Leaked
files covering 2005-2007 show bank chief executive sheltered £5m of his own
money at Panamanian company with Swiss HSBC account
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Stuart Gulliver in Hong Kong in 2012: leaked files show that the HSBC chief
executive was a client of the bank’s Swiss subsidiary at the centre of the scandal.
Photograph: Bloomberg via Getty Images |
Stuart
Gulliver, the HSBC chief executive who has vowed to reform the crisis-hit bank,
sheltered millions of pounds in a Swiss account through a Panamanian company
and remains tax domiciled in Hong Kong.
Leaked
files show that the Derby-born Gulliver, who is due to present HSBC’s annual
report on Monday in the wake of the international controversy over its
Geneva-based private bank, was also one of its clients, holding about £5m in a
Swiss account.
The bank
executive was listed as the beneficial owner of an account in the name of
Worcester Equities Inc, an anonymous company registered in Panama, containing a
balance in 2007 of $7.6m. It was through this entity that Gulliver’s HSBC
bonuses were paid until 2003. He also held a second account in the name of
Worcester Foundation, which had been closed before 2007.
Although
now based in the UK, where HSBC has its headquarters, Gulliver is domiciled in
Hong Kong for legal and tax purposes.
The banking
details have emerged as the 55-year-old Oxford University graduate, who became
chief executive in January 2011, is due to face questions from reporters and
investors for the first time since the Guardian and other media outlets
published the leaked HSBC files, which revealed misconduct at the bank’s Swiss
subsidiary.
The
documents, covering 2005-07, detailed how the private bank was complicit in tax
evasion and aggressive tax avoidance, doled out bricks of cash in mixed
currencies to clients, and provided banking services to criminals, drug
smugglers, and friends and families of dictators.
Gulliver
has already personally signed a “sincere apology” which appeared in three
newspapers last Sunday, saying “the standards to which we operate today were
not universally in place in our Swiss operations 8 years ago”.
The bank is
expected to announce on Monday full-year profits for 2014 in excess of £13bn –
and Gulliver’s total compensation package has been predicted to be around
£7.5m, although it was reported over the weekend that he may surrender some of
his remuneration because the bank agreed to pay fines to settle unrelated
allegations of foreign exchange rigging last year.
In response
to queries from the Guardian about his personal account as revealed in the
leaked files, a representative for Gulliver said he had made use of HSBC Suisse
to hold his bonus payments prior to 2003, when he moved from Hong Kong to
London.
Lawyers for
Gulliver said that Hong Kong tax had been paid on this income – and explained
that he “followed this procedure because he wanted his taxed bonus earnings to
remain private from his then colleagues in Hong Kong, which they would not have
done if he had kept them in an HSBC Hong Kong account”.
The
Guardian asked Gulliver why he used a Panamanian company to hold the funds,
given Swiss accounts already offer secrecy. His lawyers declined to answer.
Gulliver’s
legal representatives added that his Swiss accounts have “for a number of
years” been voluntarily declared to UK tax authorities. They declined to
specify the exact date they were first declared.
Gulliver is
also among those current and former clients of HSBC Suisse to take advantage of
non-dom status. Gulliver is a registered non-dom based on his long residence in
Hong Kong – now a special administrative region of China – which he considers
to be his home, despite his UK-based position.
A
representative for Gulliver said: “Having lived there since the 1980s, our
client has become a permanent Hong Kong resident with right of abode, as has
his wife who is an Australian national. Hong Kong continues to be their home
albeit that our client now works primarily in the UK. As a matter of law, our
client is domiciled in Hong Kong.”
Non-dom
status can confer several tax advantages on those who claim the status compared
with those domiciled in the UK. These include advantages in how inheritance tax
is applied, but can also exempt worldwide income earned from outside the UK
from incurring UK taxes – a system known as the remittance basis.
Gulliver’s
lawyers confirmed he was “entitled to claim the benefit of the remittance
basis”, but did not say whether or not he did so. If Gulliver were on the
remittance basis, he would not need to pay tax on investment income held
outside the UK – which would include holdings in Swiss bank accounts.
A
representative for Gulliver said that he had paid all relevant income taxes:
“Full UK tax has been paid on the entirety of his worldwide earnings less a
credit for tax paid additionally in Hong Kong (where he is also tax resident)
on that part of the same earnings doubly taxed.”
John
Christensen, director of the Tax Justice Network, which has campaigned for
abolition of non-dom tax benefits in the UK, said the non-dom quirk was
particularly attractive for anybody who had accumulated assets such as homes
and bonuses offshore, because any gains on offshore assets would be sheltered
from UK tax.
“For my
part I think it illustrates the absurdity of the rule, which should have been
abolished many years ago. It serves no useful purpose and is hugely
discriminatory against ordinary UK taxpayers,” he said.
Separately,
Gulliver did not become employed by HSBC’s main holding company when he took
over as chief executive of the bank in 2011. Documents seen by the Guardian at the time showed that Gulliver took the job of chief executive officer as a
secondment from the Dutch-headquartered HSBC Asia Holdings, rather than take a
straightforward appointment to the UK parent company.
A spokesman
for HSBC said around 350 of its staff were employed through the Netherlands.
“About 350 of the bank’s most internationally-mobile employees are employed by
HSBC BV,” he said. “This enables them to be employed/seconded to any part of
the global group without the need to change contracted employer.”
Representatives
for Gulliver declined to explain for what purpose he was employed through the
Netherlands subsidiary.
Gulliver
has repeatedly emphasised to the public and to lawmakers that the culture of
the bank, as well as its safeguards, has changed – both in the wake of the HSBC
Files, and previous scandals including Libor rigging, and involvement with
Mexican money laundering.
Since the
publication of the HSBC files, the bank has been keen to stress that it has
downsized the Swiss business, reducing the number of clients by 66%, to around
10,000. However, the total value of assets in those accounts – $68bn (£44bn) –
has fallen by only 42%.
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Douglas
Flint and Stuart Gulliver appear before the Treasury select committee.
Photograph:
Reuters TV
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