French court orders HSBC to pay $1.1-bn bail over Swiss tax scandal
10 April 2015
French authorities have started a formal criminal probe into British banking giant HSBC Holdings Plc over alleged tax evasion by its subsidiary Swiss private bank in 2006-2007.
The authorities have imposed a €1-billion ($1.1 billion) bail bond on HSBC as part of the standard investigation procedure. Under the French law, companies put under formal investigation can be ordered to post a deposit, ''to ensure payment of any damages and interests that might be decided by any future trial''.
London-based HSBC's Swiss bank is under probe in several countries on allegations that it hid millions of dollars as it helped wealthy customers around the world evade taxes.
Five months ago, HSBC's Swiss unit was charged and ordered to deposit €50 million bail by French prosecutors. However, the present move is against the holding company on similar charges.
In its annual report, the company disclosed that formal investigations on the bank are going on in Belgium, Argentina, Switzerland and India.
The information on the fraud was leaked out by a former HSBC employee, Herve Falciani, to French government in 2008, which was subsequently passed on to other countries which launched the investigations.
HSBC said in a statement yesterday that "the French magistrates' decision is without legal basis and the bail is unwarranted and excessive."
The lender said it ''intends to appeal and will defend itself vigorously in any future proceedings.''
Reuters reported citing a source that the deposit amount is nearly half f the about €2.2 billion estimated by the magistrates.
HSBC disputes the figure worked out by the French authorities. However, it has to deposit the amount by 20 June, which would allow it to appeal against the allegations.
HSBC has admitted failings in its controls saying that the bank's behaviour in the past was clearly unacceptable, and stressed that it has reformed its Swiss unit since then and there was new management in place.
Last year, Swiss banking giant UBS Group AG was also asked to pay €1.1 billion bail by French magistrates to cover potential penalties for alleged money laundering.
The bank's appeal against that bond was dismissed. It was estimated that UBS helped wealthy French citizens hide about €9.8 billion.