What can you do when you discover that your newly opened bank account is with a bank that has just been fined for massive money laundering in the USA and now, tax evasion in the UK?
Read about the latest scandal to involve the banking industry, this time the HSBC, and what an ordinary account holder plans to do...
Four weeks ago, I opened a new bank account that would allow me to transfer money between the UK and Australia to pay bills more easily. No more queuing in person at the local bank and paying a hefty fee.
The bank is HSBC.
Systems (or the lack of them) allowed the bank to launder billions of dollars for terrorists and drug barons in the USA. It has been fined $700m (£445m) , which should be a salutary reminder that sound systems and a culture of integrity must be revived to replace what the US Senate has described as a "pervasively polluted" culture.
In the UK, HSBC has been accused of allowing tax evasion through Swiss branches that could amount to £200 million in lost tax revenue. News reports have stated that £6 billion was invested by wealthy Britons in HSBC Swiss bank accounts (out of a total of £120 billion sent out of the UK to Switzerland).
This is corruption and unethical behaviour on a grand scale. What’s an ordinary account holder like me to do?
It is not good enough for us to complain over coffee about greedy banks. We have to do all we can to be heard by those in power.
First, I need to tell the Bank my concerns, in a way that acknowledges any actions the bank may be taking to change its behaviour.
So off I went to a local bank branch. Employees like those at London Bridge knew nothing and did not seem to want to know anything – I was passed from assistant to client manager, to manager and emerged with only a leaflet telling me how I could complain. Like wise the HSBC website makes no reference to its recent trouble and I could not find any part of the site which sets out its ethics or corporate responsibility policies.
I am following the steps in the leaflet, which assures me that “we are committed to providing you with a first class service and effectively delivering products and services”, though “money laundering” is not one of the options given on the phone line!
I have written to the Service Quality team and I have written to the CEO. Stuart Gulliver, who was only appointed to the top role last year, was strong in his condemnation of the bank’s practices, saying, "What happened in Mexico and the US is shameful, it's embarrassing, it's very painful for all of us in the firm.
That sounds positive but I hope HSBC is not just publicly apologetic to limit damage to its reputation. I want his words to result in organisation-wide change.
Second, I need to tell people the story so more of us become aware that corruption robs ordinary citizens (tax payers) of valuable revenue. The £200 million in lost taxes from the HSBC scheme is only a small part of the total lost through tax evasion in the UK. The Tax Justice Network published a report last year detailing that the UK loses £69.9 billion a year in tax revenue because of tax evasion – money that could have been used for all sorts of services in the UK.
David Cameron, UK PM, got into bother on a radio phone-in recently when a caller asked tearfully why she could not get cancer treatment when billions was sent abroad in aid.
Cameron was a little uncomfortable in his response – overseas aid is understandably a touchy issue in hard times and nobody is unsympathetic to the needs of a cancer patient. The PM explained the moral and security reasons for aid. But perhaps if he had told the caller that tax evasion in the UK was actually worth five times the overseas aid budget (and over 50% of the annual health budget), maybe her ire would have diverted from the poorest people in the world to some of the richest and most privileged.
So my HSBC story is part of a much more tangled global story of financial systems, poverty and corruption. Can my small actions actually achieve anything? Only if thousands of other small customers also act.
And that is why advocacy needs to be something we all do. It’s not just for “activists” or “troublemakers” or retired colonels from Tunbridge Wells. We should all make a noise about corruption and lack of ethics.
I know the EU is considering legislation on tax and payment disclosures between national jurisdictions, similar to Dodd Frank legislation in the USA – legislation which is only necessary because corporations like HSBC have flouted legal and ethical guidelines. We need good laws, we need people to watch over the laws, we need business leaders willing to stand for the highest standards and we need a vigilant public which defends righteous behaviour.
PS. I’ll keep you posted about what, if any response I get.
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