Guardian and other news outlets published a series of revelations about HSBC’s Swiss operations, offered his “sincerest apologies” but was defiant about the account he had with the bank in Geneva which sheltered millions of pounds in a Swiss account through a Panamanian company.

The 55-year-old, who became chief executive in 2011, was born in Britain but is tax domiciled in Hong Kong, where the bank has major operations.

As the bank reported a slump in 2014 profits, Gulliver attempted to justify his tax status. “I would expect to die abroad, which is the test around domiciliary,” said Gulliver, who left the UK in 1980 and only came back for postings with the bank.

He admitted the bank was shamed by the events at its Swiss unit and hit out at the notion he should know what every one of the firm’s 257,000 employees was doing.

He asserted that the bank was being held to a higher standard of account than the church and armed forces.

“I would say that a number of us, myself included, think that the practices at the Swiss private bank in the past are a source of shame and reputational damage to HSBC. Yes, I think shame is an appropriate noun,” said Gulliver.

“One of the largest impacts has been on morale inside HSBC. All of us are subject to scrutiny from our families, our friends and people we meet generally in our everyday lives. It makes people embarrassed at HSBC and concerned,” he added.

Chairman Douglas Flint, who has been with the bank since 1995, said the scandal was “totally humbling”.

The bank said Flint’s £1.5m base salary was being reviewed, indicating that the former finance director who became chairman in 2011 could receive a rise in his salary.

HSBC inflamed sentiment about City pay by revealing that 209 of its top staff were paid at least £1m – and 97 of them in the UK. The general secretary of the Trades Union Congress, Frances O’Grady, said: “It is hard to see why HSBC is paying bonuses at a time when their role in tax evasion and avoidance has become so controversial.”

Cathy Jamieson, a shadow treasury minister, said: “People will be astounded that bonuses of this size are still being paid out after the revelations of the last few days.”

Gulliver’s pay was cut by £500,000 because of run-ins with regulators last year, but not because of the revelations about the activities of the Swiss bank.

He defended his use of a Swiss bank account, saying that in the 1980s accounts were available to anyone on the bank’s dealing floor in Hong Kong where he was based.

His pay was not disclosed until he joined the board and he used a Swiss account to hide his bonuses from colleagues, then used a Panama structure to hide the details from Swiss colleagues.

He did not answer when asked if he still had a Swiss account and did not know whether colleagues were still paid through Panama.

“I have never paid less than the maximum UK marginal tax rate,” said Gulliver.

Flint said: “There is nothing that Stuart has done that is not absolutely transparent, legal and appropriate.”

“There is absolutely no story here,” he said of the chief executive’s bank account.

Flint also apologised over the Swiss bank revelations. He said: “We deeply regret and apologise for the conduct and compliance failures highlighted which were in contravention of our own policies as well as expectations of us.”

Flint, due to give evidence to the Treasury select committee of MPs on Wednesday, said the business had been overhauled and the Swiss bank customer base had shrunk by one third from its size in 2007.

Details of HSBC’s Switzerland activities were obtained by Hervé Falciani, a former employee of the bank in 2008, and relate to the period 2005-2007.

Since being published by the International Consortium of Investigative Journalists – which has collaborated with the Guardian and other media outlets in publishing the material, including Le Monde and BBC Panorama – the leaks have unleashed a political storm in the UK.


Jill Treanor and Sean Farrell

The GuardianTramp

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