The Guardian view on the HSBC files: a damning dossier

http://www.theguardian.com/commentisfree/2015/feb/09/guardian-view-hsbc-files-damning-dossier

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“Values,” wrote the Rev Prebendary Stephen Green, “go beyond ‘what you can get away with’.” Reassuring words from the part-time priest who for years ran one of the world’s biggest banks, before being brought into government by David Cameron. Courtesy of the HSBC files, however, we now know that this bank, when under his stewardship – first as chief exec, later as chair – was involved in concealing “black” accounts from the taxman, servicing the secretly stowed funds of corrupt businessmen and allowing the withdrawal of “bricks” of untraceable cash.

In the face of these ugly facts about his old bank’s Swiss operation, Lord Green has said only that it is for HSBC, and not for him, to comment on that institution’s past and current behaviour. No wonder. His obvious refuge would be to claim that, as the boss of a global business in London, he had other worries and could not be expected to know every detail of what distant colleagues in Geneva were up to. Sadly for him, this potential shelter took a battering from something else he wrote: “For companies, where does this [ethical] responsibility begin? With their boards, of course. There is no other task they have which is more important. It is their job ... to promote and nurture a culture of ethical and purposeful business throughout the organisation.”

The chief defence offered by HSBC corporately is that the Swiss skullduggery reflected the federated structure of the bank’s past, as if this structure had been merely an inheritance of historical accident, which had latterly been put right. Suspicious minds will wonder whether these structures were instead a reflection of moral evasion. They will be encouraged by yet another thing that Lord Green wrote, this time very much in dog-collar mode: “Compartmentalisation ... is a besetting sin of human beings.”

Even if Lord Green simply failed to notice what a rogue Swiss operation was up to, rather than looking away, his failure to grip it was serious. A clergyman’s feet of clay are an eye-catching detail, particularly because – as an acknowledged expert on ethical finance – he is advising the archbishop of Canterbury on how to shake up the Church of England, advocating more vicars in an MBA mould. The real issues, however, go both deeper and wider. At root, this is a story about the culture of a crooked form of capitalism.

The Treasury minister, David Gauke, faced, and failed to deal with, the obvious questions about whether any of Lord Green’s coalition colleagues had thought to ask him about the Swiss dodges after Revenue & Customs got hold of the files in 2010, but the truly dispiriting thing about the Commons session was the questions that didn’t come up. How on Earth was it that the 3,000-plus cases that HMRC investigated on the strength of the Swiss cache have contributed to just a single prosecution, and even then of someone who was already being pursued? Desperate families on benefits, who can be hounded all the way to prison for failing to declare cash-in-hand work, will discover that in angry disbelief. Rather than regarding itself as a law enforcer, HMRC would appear to approach the wealthy in a softly-softly spirit of “negotiate, and see what you can get”. And why, when illegal evasion as well as lawful avoidance appears to have been indulged, is the only discussion about prosecutions about individual clients, and not the pursuit of the bank as a whole?

Then there is the most fundamental question of the lot, at least for those unexotic citizens who are happy to work for a salary on the understanding that it will be taxed at source then paid into a British bank. Namely, what valid reason could there be for squirrelling funds in Switzerland? Even as it concedes past problems with tax, HSBC insists that there are “numerous legitimate reasons to have a Swiss bank account”, but neglected to expand on what these might be. Save for the odd individual with Swiss family links or plans to invest in a real Swiss business, are these reasons really so self-evident that they don’t need require spelling out? If private banking overseas is to be tolerated at all, then, in the light of the systematic malpractice laid bare this week, the onus should surely shift on to the individual to explain why it is needed.

That, however, is not the approach that the UK has taken to date. From George Osborne’s patchy stitch-up of a tax deal with Switzerland, which failed to bring in the promised revenue, to the extraordinarily forgiving “amnesty with interest” that Mr Gauke offered to evaders who had dabbled in Liechtenstein, tax dodging is approached first as a matter for haggling and only secondly as a crime. The smooth movement of the former tax chief Dave Hartnett from HMRC to an advisory post with HSBC last year confirms the cosiness.

Citizens who work hard to pay their own taxes are nonetheless looking at cuts to cherished services for years to come. They are entitled to rage against the rich who dodge their own obligations, the bankers who assist them, and the politicians who still refuse to get tough.