The Guardian view on tax dodging: a creative industry that demands an equally creative response
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Version 0 of 1. All week, the Guardian has been reporting the findings of its investigation into the affairs of HSBC and its Swiss private banking subsidiary. These are the outstanding questions: first, why has there been no action against the bank? Second, how could proper process allow David Cameron first to ennoble Stephen Green and then make him a government minister? And why has Lord Green, the man in charge of the bank from 2003 to 2010, who had both executive and auditing responsibilities, remained silent? And finally, why, of 3,600 British citizens identified in the database downloaded by the whistleblower Hervé Falciani and passed to HMRC by the French authorities in 2010, has only one prosecution resulted? This affair exposes shocking evidence of unlawful behaviour by an arm of one of Britain’s biggest banks. It has confirmed HMRC’s spineless approach to bringing tax dodgers to justice. And underlying it all is a disturbing moral ambiguity to the whole question of paying tax that appears to be widespread in Whitehall, in government and among some rich donors to all parties. Tax dodging is a creative industry with a long history. It demands equal creativity to stop it. HSBC is a British institution. On its board have sat some of the country’s great and good. It has included notable gamekeepers who have turned poacher, including (within six months of leaving office) the former boss of HMRC, David Hartnett. Yet none has apparently been able to penetrate the secrecy that surrounded the tax dodging activities of the highly successful Swiss subsidiary that was acquired back in 1999 – any more than they were able to detect, let alone halt, some of the wrongdoings of the recent past, which have led to a $618m fine for manipulating foreign exchange rates and a $1.9bn fine for money laundering. As part of that deal, the bank gained limited immunity in the US from related prosecutions. US senators are now calling for the deal to be reconsidered. France and Belgium are pursuing criminal investigations. There is no evidence of equivalent activity in the UK – although on Friday the Bank of England admitted the allegations “might be of relevance” to its risk assessment arm, the Prudential Regulation Authority. The PRA could fine the bank or demand that it hold more capital against risk, a move City experts regard as potentially more effective. What is imperative is that it acts in order to demonstrate that there is no deal to be done with tax dodgers. Then there is Lord Green, the man in charge while his bank’s Swiss subsidiary was aggressively marketing ways of evading successive attempts by EU governments to capture at least some of the tax owed by citizens with secret Swiss accounts. Lord Green is a serious and thoughtful individual, and an ordained minister, which is why his appointment to government was welcomed across all parties. It’s regrettable he is so reluctant to engage. HSBC should tell him to stop hiding, and MPs on the Treasury committee, due to see his successor Douglas Flint soon, must call him too. Lord Green has been honoured by his country. He cannot allow even the appearance of complicity in tax evasion that deprives it of revenue to which it is properly entitled. And finally there is Her Majesty’s Revenue and Customs, the body vested by parliament with draconian powers that are an appropriate reflection of the fundamental significance of paying tax to state and society. It is true that HMRC has been hard-hit by cuts. But it has an even more profound cultural problem. As a consequence, its approach to hunting down tax dodgers is one of extreme pragmatism based on a cost-benefit analysis that apparently excludes moral accounting (see past tax deals with, for example, Goldman Sachs). Against foreign comparisons, the excuses from officials and ministers are crumbling. French and Spanish authorities have reclaimed nearly £300m in unpaid tax, HMRC little more than £100m. Of the Britons exposed by Mr Falciani, all but one who might have been prosecuted escaped through the so-called Liechtenstein Disclosure Facility. Taking tax dodgers to court is difficult and costly. But not taking them to court has a heavy cost too. It makes it appear a victimless crime. It is not. It corrupts public attitudes to the common good. And that is a loss to us all. |