PANAMA PAPERS: CREDIT SUISSE AND HSBC DISMISS OFFSHORE ALLEGATIONS

PANAMA PAPERS: CREDIT SUISSE AND HSBC DISMISS OFFSHORE ALLEGATIONS

Credit Suisse and HSBC, two of the world’s largest wealth managers, dismissed suggestions they were actively using offshore structures to help clients cheat on their taxes. 

Their comments came a day after a leak of four decades of documents from a Panamanian law firm that specialises in setting up offshore companies showed widespread use of those instruments by global banks on behalf of their clients and triggered a raft of government investigations across the world. 

The “Panama Papers”, revealed through an investigation by the International Consortium of Investigative Journalists (Icij), exposed financial arrangements of politicians and public figures including friends of Russian President Vladimir Putin, relatives of the prime ministers of Britain, Iceland and Pakistan, and the president of Ukraine. 

Credit Suisse, who is aggressively targeting Asia’s wealthiest for growth, says the bank was only after lawful assets. 

Credit Suisse says it only encouraged the use of structures when there is a legitimate economic purpose. It is Switzerland’s second-largest bank. 

HSBC said the documents pre-dated a thorough reform of its business model. “The allegations are historical, in some cases dating back 20 years, predating our significant, well-publicised reforms implemented over the last few years.” 

Credit Suisse acknowledged that it does use offshore financial structures, but only for very wealthy customers with assets in multiple jurisdictions, and it did not support their use for tax avoidance or allow them without knowing the identities of all of those concerned. 

“We do not condone structures for tax avoidance. Whenever there is a structure with a third party beneficiary we insist to know the identity of that beneficiary.” 

Credit Suisse agreed in May 2014 to pay a $2.5 billion (R37.26bn) fine in the US for helping rich Americans evade taxes. Many Swiss-based wealth managers, including rival UBS Group AG, also had to pay large fines in the US for the same reason. 

HSBC, which also had wealth management operations in Switzerland, agreed in 2012 to pay $1.92bn in US fines, mainly for allowing itself to be used to launder drug money flowing out of Mexico. 

The tax spat with the US undermined traditional Swiss banking privacy laws and resulted in a radical overhaul of Swiss private banking, a tightening of global tax compliance standards as well as massive out-flows from Swiss bank accounts.

Reference:

Reuters