Tory minister and tax office boss told parliament failure to prosecute was due to restrictions imposed by French authorities
France has cast doubt on claims by a Conservative minister and tax office boss Lin Homer that the UK was refused permission to use the leaked HSBC files to pursue financial criminals through the courts.
When challenged about the British government’s failure to take action against the bank or criminal clients, Homer told parliament the UK’s hands were tied by treaties with France, which restricted use of the HSBC data to pursuing tax evaders.
She said HMRC had only been given permission by the French on Monday to take on more serious cases such as money laundering. Her claims were repeated by the Tory Treasury minister David Gauke to the Commons on Monday.
But France’s finance minister Michel Sapin has rejected the British version of events.
In an interview with Le Monde, published on Friday, he said: “I have not understood the comments made by the British authorities. The data on HSBC was transmitted to them in 2010, in the framework of the bilateral conventions that bind us. Nothing has been said to them since. These conventions do restrict the use of the information to tax purposes.
“But if the British tax office wants to bring court cases, it is entitled to do so. The rest is a matter of judicial co-operation.”
He denied France had been approached by HMRC this week, and appeared to suggest the decision on whether to bring criminal prosecutions was entirely in the hands of the UK authorities.
The blame was first laid at France’s door on Monday, when Gauke told the Commons: “HMRC received the HSBC data under very strict conditions that limited the department’s use of it to pursuing offshore tax evasion and prevented HMRC from sharing the data with other law enforcement authorities. Under these restrictions, HMRC has not been able to seek prosecution for other potential offences such as money laundering.
“However, the French authorities have today confirmed that they will provide all assistance necessary to allow HMRC to exploit the data to their fullest.”
Challenged to explain her track record, HMRC chief executive Lin Homer on the same day released a statement making the same claims. It stated: “The French authorities have today confirmed that they will provide all assistance necessary to allow HMRC to exploit the data to its fullest.”
She repeated her explanation while giving evidence to parliament’s public accounts committee on Wednesday. HMRC had asked the French for permission to use the data to take on financial criminals when it first received the data, Homer told the committee. She claimed permission had only been given on Monday.
“We have been talking to the French throughout that period but we’ve only just had permission to widen the scope of this,” Homer said. Asked whether the UK had received clearance from the French in the last day or two, she replied: “Yes.” Asked whether the French authorities had been asked earlier to relax their conditions and had refused, she replied that they had.
Labour immediately demanded answers from both George Osborne and David Gauke, the financial secretary, saying the Treasury’s claims about the restrictions appear to have been undermined by France.
Shabana Mahmood, a senior shadow Treasury minister, said the unanswered questions for the chancellor and other ministers about the HSBC Switzerland files
are now “mounting by the day”.
“David Gauke needs to urgently explain his claims in the House of Commons which now seem to have been contradicted by the French finance minister…
“Why has there only been one prosecution out of 1,100 names? Did David Cameron and George Osborne discuss tax evasion at HSBC with Lord Green? Why did they appoint Lord Green as a Tory Minister months after the government received these files?
“And why did George Osborne and the Treasury sign a deal with the Swiss in 2012
which prevents the UK from actively obtaining similar information in
the future?”
Earlier in the week, committee chair and Labour MP Margaret Hodge challenged the UK’s track record on prosecutions, saying other countries including France, Belgium and Argentina had taken legal action against both the bank and its clients.
“You’re not serving the British taxpayer properly,” she told Homer. “If you have an account in Switzerland it’s a risk worth taking, you won’t be prosecuted, and that’s a terrible message to send out to tax payers.”
HMRC has now begun to involve other agencies, including the Serious Fraud Office.
After receiving HSBC files lifting the lid on the hidden financial affairs of thousands of British citizens, HMRC has said it identified 3,600 individuals, traced 3,200 of them, and found 1,100 of these had cases to answer.
Some 500 were involved in cases of serious fraud, 500 were invited to settle outside court by paying tax owed and fines, and 150 were the subject of criminal investigations. Of the 1,100, around 130 cases are still open and could potentially be subject to prosecution. But so far, HMRC has brought only one case to court.
The International Consortium of Investigative Journalists, which has worked with the Guardian and Le Monde to investigate the leaked data, estimates British clients parked assets worth $22bn (£14bn) in Switzerland.
In contrast, the French and Spanish authorities have tackled high profile cases, taking on wealthy and powerful individuals in court. Spain pursued the late Santander chairman Emilio Botín, whose family has already paid €200m (£148m) to settle tax outstanding on a trust banked with HSBC. Many more individual citizens were taken to court.
The French, meanwhile, have indicted Arlette Ricci, heir to the French perfume and fashion house, and she now faces trial.
French clients held an estimated $12.5bn (£8bn) at HSBC. But the French government has so far secured £188m in back tax and fines, compared with the £135m recovered by HMRC.
France has launched a criminal investigation into HSBC for money laundering, while Belgium has charged the bank on suspicion of facilitating tax evasion.
The only case brought to court in the UK involves property developer Michael Shanly, who pleaded guilty to tax evasion worth £430,000 and was made to pay £469,444 in fines and costs. The prosecution was brought because Shanly had not fully disclosed all tax owing in a previous settlement with HMRC.
