HSBC damaged by publication of UK tax avoidance scheme

[David Guyatt]

Peter Osborne interviewed on the Beeb this morning said that HSBC pulled advertising from The Indy 3 weeks ago when it started it's ongoing investigation into the story.

And shelve tax dodging for the moment. This story now involves money laundering on arms trading and blood diamonds - and doubtless, HSBC's old standby of laundering drug money?

I remember watching the bank named as a standing money launderer - for a fee of 20% - in the TV series Homeland, where it was named as HLBC. Everyone in power knows what they do, but nobody in power will do anything about it. I wonder why?

Crookedness and illegality in banking is the new political acceptability. Maybe the prime minister should award them an enterprise award for business excellence?

HSBC: Swiss bank searched as officials launch money-laundering inquiry

Officials open investigation into suspected aggravated money laundering' and search bank's Geneva premises


HSBC private bank in Geneva, Switzerland. Photograph: Harold Cunningham/Getty ImagesStaff and agencies
Wednesday 18 February 2015 09.08 GMTLast modified on Wednesday 18 February 201509.31 GMT

Prosecutors in Geneva have announced a money-laundering investigation into the Swiss private banking subsidiary of HSBC.
Officials searched the bank's premises in the Swiss capital on Wednesday.
The investigation was launched in the wake of revelations that the bank turned a blind eye to illegal activities of arms dealers and traders in blood diamond traders while helping wealthy individuals evade taxes.
In a statement, Geneva prosecutors said they had opened an investigation into suspected aggravated money laundering against the subsidiary and against persons unknown.
Prosecutors said the investigation stemmed from "the recent published revelations" about the private bank.
More details soon...

[David Guyatt]

Oh no! Say it ain't true:

Telegraph owners' £250m HSBC loan raises fresh questions over coverage

Barclay brothers secured loan for loss-making company shortly before Telegraph reporters were allegedly discouraged from running articles critical of HSBC





[URL="http://www.theguardian.com/media/2015/feb/19/telegraph-250m-loan-hsbc-editorial-changes-yodel#img-1"]
[/URL] Owners of the Daily Telegraph, Frederick and David Barclay. Photograph: James Fraser/Rex FeaturesSimon Bowers
Thursday 19 February 2015 18.51 GMTLast modified on Friday 20 February 201500.25 GMT

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The owners of the Daily Telegraph secured a £250m loan from HSBC for a struggling corner of their business empire shortly before the newspaper's reporters were allegedly "discouraged" from running articles critical of the bank, the Guardian has learned.
The timing of the loan deal for Yodel, a loss-making parcel delivery firm owned by the Barclay brothers, raises fresh questions over the influence of commercial considerations on the Telegraph's editorial coverage of HSBC.
The deal was completed on 14 December 2012, company documents show. The paper's former chief political commentator Peter Oborne alleged this week that there was a sea change in its editorial treatment of the bank from early 2013.
The documents show that Sir David and Sir Frederick Barclay had to formally give a personal financial guarantee as additional security for the loan facility.
The paper's editorial judgment over HSBC has been called into question this week by Oborne, who accused the paper of a "fraud on its readers" in an excoriating resignation statement.
Specifically, he claims that the Telegraph's coverage of the bank changed abruptly just over two years ago. "From the start of 2013 onwards stories critical of HSBC were discouraged," he said.

Peter Oborne: what I have seen is unprecedented in a quality newspaper

Read more



Yodel refinanced in mid-December 2012 with Europe's biggest bank. As security, the bank took a charge over almost all the Yodel business - meaning the bank could take control of the parcel delivery group should the latter breach its borrowing commitments.
The new HSBC loan was used to repay previous borrowings from Lloyds Banking Group. The Yodel business made a loss of £112m for the year to 30 June 2013. Yodel filings show an outstanding amount of £242m was due on the HSBC loan at the end of June 2013 and there are no filings since then suggesting the debt has been repaid.
Contacted by the Guardian, the Barclay family declined to comment on the loan, but a source close to the family dismissed suggestions that the Telegraph's coverage could have been influenced by a loan from HSBC. The source also pointed out that the family's businesses had borrowings with many other banks.
The Barclays camp believe a lot of inaccuracies have been written about them in recent days, though they have not expanded on what these are.

After Oborne: Facts and bad faith in our newspapers

Letters: With a few exceptions our national press operates as a cartel, papers covering up each others' faults. The result is that uncorrected lies pile up in our public space, polluting debate and warping policymaking


Read more



Oborne parted company with the Telegraph this week, going public, he said, in protest at its coverage of the HSBC scandal. The Telegraph veteran has called for an independent inquiry into the newspaper's editorial guidelines because of what he sees as a lack of reporting on the HSBC affair. The Guardian, the BBC, Le Monde and 50 other media outlets revealed how the bank's Swiss banking arm helped wealthy customers dodge taxes and conceal millions of dollars of assets, while circumventing domestic tax authorities.
Revelations about the controversial banking affairs of some of HSBC's wealthiest clients have dominated headlines across the British media in recent weeks, but featured only fleetingly in the Telegraph, Oborne argues.
Yodel's directors, who include Sir David Barclay's sons Aidan and Howard, admit in the firm's accounts that the parcel delivery trade is "a rapidly changing marketplace". While that presented opportunities, there were too many suppliers in the industry, leading to "a high degree of competition".
The accounts show the struggling business was able to qualify as a "going concern" for accounting purposes thanks to the willingness of its Jersey-based parent, another company in the Barclays' investment empire called LW Corporation, to provide financial support. Companies in Jersey are not required to file accounts.
Earlier this week Oborne claimed that HSBC had suspended its advertising with the Telegraph after it ran an investigation in November 2012 based on leaked details of personal accounts held with HSBC in Jersey.
He also claims that reporters were ordered to destroy all emails, reports and documents related to the HSBC investigation. "This was the pivotal moment," Oborne wrote.
He attributed the change to an effort to win back advertising. He said he had been told by an extremely well informed insider that HSBC's advertising spend was extremely valuable. "Winning back the HSBC advertising account became an urgent priority," Oborne said.

In a statement responding to Oborne's allegations, a Telegraph spokesperson said it would not comment on individual commercial relationships, but continued: "We aim to provide all our commercial partners with a range of advertising solutions, but the distinction between advertising and our award-winning editorial operation has always been fundamental to our business. We utterly refute any allegation to the contrary.
"It is a matter of huge regret that Peter Oborne, for nearly five years a contributor to the Telegraph, should have launched such an astonishing and unfounded attack, full of inaccuracy and innuendo, on his own paper."

[David Guyatt]

If the HSBC Swiss subsidiary tax avoidance and money laundering scheme sounds at all familiar, it is because it is.

And the Swiss authorities clearly did nothing to bring this type of activity to a halt, which is why they are now panicking and (pretending?) to opening an investigation into the HSBC affair. But will any meaningful changes occur?

Tax evasion remains rife, the banks goes virtually unpunished - it's not their money they use to pay fine - and all the while Julian Assange reamins incommunicado in a foreign embassy in London to avoid arrest and deportation to Sweden for an offence everyone know he didn't commit, so that the Swedes can deport him to the US to be imprisoned... probably permanently. Possibly terminally.

From Wikileaks 2008

Bank Julius Baer: Grand Larceny via Grand Cayman

Bank Julius Baer & Trust ownership structure. See Bank Julius Baer: The Baer essentials part 1 for other internal Baer documents supporting this article

The Baer essentials, part 1

RUDOLF ELMER with editors DANIEL SCHMITT & JULIAN ASSANGE (WikiLeaks)
February 29, 2008
[TABLE="width: 23"]
[TR]
[TD][TABLE="class: toc"]
[TR]
[TD]

Contents

[hide]

• 1 Letter from Rudolf Elmer
  • 1.1 What is this about
    • 1.1.1 Julius Baer Bank and Trust Co. Ltd, Cayman Islands
      
    
    
  • 1.2 Violation of tax laws
    
  • 1.3 Violation of matching maturities
    • 1.3.1 URSA Ltd., Cayman Islands
      
    • 1.3.2 Baer Select Management Ltd, Cayman Islands
      
    
    
  • 1.4 The rip-off
    • 1.4.1 Calculation of fees for both organizations
      • 1.4.1.1 CreInvest, Zug, respectively Cayman:
        
      • 1.4.1.2 shaPE, Zug/Freienbach, respectively Cayman:
        
      
      
    • 1.4.2 Julius Baer Trust and Co Ltd. Cayman Islands
      
    
    
  • 1.5 Calculation of Swiss tax losses due to activities of Bank Julius Baer on the Caymans
    
  • 1.6 Handling of offshore constructs by the cantonal tax office of canton Zurich
    
  • 1.7 Tax authorities are not allowed to use data
    
  • 1.8 Responsibilities
    
  • 1.9 Protection of the investor
    

[/TD]
[/TR]
[/TABLE]
[/TD]
[/TR]
[/TABLE]
The following is the first of three written statements by Rudolf Elmer, the former Chief Operating Officer of Bank Julius Baer in the Cayman Islands. This first letter details the offshore structures of the Bank Julius Baer group, explains workings of several of Baer's hedge funds and outlines how Julius Baer employs these to avoid paying taxes in the home country of the group.
It is the account of a whistleblower stepping forward to talk about unlawful and unethical behavior.
Wikileaks has verified the material on a preliminary basis, coordinating efforts with the Bern Declaration, and is now asking financial specialists to have a look and verify the substance of the published statements of Mr. Elmer.

• A full translation of the german paper is printed below, the original paper itself File | Torrent | Magnet
  
• English translation File | Torrent | Magnet
  
• Attachments coming with the letter as well as the letter and its translation in pdf format File | Torrent | Magnet
  

The german version of this article can be found HERE.

Letter from Rudolf Elmer

As an insider (whistleblower) I am able to disclose certain statements of affairs of Bank Julius Baer. The main intention of this letter is to disclose methods used and still being used by Bank Julius Baer to avoid or decrease tax payments.
I have been the Chief Operational Officer (COO) of Bank Julius Baer & Trust Ltd, Cayman. I have been asked to transact unethical and immoral business for the bank. I have cooperated firstly out of naivete and then for an annual salary of CHF 220,000.
Fact is, that tax fraud evasion as well as massive aiding hereunto are part of the repertoire of this Cayman Bank owned by the Swiss. It succeeds to:

• unjustifiably minimize taxes via Julius Baer and Trust Co Ltd, Cayman Islands and the Julius Baer Holding AG, Zuerich.
  

• unethically and immorally deprive the Swiss people of tax funds.
  

• evade banking regulations.
  

This report intends to protect my family, as the public needs to know that I want to contribute to:

• the Swiss people understanding the operations of Bank Julius Baer,
  

• bringing tax evaders and defrauders to light in that their methods will be revealed, stopped and no longer be treated as a peccadillo.
  

• a reconsideration of the interpretation of tax evasion, fraud and the planning of this, and maybe qualify it as ex-officio matter for the future,
  

• tax evasion and fraud being treated as a preliminary stage for money-laundering, as this is the case in the US and Germany,
  

• more money flowing to the Swiss and other state's tax entities for them to achieve their tasks.
  

• the Swiss banking commission reconsidering and tightening their regulations and practices,
  

• the Swiss financial world by my account becoming more honest, ethical and moral,
  

• Offshore investors becoming more aware of the risks they are running into, as seen with Swisspartner and other vehicles,
  

• my wife and child not longer having to fear stalking by Bank Julius Baer and threats from third persons.
  

What is this about

Bank Julius Baer is systematically moving taxable funds to the offshore-island Cayman Islands (as well as Luxembourg or the tax-haven Guernsey), to minimize or reduce to zero their tax burden and that of their customers. I call such entities "bellevue-griten (little whores)". I sometimes felt like the guard of those "ladies" who essentially are being abused. The story is about the following limited liability companies of the Julius Baer Holding AG, which offer their services as offshore-entities of Julius Baer Holding AG in the Cayman Islands:

• Julius Baer Bank and Trust Co. Ltd, Cayman Islands (the bank)
  

• Julius Baer Trust Co Ltd, Cayman Islands (the administrative company)
  

• URSA Ltd., Cayman Islands (the insurance company)
  

• Baer Select Management Ltd, Cayman Islands (the investment manager)
  

• CreInvest Ltd, Cayman Islands (the hedge fund)
  

• shaPE Ltd, Cayman Islands (the private equity company)
  

The common goal of these companies is to:

• establish transactions only possible because of the lack of financial regulation and jurisdiction on the Caymans, as compared with well-regulated countries,
  

• reduce the taxable revenues of the Julius Baer groups in Switzerland and other countries for itself and its customers,
  

• offer vehicles to Swiss and foreign customers for tax evasion or even tax fraud,
  

• offer the ability to Swiss and foreign trustees to found companies on the Caymans (as well as Guernsey and Luxembourg) in order to profit from this situation,
  

• protect investors,
  

• and naturally reduce taxes for the Julius Baer group.
  

Only the mother company Julius Baer Bank and Trust Co Ltd, Cayman Islands (the bank) is owned directly by Julius Baer Holding AG, Zurich. All other companies are owned by Julius Baer Bank and Trust Ltd, (directly or indirectly) and therefore only Julius Baer Bank and Trust Co Ltd., Cayman Islands (the bank) appears to the outside. This is effective, as all other companies stay hidden. Neither the Eidgenoessische Banken Kommision (Swiss federal banking commission) nor the tax administration are ever shown the balances or profit calculations of these companies due to the Confidentiality Law on the Caymans (similar to the Swiss banking law), under which there is no right for examination.
The estimated quantum of the tax reduction can be determined from the calculations at the end of this document. This is not about an exact figure of the loss of tax revenue in Switzerland but an order of magnitude and especially the methodology of offshore entities. The numbers presented represent the beginning of this decade and are very likely much higher today in light of the growth of the group.

Julius Baer Bank and Trust Co. Ltd, Cayman Islands

The sole shareholder of Julius Baer Bank and Trust Co. Ltd, Caymans Islands (the bank) is Julius Baer Holding AG, Zurich. This banked finances itself from Switzerland via Callmoney (up to CHF 1,600,000,000.00 during my time) of clients. It invests this money into the corporate bond portfolio, which is actively managed from Switzerland via the Asset & Liability Management (the decision maker) in Zurich. All investment decisions are make in Zurich, financing of bond purchases (including assignment of customer call money) is made and controlled in Zurich, Buy and Sell decisions are made in Zurich and the risk management is de facto exercised in Zurich.
Nevertheless it is feigned that the management had made decisions on the Caymans. I had to allot orders via Lotus Notes e-Mail (an internal communication system), even though the orders had long been placed. The climax was that the bank kept these transactions in management protocols of Julius Baer and Trust Co. Ltd, Cayman Islands, formulating them to appear as if the decision making for buying and selling had taken place in the Caymans. This added up with my e-Mail order to originating the decision to the Caymans. These weekly management protocols had to be sent to Zurich to the general administration. The further proceedings with those protocols are not known to me.
The bond portfolio not only holds long-term investments (obligations of International Financial Reporting Standards (IRFS) category Hold to Maturity), but also is a trading book (for instanceLiquibaer, a Julius Baer fund or also the legendary Long Term Capital Fund (see attachment LINK). The frequent acquisitions and sales of Liquibaer shares were not to be booked. Only at the end of the month was the stock reconciled. Naturally no fees were calculated on these acquisitions and sales (foreign transactions) even though all transactions were made via an account in Zurich with Bank Julius Baer (account number 726.5062). The acquisitions and sales generally pertained to accounts in Zurich. Account- and bond-administration is thus also done in Zurich.

Violation of tax laws

Swiss banking law clearly states that when administrative tasks are being accomplished in Switzerland and an organization's only purpose is to circumvent tax regulations, the organization is to be treated as a Swiss entity under Swiss tax laws. To avoid such treatment, the business activity of the organization has to be independent, and either investment decisions or strategic investment planning has to be performed by the foreign organization.
Foreign organizations are only not subject to Swiss tax laws if the following criteria is met (taken from an english text):

• An independent business activity should be performed at the foreign domicile in which either decisions for investments are made in person or that at least strategic investment plans are developed there in order to prepare respective decisions of other companies.
  

Julius Baer Bank and Trust Co. Ltd., Caymans (the bank) is not acting independently in a foreign domicile and thus is not subject to tax exemption, as the decision takers for i.e. bond acquisitions and sales are domiciled in Switzerland (Asset & Liability Management of Julius Baer AG, Zurich). The professional know-how is non-existent in the Caymans and thus no real administration is done there. In reality, only a shadow-accounting is in place at Julius Baer Bank and Trust Co. Ltd., Cayman; the bond portfolio and the financing of the portfolio are held in Zurich.
The profits of Julius Baer Bank and Trust Co. Ltd., Cayman Islands (the bank) and its daughter organizations, roughly CHF 10-30,000,000 per year and probably much more today, flow back as a dividend to Julius Baer Holding, Zurich. The holding allowance is applied and the Caymans' interest yield is not taxed.

• The foreign domicile should be furnished with infrastructure.
  
• The offshore-company must hire own staff, which in act is working at the foreign domicile and possesses the required professional qualifications so that thereby the management of the offshore-company on site is ensured. Not sufficient is this respect is the engagement of loan staff by the offshore-company.
  
• The offshore-company has to obtain all necessary approvals and licenses with regard to the local legislation for its business.
  
• The sole purpose of the vehicle/construction should not be to minimize tax exposure in the home country.
  

If only one of the above-mentioned criteria cannot be proved, then the offshore company is qualified as a passive investment entity. This classification leads to extensive tax consequences (i.e. direct federal taxes, state- and local taxes, withholding taxes) in Switzerland.

Violation of matching maturities

Bank Julius Baer and Trust Co. Ltd., Cayman Islands (the bank) is financing a long-term bond portfolio (obligations with bonds of IFRS category "Hold to Maturity) as well as a speculative trading-book with customer- and bank-owned call-money (callable in 2-3 days). In Switzerland, holding short-term financing such as call-money in amounts as Julius Baer Bank & Trust Co. Ltd., Caymans Islands (the bank) is unlawful, especially under Swiss banking law, and therefore not possible to do legally. It is ridiculous that Cayman banking-law allows for short-term financing (customer call-money up to 90% of the balance) and long-term (obligations) and speculative (trading-book) investments of that money. That customer call-money is being used for financing of a long-term bond portfolio is clearly in violation of Swiss bank-law matching maturities. Naturally Bank Julius Baer argues that things need to be regarded from the perspective of the holding, not a single organization or offshore entity. In bankruptcy cases there is no corporate liability, which causes a higher risk on the offshore investment. It has never been the idea of the Swiss legislator that short-term investments (call-money) should reside with 100% controlled group organizations. The idea was to manifest a risk distribution, which means the money was supposed to be invested with third banks and not holding-internal offshore organizations. That a renowned private bank is holding an offshore trading-book is certainly despicable. This is very risky as clear banking regulations regarding risk management can be avoided. There is no professional risk management in the Caymans.

URSA Ltd., Cayman Islands

(100% shareholder: Julius Baer Bank and Trust Co. Ltd., Cayman Islands)
URSA is a group internal insurance pseudo-company of the bank, in place to reduce tax liabilities in Switzerland and other countries by deducting insurance premiums as business expenses of Bank Julius Baer, Zurich and other group organizations. This concerns insurance premiums of ca. CHF 500,000 per year (probably more today). The benefits from the bond portfolio and the gains from pseudo insurance premiums of group organizations make up the equity capital of URSA of around CHF 25,000,000. URSA has not paid for one group-internal insurance claim in the last 15 years, as all losses are directly charged to the Baer organizations, which furthermore lead to local tax liability reduction. The company has no real administrative efforts and no operative costs, as it has no employees. Decisions on the bond portfolio are made in Zurich and London. These services are not invoiced and therefore neither London nor Zurich generates any incomes or tax liability. Moreover no value-added tax is being applied to the premiums, even though URSA is indirectly held by Julius Baer Holding AG, Zurich (renderer and beneficiary of service are both in Switzerland). URSA is an instrument with the sole purpose of minimizing and evading taxes.

Baer Select Management Ltd, Cayman Islands

(100% shareholder: Julius Baer Bank and Trust Co. Ltd., Cayman Islands)

The purpose of this organization is to act as an investment manager and employee investment advisors to delegate investment decisions to professional managers.
This is the height of tax minimization, as the management fees, investment advisory fees and partly the performance fees of Swiss stock-notated companies (CreInvest AG, Zug and shaPE AG, Zug/Freienbach) are collected tax free offshore. The company holds no employees or furniture, but manages the Investment Management Mandate of diverse Baer funds (CreInvest, shaPE, Fixed Income Hedge Funds and newly diverse other Hedge Funds). Baer Select Management Ltd., Caymans Islands (investment manager) has the mandate to perform Investment Management Services via an Investment Advisor, for instance for CreInvest Ltd, Cayman, which is held by CreInvest AG, Zug. The services are charged with CreInvest Ltd, Cayman (holding a bond portfolio in Zurich and New York at Julius Baer companies), so tax-free profits can be generated in the Cayman Islands. CreInvest AG, Zug, holds just enough dividend that operation costs can be covered and only a very small profit is made in Switzerland (profit-manipulation). Naturally CreInvest Ltd., Cayman is profiting as the offshore entity from the acquisitions and sales with many fewer charges and sketchy legal regulations in the Cayman Islands. While Swiss law for investment funds is rigorous, such laws are non-existent in the Caymans.
Also shaPE, Cayman and shaPE, Freienbach (Kanton Schwyz, the Swiss tax haven) are structured in the same manner. CreInvest AG, Zug and ShaPE AG, Freienbach are assigned to the Swiss stock exchange, but the investment management appears to be moved to the Caymans. As a result, Investment Management Fees and Performance Shares can be collected offshore by Baer Select Management Ltd., Cayman. This again reduces taxable earnings due to Switzerland and other countries.
Further funds like Julius Baer Diversified Fixed Income Hedge Fund, Cayman, JB Black Sea Frontier Fund 2007 and Julius Baer Equity Hedge Fund, Cayman are structured in the same way. The Management, Performance and Investment Management fees accumulate offshore with Baer Select Management Ltd., Cayman. It also has to be regarded that CreInvest AG, Zug, as well as shaPE AG, Freienbach, are using Swiss infrastructure as they are listed on the Swiss stock exchange (SWX). The profits are entirely made by Baer Select Management Ltd., Caymans Islands (please see below), These profits flow back as a dividend to the Julius Baer Holding AG, Zurich, via Julius Baer Bank and Trust Co Ltd, Cayman. The fact is that the Win/fee ratio (Definition: difference between charged fees for Investment Management Mandates and paid fees to so-called Investment Advisors) that are economically generated by Switzerland or another country accumulate offshore and are then transferred back to Zurich to Julius Baer Holding AG. In this process the holding allowance is asserted and therefore profits are never taxed.

The rip-off

Especially the case of shaPE is a violation of Corporate Governance. The majority of customers who have invested in this product are customers of Bank Julius Baer. These customers gave a mandate for asset management to the bank. The management has exploited this and indirectly forced their own consultants to buy shaPE bonds for the customers. This amounts to CHF 130,000,000 that has forcibly been invested to make a success of the shaPE entity in respectively generating more fees offshore. The shaPE stock is an under performer compared to the market. The bank profits around 1.5% from the CHF 130,000,000 though, which equals to 2,000,000 annually. It generates untaxed profits from its suffering customer's assets.

Calculation of fees for both organizations

CreInvest, Zug, respectively Cayman:

• fund volume: USD 340,000,000
  

• fees: range of 2% Investment Management / Advisory Fees, Custodian Fees for investments, Transaction Fees, Performance Fees.
  

• The offshore organization Baer Select Management Ltd., Cayman, gained around the year 2000 ca. USD 12,000,000 per year, tax-exempt.
  

shaPE, Zug/Freienbach, respectively Cayman:

• fund volume: CHF 130,000,000 (mainly customers with asset management mandates)
  

• fees: up to 2% Investment Management / Advisory Fees, Custodian Fees 0,2%, Transaction Fees
  

• a 10% Performance Fee is a farce, the performance is rarely, if at all achieved.
  

• The offshore organization Baer Select Management Ltd., Cayman, generates ca. CHF 3,700,000 per year, tax-exempt.
  

Besides CreInvest Ltd., Cayman and shaPE Ltd., Cayman, the Baer-owned Hedge Funds pay fees to Baer Select Management. Consequently Baer Select Management is an actual cash cowthat produces tax-exempt profits offshore and moves these back to Zurich.

Julius Baer Trust and Co Ltd. Cayman Islands

The purpose of this organization is to offer the following services:

• Administration of Mutual Funds
  

• Administration of Trusts & Companies
  

Principally this organization also offers services to independent Swiss asset managers who exploit the holes arising from the lack of knowledge of the Cayman legislation and also generate certain Management Fees offshore that the Swiss federal tax can be deprived of. A classic example is that of Mr. C. L. Jr., the former representative of Julius Baer, Mexico City and former member of the advisory board of Julius Baer, Cayman. The Julius Baer corporation had to do a moonlight flit there because of C. L. Jr.'s involvement in the Salinas story. The Swiss criminal prosecution has been investigating C. L. Jr. since 1995 for money-laundering, drug-trafficking, misappropriation of funds, and other criminal matters (in detail: BGE 125 IV 165). On the 15th of November 1995 C. L. Jr.'s assets in Zurich were seized due to preliminary proceedings initiated by Swiss authorities. He was the trusted investment advisor to members of former Mexican president Raul Salinas' family and had also been involved with the assets of Salinas' brother at Bank Julius Baer, Zurich. It is known from reliable sources that the proceedings against him and the bank closed: the Due Diligence investigation in the Salinas case was sloppy and is thus not punishable. This leads to the assumption that sloppy Due Diligence is treated as a peccadillo in Switzerland.
The Cayman unit also offers Trust & Company services, to ascribe money back to Switzerland via detours, i.e. in forms of grants and thereby generate tax-exempt interest from the credits offshore.
The concept of these FINTEX corporations is that money can be deposited on the account of a customer's offshore company with Julius Baer in Zurich. This offshore company is administered by the Julius Baer Bank and Trust Co. Ltd., Cayman. To make the money usable for the mother company, the Cayman corporation grants a credit with a profitable interest rate. The expenses for interest are now declared justifiable as pertaining to business expenses, and again Swiss tax revenues are reduced. Julius Baer is aiding here actively to avoid taxes. This offshore entity is also needed to make payments to third parties that are not liked by corporate accounting. The question remains as to what return services are offered by the receiver. In fact, this company is abellevue grite.
Julius Baer Bank & Trust Co. Ltd., Cayman has also been used for course maintenance of the CreInvest AG, Zurich stock. CreInvest stock was purchased in large volume to keep the stock up. The company's own stock was up 40% at certain points in time. Bank Julius Baer, Zurich would not have been allowed to hold more than a certain amount of stocks without involving the federal tax office. Thus the major part was transacted via Julius Baer Bank & Trust Co. Ltd., Cayman.

Calculation of Swiss tax losses due to activities of Bank Julius Baer on the Caymans

[TABLE]
estimated Swiss tax loss[TR]
[TH][/TH]
[TH]Yearly average profit in Mio. CHF[/TH]
[TH]Tax burden Zurich and dBSt. ca 35%[/TH]
[TH]Tax-reduction/- resp. fraud per year[/TH]
[/TR]
[TR]
[TH]Julius Baer Bank and Trust Co. Ltd., Cayman Islands[/TH]
[TD]CHF 15 - 20,000,000[/TD]
[TD]CHF 7,000,000[/TD]
[TD]CHF 7,000,000[/TD]
[/TR]
[TR]
[TH]Julius Baer Trust Co. Ltd., Cayman Islands[/TH]
[TD]CHF 3,000,000[/TD]
[TD]CHF 1,000,000[/TD]
[TD]CHF 1,000,000[/TD]
[/TR]
[TR]
[TH]Baer Select Management Ltd., Cayman Islands[/TH]
[TD]CHF 8 - 9,000,000[/TD]
[TD]CHF 3,000,000[/TD]
[TD]CHF 3,000,000[/TD]
[/TR]
[TR]
[TH]URSA Ltd., Cayman Islands[/TH]
[TD]CHF 500,000[/TD]
[TD]CHF 200,000[/TD]
[TD]CHF 200,000[/TD]
[/TR]
[TR]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[/TR]
[TR]
[TH]Total per year[/TH]
[TD]CHF 26,5 - 32,500,000[/TD]
[TD][/TD]
[TD]CHF 10,2 - 11,200,000[/TD]
[/TR]
[/TABLE]

The CHF 26,5 - 32,500,000 provide for an estimated taxable profit of ca. CHF 38 - 45,000,000 in Switzerland. Normally this would be applicable to Direct Federal Tax (Direkte Bundessteuer), state and local taxes (Staats- und Gemeindesteuer) as well as withholding tax in case of payout of dividends. These payouts would also be taxed as income if pertaining to a human person. All these tax burdens are not there for the offshore entity.
These numbers are based on experience from 1997 to 2003 and it is therefore clear that the massive growth of the Baer group (Asset under Management 2002 ca. CHF 170,000,000,000 and 1900 employees versus CHF 400,000,000,000 and 4100 employees in 2008) must mean these numbers are pretty conservative and today are a multiple due to higher transaction volumes and further funds on the Caymans.

Handling of offshore constructs by the cantonal tax office of canton Zurich

The responsible people with Julius Baer will respond to the facts presented in this report that all efforts have in detail been coordinated with the tax authorities. The intermingling of the cantonal tax authorities with the Zurich finance world has to be assessed critically from my perspective. It is understandable that the canton Zurich does not want to disgruntle the big tax payer Julius Baer and therefore grants so-called "tax rulings". But when the Zurich tax authorities have once agreed to an offshore entity, a lot is needed before coming back to this decision. The dimension of the profit that is generated offshore is not revealed when presenting the construct initially. This would raise questions about the construct. The cantonal tax authority thus grants a permit without being able to know the dimension of tax loss. Furthermore, as soon as a construct has been acknowledge by the tax authorities (via a written acknowledgment), it is protected by Cayman banking secrecy. The tax authorities can then no longer ask for disclosure. The tax authorities therefore also never see balances of profit calculations from the Cayman corporations and will never know the degree of "tax-savings". Also interesting is that neither the Confederate Tax Administration (Eidgenoessische Steuerverwaltung), nor the Confederate Withholding-tax authority or department for added-value taxes ever are consulted for such "tax-ruling" negotiations, or have any right of co-determination. It is the sole realm of the cantonal Tax Authority to pass such rulings.
Julius Baer argues that these offshore entities have been agreed upon with the tax administration and there also would be the "Arm's Length Principle", and therefore all is lawfully sound. Nevertheless the effect is that:

• Julius Baer pays massively reduced taxes
  

• Swiss small- and medium-sized businesses can not afford such entities
  

• the people and the state lose tax revenue
  

Tax authorities are not allowed to use data

Cayman-data that has lawfully come into my possession can not be used by the Confederate Tax Administration for investigation. As the responsible person for the bank I had to take a tape copy home with me, to make sure bank data could be reconstructed timely in case of a fire. This would also have been the case for a hurricane, in which case I had to fly the data out of the island, which I have done a couple of times.
My employment contract was been canceled while I was on holidays in the hospital in Zurich for a spinal surgery. Therefore no one has asked for this data. I therefore assert that I have lawfully obtained the data from the Caymans, there can be no talk of theft. This has also been stated in written form by the Zurich prosecutor. Also the Cayman jurisdiction has not accused me, but the Weltwoche (Lukas Haessig) and "Sonntagszeitung" (Meinrad Ballmer) started a media campaign against me as a data-thief. Ballmer went as far as to calling me a psychically suffering person. Even more aggravating is that the Zurich judges denied the Confederate Tax Administration the right to analyze the related files, therefore making an investigation into Baer-Cayman-customers and the bank itself impossible. This has been confirmed by the Confederate Tax Administration (ESTV) in a letter:
"The ESVT has been denied access to records of the criminal prosecutor of the canton Zurich against Rudolf Elmer. This has been justified with the claim that the by the prosecutor illegally obtained files from Bank Julius Baer are still subject to Swiss banking secrets. In a "proper" criminal investigation the prosecutor would not have been able to seize customer data from a daughter company of Bank Julius Baer in a foreign country. As Rudolf Elmer is still subject to the banking secrecy, the ESTV can not use any oral or written statements from you in any investigation against particular persons or organizations, as this information would have been obtained illegally by us." This justification is ridiculous and only an argument pushed forward to deny access to records.
In contrast, the prosecutor has granted access to even those files to the compensation fund of the banks (Ausgleichskasse der Banken), which lead to the bank having to remargin thousands of franks of social security payments. Obviously the rights of the Confederate Department of Finance and the Confederate Department of Social Insurance to access the files are being judged differently by the Zurich judges.
This shows clearly that the Swiss legislation is just not sufficient in such cases. The bank can optimize its tax evasion and the state can not call this bank to account when it learns about it. The wrongly manifested statements in the management protocols on the Caymans, that "account" for acquisition and sales decisions being taken in the Caymans 6-7 hours after the actual transaction occurred, can thus not be prosecuted. A discussion about the ethics and morality of such behavior/decision is superfluous.

Responsibilities

The following people know about and have the responsibility for the activities of Bank Baer on the Cayman Islands:

• Raymond Baer, VR President of Julius Baer Holding AG, former VR President of of CreInvest AG, Zug and former Business Line Responsible for Julius Baer, Cayman
  

• Rudolf E. Baer, former CEO of Julius Baer Holding AG, former VR of Julius Baer Bank and Trust Co. Ltd., Cayman
  

• Walter Knabenhans, former CEO Julius Baer Holding AG, Zurich, former President of the Advisory Board Julius Baer Bank and Trust Co. Ltd., Cayman Islands
  

• Michael Vukotic, Bankdirector Julius Baer Bank AG, Zurich, Advisory Board Julius Baer Bank and Trust Co. Ltd., Cayman Islands
  

• Martin Vogel, Advisory Board Julius Baer Bank and Trust Co. Ltd., Cayman Islands
  

• Fabio Oetterli, Director Baer Select Management Ltd., Caymans Islands, Director Bank Julius Baer & Co AG, Zurich
  

Protection of the investor

This example shows how important it is that the investor have control over his offshore vehicle and does not give a full management mandate to an unprofessional consultant. This pertains to the Offshore product Swisspartner. An example (in english language):

A United States resident claims he lost $22 million as a result of the mis-handled restructuring of his offshore account made necessary by Swiss banks agreeing to co-operate with the IRS.
At the center of the allegations are Bank Julius Baer and Dexia Private Bank, both of Switzerland, and investment firms controlled by Liechtensteinische Landesbank Ltd., of Liechtenstein.
Anthony Defries, of Berryville, Virginia, alleges the value of his securities portfolio plummeted after he was induced by his advisers to give up direct control in order to comply with U. S. tax laws.
Four months later, the portfolio had lost $22 million as his money managers failed to implement a limit strategy or obtain insurance, as they should have, it was alleged.
In an effort to recoup his losses, Defries filed a civil complaint at the U. S. District Court for the Eastern District of Virginia on October 29, 2003, alleging "securities and insurance fraud".
Defendants are Swiss Partners Investment Network Ltd., of Liechtenstein; Swiss Partners Insurance Company SPC Ltd., of Switzerland; Liechtensteinische Landesbank Ltd., of Liechtenstein; Karp & Genauer PA, of Florida; Bank Julius Baer & Company Ltd., of Switzerland; Dexia PrivatBank, of Switzerland; Rainer H. Moses, a Swiss national; Martin P. Egli, a Swiss national residing in Monaco; Simon Newson, a Swiss national; Benno K. Raeber, a Swiss national; Anthony B. Stelling, a British national residing in the Cayman Islands; Elfried Hasler, residing in Switzerland; Norman Oehri, residing in Switzerland; Joel J. Karp, residing in Florida; Raymond J. Baer, residing in Switzerland; Armin Weber, a Swiss national; Marcel Wieduwilt, a Swiss national; Sigrid Baur, residing in Switzerland; and Alfons Widmer, residing in Switzerland.
Defries indicated his lawsuit may turn into a class action on behalf of "any policyholder who participated in or purchased insurance products from Swiss Partners Insurance Company SPC during the relevant period".
"The Defendants have been requested to provide details of the holders of optional variable annuities so that those holders might be asked if they wished to pursue such a class action, but the Defendants have failed and refused to provide any such information," he alleged.
Defries claims that, from 1997 to 2001, the defendants "dealt in unregistered securities in violation of the Securities Act 1933 and sought to pass off those securities as unlicensed insurance products". "Defendants further engaged in a conspiracy with each other to set up, market, disseminate and sell unregistered securities and unlicensed insurance products and so-called purported deferred variable annuity insurance policies in the USA and in Switzerland and carried out a course of conduct involving such fraud, conspiracy, reckless behavior and attendant actions, occurred in the period between 1997 and 2001."
Defries claims that his own problems began in April, 2000 when Rainer Moser, of SPIN/SPC, advised him of "a new IRS ruling under which all US equity holders who were US residents would be required to pay full withholding tax and penalties".
"Moser said that the Swiss banking community had agreed to cooperate with the IRS and disclose the US resident owners of all Swiss accounts.
"The deadline for such disclosures and penalties was December 2000. SPIN advised Defries that reconstruction of the portfolio and the necessary insurance protection in the form of a Deferred Variable Annuity would have to be implemented before that date.
"They insisted that the account management be made entirely local at SPIN, with no direction from Defries or the US. They specifically described insurance guidelines and restrictions as requiring a complete cutout of any US direction, management, or control."
Defries claims that he relinquished direct control of his account in July, 2000 and that, by November, 2000, his securities portfolio had suffered losses of approximately $22 million.
Much of the loss was incurred in the stock of Bookham Technology PLC, whose shares are listed on the London Stock Exchange and Nasdaq, stated Defries.
He said he made a profit of $15 million on an initial investment of $500,000 in Bookham in 1999 when it conducted "a very successful" IPO in 2000.
"The bulk of this profit was subsequently lost by failure of SPIN to take required and requested action to protect the stock," he alleged, as Bookham's share price fell from $40 to $12.
SPIN failed to act on Defries' request to "establish a limit strategy for Bookham to protect the entire position at $35 to $40".

This is only one example of many incidents within Julius Baer Group. It can be acknowledged here that Julius Baer warned the customer.


The second whistleblower letter will be dedicated to the topic of "tax-ruling" of the Zurich tax department and the role of a well-known law firm in the Bahnhofstrasse, Zurich in this.
The third whistleblower letter will deal with the topic of "practices" pertaining to single formerly existent cases to demonstrate in what ways external asset managers use offshore vehicles.

Rudolf Elmer, February 2008

[Paul Rigby]

HSBC Bank : Secret Origins to 26/11 Mumbai Attacks

http://greatgameindia.com/hsbc-bank-secr...ai-attacks

#SwissLeaks what the media has termed it is a trove of secret documents from HSBC's Swiss private banking arm that reveals names of account holders and their balances for the year 2006-07. They come from over 200 countries, the total balance over $100 billion. But nowhere has the HSBC Swiss list touched off a more raging political debate than in India.

That's why to obtain and investigate the Indian names, The Indian Express partnered in a three-month-long global project with the Washington-based International Consortium of Investigative Journalists (ICIJ) and the Paris-based Le Monde newspaper. The investigation revealed 1,195 Indian HSBC clients, roughly double the 628 names that French authorities gave to the Government in 2011. The new revelation published as part of a global agreement is expected to significantly widen the scale and scope of the ongoing probe by the Special Investigation Team (SIT) appointed by the Supreme Court.

For years, when banks have been caught laundering drug money, they have claimed that they did not know, that they were but victims of sneaky drug dealers and a few corrupt employees. Nothing could be further from the truth. The truth is that a considerable portion of the global banking system is explicitly dedicated to handling the enormous volume of cash produced daily by dope traffickers.

Contrary to popular opinion, it is not "demand" from the world's population which creates the mind destroying drug trade. Rather, it is the world financial oligarchy, looking for massive profits and the destruction of the minds of the population it is determined to dominate, which organized the drug trade. The case of HSBC underscores that point. Serving as the central bank of this global apparatus, is HSBC.

East India Company Origins

The opium trade began in the early 1700s as an official monopoly of the British East India Company, which conquered India, and ran it on behalf of the British Crown and the financiers operating through the City of London. Indian-grown opium became a key component in the trade for tea and silk in China. The East India Company had a thriving business selling British textiles and other manufactured products in India, and selling Chinese silk and tea in Britain. But the Company ran into problems with the opium end of the trade. The influx of opium caused major problems for China, and led the Emperor to issue an edict in 1729 prohibiting opium consumption. Then, in 1757, the Emperor restricted all foreigners and foreign vessels to a trading area in the port city of Canton. A stronger edict in 1799 prohibited the importation and use of opium under penalty of death.

None of this stopped the British from continuing to flood China with opium, creating millions of addicts, but it did cause the East India Company to protect its tea and silk trade by shifting its Chinese opium operations to nominally independent drug runners who bought opium legally from the East India Company in Calcutta, and smuggled it into China. The most prominent of these drug-running firms was Jardine Matheson & Co. It was founded in 1832 by two Scotsmen, William Jardine and James Matheson. Jardine had been a ship's surgeon with the East India Company, while Matheson was the son of a Scottish baronet. The firm today is controlled by the Keswick family. In 1839, the Chinese Emperor launched an anti-opium offensive, which included the confiscation of all opium stocks in the hands of Chinese and foreign merchants. The merchants put up a fight, but were ultimately forced to concede, turning in their opium stocks after being indemnified against losses by British officials.

In response, however, the British launched a propaganda campaign against China, accusing it of violating Britain's right to "free trade." Britain sent its fleet to China, to force the Chinese to capitulate to the opium trade. The action, known as the First Opium War, resulted in the Treaty of Nanking in 1842, under which China not only capitulated to the opium trade, but also agreed to pay reparations to the opium runners and gave the British control of the island of Hong Kong. However, the treaty did not specifically legalize opium, so the British launched a second Opium War, which resulted in the 1856 Treaty of Tientsin, which legitimized the opium trade and opened China up to foreigners even more.

As the opium and other trade with China expanded, Britain's new territory of Hong Kong became a major imperial commercial center. The opium dealers gathered together to form a bank, the Hongkong and Shanghai Bank, as the financial flagship of the British opium trade. Over time, the banknow known as HSBCwould extend its reach into the drug fields of the Middle East and Ibero-America, as befitting its role as the financial kingpin of Dope, Inc.

Role of Secret Societies

In 1783 Lord Shelbourne launched the Chinese opium trade with Scottish merchants from the East India Company and members of the House of Windsor-allied Knights of St. John Jerusalem.

Shelbourne's chief propagandist was Adam Smith who worked for East India Company, which emerged from the slave-trading Levant Company and later became known as Chatham House, home to the powerful Royal Institute for International Affairs (RIIA). In 1776 the high seas pirate Adam Smith wrote Wealth of Nations, which became the bible of international capitalism.

In the Far East the British organized the Chinese Triad Society, also known as the Society of Heaven and Earth, to smuggle their opium. Beginning in 1788 the Freemason Grand Lodge of England established lodges in China, one of which was the Triad Society. Another was known as the Order of the Swastika.

In 1839 William Jardine- a Canton-based opium trafficker- steered Britain into the first Opium War after Chinese officials confiscated his stash. The second Opium War lasted from 1858-1860. Lord Palmerston commanded both expeditions for the Brits. He was also the High Priest of Scottish Rite Freemasonry in the British Empire.

Throughout the 19th century the British families of Matheson, Keswick, Swire, Dent, Inchcape, Baring and Rothschild controlled the Chinese heroin traffic. The Inchcape's and Baring's Peninsular & Orient Steam Navigation Company (PONC) transported the dope around the world.

To the US West Coast, the families brought Chinese coolies to build JP Morgan's railroads, slave laborers who were kidnapped (shanghaied) by the Triads. The Triads came along too, setting up opium dens in San Francisco and Vancouver and using a network of Chinatowns as a channel for heroin. This network exists today. To the US East Coast the families brought African slaves and cotton. These same families built plantations and became kings of southern cotton on the backs of shanghaied Africans.

The American families Perkins, Astor and Forbes made millions off the opium trade. The Perkins' founded Bank of Boston, which is today known as Credit Suisse First Boston. The Perkins and Morgan families endowed Harvard University. William Hathaway Forbes was a director at Hong Kong Shanghai Bank shortly after it was founded in 1866. John Murray Forbes was the US agent for the Barings banking family, which financed most of the early drug trade. The Forbes family heirs later launched Forbes magazine. Steve Forbes ran for President in 1996. John Jacob Astor invested his opium proceeds in Manhattan real estate and worked for British intelligence. The Astor family home in London sits opposite Chatham House.

These families launched the Hong Kong Shanghai Bank Corporation (HSBC) after the second Opium War as a repository for their opium proceeds. HSBC, a subsidiary of the London-based HSBC Holdings, today prints 75% of Hong Kong's currency, while the British Cecil Rhodes-founded Standard Chartered Bank prints the rest. HSBC's Hong Kong headquarters sits next to a massive Masonic Temple.

Freemasonry is a highly secretive society, making it an ideal vehicle for global drugs and arms trafficking. According to 33rd Degree Mason Manly Hall, "Freemasonry is a fraternity within a fraternity an outer organization concealing an inner brotherhood of the elect…the one visible and the other invisible. The visible society is a splendid camaraderie of free and accepted' men enjoined to devote themselves to ethical, educational, fraternal, patriotic and humanitarian concerns. The invisible society is a secret and most august fraternity whose members are dedicated to the service of an arcanum arcandrum (sacred secret)."

Wealth derived from selling this Chinese opium during British colonial rule, helped build many landmarks on India's west coast. The Mahim Causeway, The Sir JJ School of Art, David Sassoon Library and Flora Fountain, landmarks in modern Mumbai, were built by prominent Parsi and Jewish traders from profits made by a flourishing opium and later cotton trade with China.

Prominent families from Mumbai's past, names that adorn today's famous institutions such as the Wadia's, Tata's, Jejeebhoy's, Readymoney's, Cama's and Sassoon's sold opium to China through the British. By the end of the nineteenth century, when the opium trade went bust, cotton from India's western state of Gujarat, which had already developed strong trade links with Canton profited. The Paris's ploughed profits from the trade with the Chinese back into India, setting up several schools, hospitals and banks. Historical records prove that some of India's prominent Parsi traders at the time, were founders of the Hong Kong and Shanghai Banking Corporation (HSBC) founded in 1865. For a detailed report read Rothschild colonization of India.

It is this deadly opium empire that Gandhiji was very much conscious about and spoke out against for which he was jailed in 1921 by India's British rulers for "undermining the revenue". Having seen generations of Chinese youths rendered docile and passive Gandhijis was concerned over opium and its deadly effects on India which is clear from his letters. These opium production activities ran until 1924 in India and were stopped with the heroic efforts of Mahatma Gandhi who first agitated to remove opium production from India and destruction of China using Indian soil. Finally the British transferred the entire production to Afghanistan in 1924 handing the production to southern Afghani tribals which after 90 years became the golden crescent of opium production. Though the production is in the hands of Afghan tribals the distribution finance market control is still exercised by the same old British business houses or their proxies.

Afghan Opium for Bankers and Terrorists

There is a general impression that Afghanistan has always been the center of opium production. In fact, it has not. Prior to the Soviet invasion in 1979, opium production in Afghanistan was less than 1,000 tons; that grew to 8,200 tons (based on conservative UN Office on Drugs and Crime/UNODC figures) in 2008. Throughout this period, Afghanistan was in a state of war. Following the Soviet invasion, the anti-Soviet powers, particularly, the US, UK, and Saudi Arabia, began generating larger amounts of drug money to finance much of the war to defeat the Soviets. Since 1989, after the Soviet withdrawal, there has been an all-out civil war in Afghanistan, as the US-UK-Saudi-created mujahideen dipped further into the opium/heroin money.

What was happening in Afghanistan during this period that caused opium production to soar to those levels? History shows that the US invasion in 2001 came close to wiping out the Taliban forces; the Afghan people, at least at that point in time, because of the Pakistani-Saudi links to the Taliban and the oppressive nature of the Wahhabi-indoctrinated regime, supported the invading American and NATO forces. That began to change in 2005.

The year 2005 is important in this context, since one of the most damning parts of the US Senate report details HSBC's relationship with the Saudi-based Al Rajhi Bank, a member of Osama bin Laden's "Golden Chain" of important al-Qaeda financiers. The HSBC-Al Rajhi relationship has spanned decades; perhaps that is why, even when HSBC's own internal compliance offices asked that it be terminated in 2005, and even when the US government discovered hard evidence of Al Rajhi's relationship with terrorism, HSBC continued to do business with the bank until 2010.

In fact, the report said, Al Rajhi's links to terrorism were confirmed in 2002, when US agents searched the offices of a Saudi non-profit US-designated terrorist organization, Benevolence International Foundation. In that raid, agents uncovered a CD-ROM listing the names of financiers in bin Laden's Golden Chain. One of those names was Sulaiman bin Abdul Aziz Al Rajhi, a founder of Al Rajhi bank.

Recently an operation by German Customs official revealed that the British Queen financed Osama Bin Laden. German officials in an operation raided two containers passing through Hamburg Port and seized 14,000 documents establishing that Osama bin Laden was funded by UK Queen's bank Coutts, which is part of the Royal Bank of Scotland.

HSBC & 26/11 Mumbai Attacks

Why did HSBC not terminate its links with the Al Rajhi in 2005? The answer lies in what was then put in place in Afghanistan to generate large amounts of cash. When it comes to opium/ heroin and offshore banks, Britain rules supreme. In 2005, poppy fields in southern Afghanistan began to bloom, and it became evident to the bankers and the geo-politicians of Britain and the US that cash to support the financial centers and the terrorists could be made right there.

It was announced on Jan. 27, 2006 in the British Parliament that a NATO International Security Assistance Force (ISAF) would be replacing the US troops in Helmand province as part of Operation Herrick. The British 16 Air Assault Brigade would make up the core of the force. British bases were then located in the districts of Sangin, Lashkar Gah, and Gereshk.

As of Summer 2006, Helmand was one of the provinces involved in Operation Mountain Thrust, a combined NATO/Afghan mission targeted at Taliban fighters in the south of the country. In July 2006, the offensive essentially stalled in Helmand, as NATO (primarily British) and Afghan troops were forced to take increasingly defensive positions under heavy insurgent pressure. In response, British troop levels in the province were increased, and new encampments were established in Sangin and Gereshk. In Autumn 2006, some 8,000 British troops began to reach "cessation of hostilities" agreements with local Taliban forces around the district centers where they had been stationed earlier in the Summer, and it is then that drug-money laundering began in earnest.

This drug money, at least a good part of it, is generated in this area with the help of Dawood Ibrahim, who also played a role in helping the Mumbai attackers by giving them the use of his existing network in Mumbai. At the time, Ibrahim worked on behalf of the British, and ran his operation through the British-controlled emirate of Dubai. Drugs came into Dubai through Dawood's "mules," protected by the Pakistani ISI and British MI6; the dope was shipped in containers which carried equipment sent there for "repair" from Kandahar and elsewhere in southern Afghanistan. British troops controlled Helmand province, where 53% of Afghanistan's gargantuan 8,200 tons of opium was produced in 2007.

The drugs were converted, and still are today, to cash in Dubai, where Dawood maintains a palatial mansion, similar to the one he maintains in Karachi. Dubai is a tax-free island-city, and a major offshore banking center. The most common reason for opening an offshore bank account is the flexibility that comes with it.

With the development of the Dubai International Financial Centre (DIFC), which is the latest free-trade zone to be set up there, flexible and unrestricted offshore banking has become big business. Many of the world's largest banks already have significant presence in Dubai big names such as Abbey National Offshore, HSBC Offshore, ABN Amro, ANZ Grindlays, Banque Paribas, Banque de Caire, Barclays, Dresdner, and Merrill Lynch, all have offices in the Emirate already.

In addition to Dubai, most of the offshore banks are located in former British colonies, and all of them are involved in money laundering. In other words, the legitimization of cash generated from drug sales and other smuggled illegitimate goods into the "respectable banks" is the modus operandi of these offshore banks. The drugs that Dawood's mules carry are providing a necessary service for the global financial system, as well as for the terrorists who are killing innocents all over the world.

In December of 2007, this Britain-run drug-money-laundering and terrorist-networking operation was about to be exposed when Afghan President Hamid Karzai learned that two British MI6 agents were working under the cover of the United Nations and the European Union behind his back, to finance and negotiate with the Taliban. He expelled them from Afghanistan. One of them, a Briton, Michael Semple, was the acting head of the EU mission in Afghanistan and is widely known as a close confidant of Britain's Ambassador, Sir Sherard Cowper-Coles. Semple now masquerades as an academic analyst of Afghanistan, and was associated with the Harvard Kennedy School's Carr Center. The second man, an Irishman, Mervin Patterson, was the third-ranking UN official in Afghanistan at the time that he was summarily expelled.

These MI6 agents were entrusted by London with the task of using Britain's 7,700 troops in the opium-infested, Pushtun-dominated, southern province of Helmand to train 2,000 Afghan militants, ostensibly to "infiltrate" the enemy and "seek intelligence" about the lethal arms of the real Taliban. Karzai rightly saw it as Britain's efforts to develop a lethal group within Afghanistan, a new crop of terrorists.

The drug money thus generated to fund the financial centers and terrorists through HSBC was also responsible for ongoing terrorist attacks that have destabilized most of South Asia. The most important of these was the massive attack on Mumbai.

The mode used to launder such drug money is through diamonds. A 2003 Report assessed various alternative financing mechanisms that could be used to facilitate money laundering and or terrorist financing. Trading in commodities, remittance systems, and currency were assessed on each of their abilities to earn, be moved, and store value. Diamonds were the only alternative financial device that fit into all of these assessment criteria.

Diamonds can be vulnerable for misuse for money laundering and terrorist financing purposes because they can transfer value and ownership quickly, often, with a minimal audit trail. They provide flexibility and an easy transportation of value.

Top diamond traders of the country, several of whom are now settled abroad, figure on what the media calls as the #SwissList, with mostly Mumbai addresses given. Many persons on the list are Gujarati diamond merchants with offices all over world having roots in Palanpur.

However their involvement in not just limited to money laundering. Almost 6 months before 26/11 2008 Mumbai Attacks the Financial Intelligence Unit of India (FIU-IND) (the central national agency responsible for receiving, processing, analyzing and disseminating information relating to suspect financial transactions) was already tracking the diamond industry for suspicious activities by terrorists.

"A year ago, some people from Mumbai began purchasing diamonds worth crores of rupees. When the industry tried to trace the traders, they turned out to be non-existent," said Vanani.

The FIU traced all foreign transactions of Surat's diamond industry, especially those emanating from Belgium. It found that a great deal of money was being invested by terrorist groups.

However in May 2014 eight of these Belgium based diamond dealers were given a clean chit by the Income Tax department in the black money case. The I-T department said a probe was initiated against the eight individuals, but there was no proof of tax evasion by them. Why is the Government reluctant in disclosing Black Money related data; be it NDA and even UPA before it ? For a detailed report on the issue read 26/11 The Black Money Trail.

From the Far East to the Middle East to Ibero-America to India, everywhere the drug trade is flourishing, you will find HSBC. It may not handle the dope, but it does handle the money, making sure that the "citizens above suspicion" who run the empire get their cut of the proceeds. Now HSBC has been caught red-handed laundering money in the U.S., India, China, Argentina almost everywhere the sun shined through the colonies. This is a bank which has abused us, assaulted our people, and violated the law with abandon. Isn't it time we set an example and revoke its charter to do business here in India ?

Report prepared by Drug Trafficking & Narco-Terrorism Department of GreatGameIndia

[Magda Hassan]

It has a Larouchie whiff about it but this article is great! I especially like the following:

Contrary to popular opinion, it is not "demand" from the world's population which creates the mind destroying drug trade. Rather, it is the world financial oligarchy, looking for massive profits and the destruction of the minds of the population it is determined to dominate, which organized the drug trade. The case of HSBC underscores that point. Serving as the central bank of this global apparatus, is HSBC.

Yes. It is often potrayed as the rational benevolent market simply fulfilling the needs of the demanding consumers. Nothing about how that need was created and in whose interests that was.

In response, however, the British launched a propaganda campaign against China, accusing it of violating Britain's right to "free trade."

.....the 1856 Treaty of Tientsin, which legitimized the opium trade and opened China up to foreigners even more.

Plus ça change, plus c'est la même chose! Just like the all the 'free trade' TPPs NAFTAs today. Free trade isn't free at all.

Freemasonry is a highly secretive society, making it an ideal vehicle for global drugs and arms trafficking.

Yes indeed!

It is this deadly opium empire that Gandhiji was very much conscious about and spoke out against for which he was jailed in 1921 by India's British rulers for "undermining the revenue". Having seen generations of Chinese youths rendered docile and passive Gandhijis was concerned over opium and its deadly effects on India which is clear from his letters. These opium production activities ran until 1924 in India and were stopped with the heroic efforts of Mahatma Gandhi who first agitated to remove opium production from India and destruction of China using Indian soil. Finally the British transferred the entire production to Afghanistan in 1924 handing the production to southern Afghani tribals which after 90 years became the golden crescent of opium production. Though the production is in the hands of Afghan tribals the distribution finance market control is still exercised by the same old British business houses or their proxies.

Plus ça change, plus c'est la même chose

The mode used to launder such drug money is through diamonds.

Of which HK was (is still?) a major player.

[David Guyatt]

Exactly my thoughts too, the LaRouche whiff ---- maybe because the author attributes the drug running to the Queen but soon adds that actually it was Coutts & Co that are involved. A bit shoddy that. I'd hate to be associated with the dirty business of my bank simply by virtue of being a customer (when the choices of high street banks these days are mighty slim - and all are dirty imo, anyway)

The better angle is to highlight the fact that Coutts & Co are wholly owned by RBS - which the author does so, in fact, but fails to add the rider: - that RBS is, in turn, 84% owned by the British government - albeit involuntarily.

More important I think, is the story surrounding Michael Semple. If LaRouche's EIR is correct, it was not Hamad Karzai who was responsible for expelling him and sidekick Mervyn Patterson from Afghanistan, but the CIA (see EIR report HERE). There is also a more in depth story on these two HERE.

[David Guyatt]

Well, don't hold out any hope that the UK government (in other words David Cameron) will change their attitude and proceed with a criminal investigation of HSBC, because it ain't going to happen.

And the tax evasion seems to me to now be the "limited hangout" option. Based on what we now know far worse has occurred than tax fiddles.

And that leads to questions. Does the UK government automatically protect every criminal excess of City of London banking firms? Is this because it is understood that criminal activity, especially in tax avoidance and particularly in money laundering is a sanctioned activity? Or is it that HSBC have blackmail as a backdrop to protect them?

Personally, I find HMRC's excuse about not breaching international treaty conditions to be utterly deceptive cobblers.

HSBC accused of 'engaging a systematic and profitable collusion in serious criminal activity'



Lord Ken Macdonald said there existed 'credible evidence' of HSBC's involvement in 'grave' cross border crimes that should have had a 'sustained criminal investigation' in the UK

OLIVER WRIGHT

Sunday 22 February 2015

The banking giant HSBC is today accused by a former Director of Public Prosecutions of engaging in "a systematic and profitable collusion in serious criminal activity".

In a damming intervention Lord Ken Macdonald, who led the Crown Prosecution Service until 2008, said there existed "credible evidence" of HSBC's involvement in "grave" cross border crimes that should have been the subject of urgent and "sustained criminal investigation" in the UK.
Lord Macdonald added that a decision by Her Majesty's Revenue and Customs not to investigate HSBC for its role in facilitating possible tax evasion was "seriously legally flawed".
Lord Macdonald's intervention will increase the pressure both on the bank, which reports its full year results today, and HMRC. It comes as the Liberal Democrat Chief Secretary to the Treasury Danny Alexander called for new laws to be introduced to crack down on tax evasion before the next election.
Until now HMRC has claimed it received the details of accounts held by clients of HSBC Suisse under strict international treaty conditions, which it said, limited their use of the data to only to pursuing tax offences.

READ MORE:
TIMELINE OF BRITAIN'S BIGGEST BANKING LEAK
PETER OBORNE QUITS TELEGRAPH DRAMATICALLY OVER HSBC ALLEGATIONS
SWISS AUTHORITIES RAID HSBC'S GENEVA OFFICES OVER TAX CLAIMS

But in a legal opinion prepared for the international online campaign group SumOfUs Lord MacDonald challenged that assumption.
"There is no rule of law or evidence in criminal proceedings that unlawfully obtained data cannot be relied on by the prosecution or that there is any specific corroboration requirement for it," he wrote. "Such evidence is in principle admissible if it is relevant."
SumOfUs said on the basis of his opinion it had written to HMRC to notify it that unless a criminal investigation is begun by next month it will institute judicial review proceedings.
In his opinion Lord MacDonald said there appeared to be clear and credible evidence that "HSBC Swiss and/or its employees have engaged over many years in systematic and profitable collusion in serious criminal activity against the exchequers of a number of countries".
He added it seemed "equally clear that this criminal activity has taken place within the context of an institutional cynicism that is deeply shocking".
"The corporate and wholesale nature of HSBC Swiss' apparent involvement in what amounts to grave cross border crime makes it all the more obvious that the relevant evidence, once it came to the attention of HMRC, should have been the subject of urgent and sustained criminal investigation," he wrote.
"It is inescapable that this investigation should have included a rigorous inquiry to establish whether there was any criminal complicity on the part of HSBC Holdings PLC in the UK into this category of wrongdoing on the part of its Swiss subsidiary.
"Any sufficient evidence of such complicity would be virtually certain to warrant prosecution in the public interest."
His comments come as Mr Alexander used an interview to propose creating a new offence of "corporate failure to avoid preventing an economic crime" for those who encourage or help tax evasion.
Those found guilty could be given matching fines to those imposed on the people who actually benefited from the schemes under plans for a "tough disincentive" against those in the City aiding tax-dodgers.

READ MORE:
TELEGRAPH PUTS HSBC SCANDAL STORY ON HOMEPAGE MORNING AFTER PETER OBORNE ACCUSATIONS
TELEGRAPH'S PETER OBORNE SAYS HE FEELS 'SICK' OVER ALLEGED FAILINGS OF PAPER'S HSBC COVERAGE
JAMES MOORE: IF EVEN THE SWISS ARE TURNING ON HSBC, WHY AREN'T WE?

"Organisations, be they accountants, banks or whatever, who help people evade tax will be liable for this new offence and crucially liable for financial penalties," Mr Alexander told the BBC's Marr Show.
"So, for example, if their customers have to pay back hundreds of millions of pounds in tax then those organisations should have to match that with hundreds of millions of pounds of their own money. I think that's a very tough disincentive to them to get involved in this in the first place.
Mr Alexander said he was hoping to introduce the measures before parliament in advance of the general election.
If the party does not succeed, then, he said, the proposals would be included in the Lib Dem manifesto for the election.
HSBC has faced widespread anger over allegations that it had helped wealthy Britons to avoid paying millions in tax by hiding cash in its Swiss banking arm.
The Financial Conduct Authority (FCA) this week said it had begun looking into the affair.
Bit George Osborne insisted last week that it was not for the government to intervene in the decision over whether to bring prosecutions.
"There are very serious allegations [against HSBC], there are allegations around tax evasion, which is illegal," he said.
"We have independent prosecuting authorities in this country and I don't think it would be right for a chancellor of the exchequer to direct prosecutions against individuals or individual companies."
HSBC declined to comment on Lord MacDonald's opinion. But an HMRC spokesperson said: "HMRC received the HSBC Suisse data under very strict international treaty conditions, which limited our use of it only to pursuing tax offences. As the data is now in the public domain, the French have confirmed that they will provide all assistance necessary to us.
"We are awaiting formal written confirmation from the French that they will alter the conditions to allow its wider use by HMRC and have already started discussions with other UK law enforcement agencies about exploiting it."

[David Guyatt]

Filling the gap left by the BBCI, it seems.

From the ICIJ:

SWISS LEAKS: MURKY CASH SHELTERED BY BANK SECRECY

Banking Giant HSBC Sheltered Murky Cash Linked to Dictators and Arms Dealers

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Image: Tim Meko / Shutterstock

By Gerard Ryle, Will Fitzgibbon, Mar Cabra,Rigoberto Carvajal, Marina Walker Guevara,Martha M. Hamilton and Tom Stites February 8, 2015, 4:00 pm

KEY FINDINGS

• HSBC Private Bank (Suisse) continued to offer services to clients who had been unfavorably named by the United Nations, in court documents and in the media as connected to arms trafficking, blood diamonds and bribery.
  
• HSBC served those close to discredited regimes such as that of former Egyptian president Hosni Mubarak, former Tunisian president Ben Ali and current Syrian ruler Bashar al-Assad.
  
• Clients who held HSBC bank accounts in Switzerland include former and current politicians from Britain, Russia, Ukraine, Georgia, Kenya, Romania, India, Liechtenstein, Mexico, Lebanon, Tunisia, the Democratic Republic of the Congo, Zimbabwe, Rwanda, Paraguay, Djibouti, Senegal, Philippines and Algeria.
  
• The bank repeatedly reassured clients that it would not disclose details of accounts to national authorities, even if evidence suggested that the accounts were undeclared to tax authorities in the client's home country. Bank employees also discussed with clients a range of measures that would ultimately allow clients to avoid paying taxes in their home countries. This included holding accounts in the name of offshore companies to avoid the European Savings Directive, a 2005 Europe-wide rule aimed at tackling tax evasion through the exchange of bank information.
  

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ABOUT THIS PROJECT

Swiss Leaks is a collaborative investigation that exposes how the Swiss branch of one of the world's biggest banks, HSBC, profited from doing business with tax dodgers and criminals around the world.


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Team of journalists from 45 countries unearths secret bank accounts maintained for criminals, traffickers, tax dodgers, politicians and celebrities
Secret documents reveal that global banking giant HSBC profited from doing business with arms dealers who channeled mortar bombs to child soldiers in Africa, bag men for Third World dictators, traffickers in blood diamonds and other international outlaws.
The leaked files, based on the inner workings of HSBC's Swiss private banking arm, relate to accounts holding more than $100 billion. They provide a rare glimpse inside the super-secret Swiss banking system one the public has never seen before.
The documents, obtained by the International Consortium of Investigative Journalists via the French newspaper Le Monde, show the bank's dealings with clients engaged in a spectrum of illegal behavior, especially in hiding hundreds of millions of dollars from tax authorities. They also show private records of famed soccer and tennis players, cyclists, rock stars, Hollywood actors, royalty, politicians, corporate executives and old-wealth families.
These disclosures shine a light on the intersection of international crime and legitimate business, and they dramatically expand what's known about potentially illegal or unethical behavior in recent years at HSBC, one of the world's largest banks.
The leaked account records show some clients making trips to Geneva to withdraw large wads of cash, sometimes in used notes. The files also document huge sums of money controlled by dealers in diamonds who are known to have operated in war zones and sold gemstones to finance insurgencies that caused untold deaths.
HSBC, which is headquartered in London and has offices in 74 nations and territories on six continents, at first insisted that ICIJ destroy the data.
Late last month, after being informed of the full extent of the reporting team's findings, HSBC gave a final response that was more conciliatory, telling ICIJ: "We acknowledge that the compliance culture and standards of due diligence in HSBC's Swiss private bank, as well as the industry in general, were significantly lower than they are today."
The written statement said the bank had "taken significant steps over the past several years to implement reforms and exit clients who did not meet strict new HSBC standards, including those where we had concerns in relation to tax compliance."
The bank added that it had refocused this part of its business. "As a result of this repositioning, HSBC's Swiss private bank has reduced its client base by almost 70% since 2007."
How the offshore banking industry shelters money and hides secrets has enormous implications for societies across the globe. Academics conservatively estimate that $7.6 trillion is held in overseas tax havens, costing government treasuries at least $200 billion a year.
"The offshore industry is a major threat for our democratic institutions and our basic social contract," French economist Thomas Piketty, author of Capital in the Twenty-First Centurytold ICIJ. "Financial opacity is one of the key drivers of rising global inequality. It allows a large fraction of top income and top wealth groups to pay negligible tax rates, while the rest of us pay large taxes in order to finance the public goods and services (education, health, infrastructures) that are indispensable for the development process."

HSBC's questionable tax tactics

The secret files obtained by ICIJ covering accounts up to 2007 associated with more than 100,000 individuals and legal entities from more than 200 nations are a version of the ones the French government obtained and shared with other governments in 2010, leading to prosecutions or settlements with individuals for tax evasion in several countries. Nations whose tax authorities received the French files include the U.S., Spain, Italy, Greece, Germany, Britain, Ireland, India, Belgium and Argentina.
It's not illegal in most countries to maintain offshore bank accounts, and being identified as holding an HSBC Private Bank account is of itself no indication of any wrongdoing. Some who are named in the files may have had some connection to a Swiss bank account, such as a power of attorney, while not owning the money in the account, or owning only a share of it. Others in the files may not even have had a Swiss bank account.
Swiss citizen Tina Turner in an ad for Swisscom.Hollywood actor John Malkovich, for instance, said through a representative that he knows nothing about an account listing his name and conjectured that it might have to do with Bernard Madoff, the former stockbroker convicted of fraud who handled some of his finances. A representative for the British actress Joan Collins told ICIJ: "In 1993 my client deposited funds into a bank account in London and subsequently discovered that, without her instructions, the money had been transferred to the Swiss account referred to in your letter." The representative added that no tax was avoided.
The rock star David Bowie responded to ICIJ media partner The Guardian that he has been a legal resident of Switzerland since 1976. Tina Turner, though seen by many as a quintessentially American singer, has lived in Switzerland for nearly two decades and gave up her U.S. citizenship in 2013.
In many instances the records do describe questionable behavior, such as bankers advising clients on how to take a range of measures to avoid paying taxes in their home countries and customers telling bankers that their accounts are not declared to their governments.
The reporting by ICIJ and a team of media organizations from 45 countries go deeper into the dark corners of HSBC than a 2012 U.S. Senate investigation, which found that the bank had lax controls that allowed Latin American drug cartels to launder hundreds of millions of ill-gotten dollars through its U.S. operations, rendering the dirty money usable.
The Senate Permanent Subcommittee on Investigations' extensive report on HSBC also said some bank affiliates skirted U.S. government bans against financial transactions with Iran and other countries. And HSBC's U.S. division provided money and banking services to banks in Saudi Arabia and Bangladesh believed to have helped fund Al Qaeda and other terrorist groups, the report said.
Later in 2012, HSBC agreed to pay more than $1.9 billion to settle U.S. criminal and civil investigations and entered into a five-year deferred-prosecution agreement.
A subcommittee staff source said Senate investigators had sought the HSBC Private Bank account records from HSBC whistleblower Hervé Falciani and French authorities, but never received the data. The new documents show the bank's activity in many other parts of the world and reveal a new range of questionable clients and actions by the bank.
The ICIJ revelations also come after The Wall Street Journal reported in January that a progress report by the independent monitor appointed to the bank, a synopsis of which is expected to be made public in April, will show HSBC is failing in its attempts to reform.

An international cast of clients

The documents obtained by ICIJ are based on data originally smuggled away by a former HSBC employee-turned-whistleblower, Hervé Falciani, and handed to French authorities in 2008. Le Monde obtained material from the French tax authority investigation into the files and then shared the French tax authority's material with ICIJ with the agreement that ICIJ would pull together a team of journalists from multiple countries that could sift through the data from all angles.
ICIJ enlisted more than 140 journalists from 45 countries, including reporters from Le Monde, the BBC, The Guardian, 60 Minutes, Süddeutsche Zeitung and more than 45 other media organizations.
The reporters found the names of current and former politicians from Britain, Russia, Ukraine, Georgia, Kenya, Romania, India, Liechtenstein, Mexico, Tunisia, the Democratic Republic of the Congo, Zimbabwe, Rwanda, Paraguay, Djibouti, Senegal, the Philippines and Algeria, among others. They found several people on the current U.S. sanctions list, such as Selim Alguadis, a Turkish businessman alleged to have supplied sophisticated electrical goods to Libya's secret nuclear weapons project, and Gennady Timchenko, a billionaire associate of Russian President Vladimir Putin and one of the main targets of sanctions imposed on Russian individuals and businesses in response to the annexation of Crimea and the crisis in eastern Ukraine.
The files do not state either Alguadis' or Timchenko's exact roles in relation to the Swiss accounts. A spokesman for Timchenko said the reasons for the sanctions were "far-fetched and deeply flawed" and that his client has "always been fully compliant with all tax related matters."
Alguadis told ICIJ, "I have had many bank accounts at Turkish and international banks during my life for my personal reasons. At times I felt it prudent to keep some of my savings off-shore." Alguadis called the U.S. accusations "ridiculous."
"All our exports were properly declared at Turkish customs and completely legal," said Alguadis, who denied all links to Libya.
Rami Makhlouf. Photo: APSome clients linked to millions and sometimes tens of millions of dollars in their accounts are politically-connected figures such as Rachid Mohamed Rachid, the former Egyptian trade minister who fled Cairo in February 2011 amid the uprising against Hosni Mubarak. Rachid, who is listed as having power of attorney over an account worth $31 million, was convicted in absentia for alleged profiteering and squandering public funds. Other names in the files include the late Frantz Merceron, the alleged bagman for the late former Haitian President Jean Claude "Baby Doc" Duvalier, who was accused of having looted up to $900 million before fleeing his country, and Rami Makhlouf, whose cousin and close associate, Syrian President Bashar al Assad, over the past three years has helped cause the deaths of tens of thousands of his citizens in the country's civil war. Merceron is listed as an attorney on a $1.3 million account belonging to his wife. Makhlouf is listed as a beneficial owner on multiple accounts.
The files feature people who figure in legal proceedings, such as Vladimir Antonov, the former owner of an English soccer club, Portsmouth FC, who faces trial in Lithuania over an alleged €500 million bank fraud; Margulan Seisembayev, a Kazakh banker accused by the Alliance Bank of looting its assets and Tancred Tabone, the former head of the Malta state oil company Enemalta, who is facing prosecution for allegedly demanding bribes.
In a statement, Tabone's lawyer said his client denies all charges and added that he "has formally authorised the Swiss authorities to provide all that information. … His fiscal affairs in that respect are in order." Antonov is listed as a beneficial owner on an account worth $65 million. Seisembayev is listed as beneficial owner of multiple accounts.
A representative told ICIJ reporting partner The Guardian, "Mr.Antonov is not and was never a tax resident in the UK. He opened the Swiss accounts you refer to in 2008 for business reasons and because Swiss banks provide a better level of client care and are much more flexible than any UK banks."
In a reflection of the sheer variety of names in the data, others who appear are Li Xiaolin, the daughter of former Chinese Premier Li Peng, famous for his role in the Tiananmen Square massacre; Joseph Fok, a judge on Hong Kong's highest court, and Prince and Princess Michael of Kent, the beloved cousin of Queen Elizabeth II of England and his wife.
The account that can be linked to the prince and princess was held in the name of their company, Cantium Services Limited. A representative for the couple said the account "never received nor held any funds" and was closed in 2009. Li Xiaolin is listed, along with her husband, as a beneficial owner of an account that held $2.5 million. Fok is listed as the holder of an account that was closed in 2002. They did not respond to requests for comment.
The files reflect a spectrum of royalty, from King Mohammed VI of Morocco to the Crown prince of Bahrain, Prince Salman bin Hamad bin Isa Al Khalifa, to dozens of members of Saudi Arabia's ruling family. Many were partial or full beneficial owners of accounts. The role of the King of Morocco was not specified.
A spokesman for the Crown Prince said, "The Crown Prince invested in a regional hedge fund over which he exercised no control and obtained no tax advantage."
Business figures and political donors from the U.S. include the financier and philanthropist S. Donald Sussman, whose account predated his marriage to Democratic Congresswoman Chellie Pingree of Maine; the billionaire owner of the Victoria's Secret lingerie chain, Les Wexner, who in 2012 donated $250,000 to a super PAC supporting former Republican presidential candidate Mitt Romney; and the Israeli diamond-dealing Steinmetz family. The Wall Street Journal reported in 2007 that the Steinmetz family's venture capital firm Sage Capital Growth paid generous allowances for speeches and other services to Rudy Giuliani, the former New York mayor lauded as an organized crime and corruption fighter who later unsuccessfully pursued the Republican presidential nomination.
A representative of Sussman said the account was not his, adding that he had made a passive investment in a technology venture fund. The representative said it was this fund that had the account, the existence of which he learned for the first time when questioned by ICIJ. "Mr. Sussman's investments were minority interests," the spokesman said, "and he had no involvement in the funds' management, investment decisions, or other activities." Neither Wexner nor the Steinmetz family responded to requests for comment.
An analysis of the files by ICIJ shows that many individuals linked to accounts took extra precautions to protect their identities, even though HSBC staff repeatedly assured customers they were already bound by tight Swiss banking secrecy.
Many of the accounts were held by companies in offshore tax havens such as the British Virgin Islands, Panama or in the remote Pacific island of Niue, rather than by the individuals who owned the money. Thousands more used de-identified, numbered accounts.
HSBC Private Bank in Geneva. Photo: Pascal Frautschi/TamediaIn the documents an HSBC employee refers to one of Australia's most prominent corporate figures, Charles Barrington Goode, by his initials.
"Acct holder Mr. Ch.B.G. would like to be called Mr. Shaw (acct heading). So the entire discussion we were speaking about Mr. Shaw," the staff member wrote in one document. Goode's account was held under the name "SHAW99."
At the time of the note, Goode was the chairman of ANZ bank, one of Australia's biggest. In his other role in politics, Goode was called by a senator during debate in the Australian Parliament in 2001 "a man who is the bag carrier, the fundraiser, for the Liberal party," the current ruling party of the Australian Prime Minister, Tony Abbott.
Two foundations that Goode has been publicly associated with in Australia The Cormack Foundation and Valpold Pty Ltd gave more than Aus$30 million to the Victoria branch of the Liberal Party between 1998 and 2013, according to filings with the Australian Electoral Commission.
Goode told ICIJ that he opened his account 30 years ago and the bank insisted he use a pseudonym. "The bank officer told me that, for security purposes, I needed a name, other than my own name, or a number, to identify the account and which I should use in communicating with the bank. I chose the name Shaw.' " Goode said "the account was dormant for about 25 years" and that before he closed the account five years ago he had declared it to Australian tax authorities and paid tax on any income he derived.

Breaking the bank's own policy

The documents raise new questions about past public statements by HSBC that staff did not help customers engage in tax evasion. In July 2008, for example, Chris Meares, the then head of private banking for HSBC, told a British parliamentary hearing: "We prohibit our bankers from encouraging or being involved in tax evasion."
Three years earlier one wealthy British client, Keith Humphreys, a director of the English Premier League soccer club Stoke City FC, is described telling his HSBC manager that one of his family's Swiss accounts was "not declared" to the U.K. tax authorities. The files state it held more than $450,000 at the time.
Humphreys told ICIJ media partner, The Guardian, that the Swiss account was held not by him but by his father and that it was later voluntarily disclosed to authorities. The account, he said, "was established in line with financial advice that he was given at the time" and disclosed to British tax authorities in 2011, with a settlement of £147,165.

"This client is somwhat [sic] paranoid, e.g. whenever he was coming to ZH [Zurich], he flew to Paris and hired a car to drive to ZH"

In another instance, an HSBC employee wrote this note in the file of Irish businessman John Cashell, who would later to be convicted of a tax fraud in his native country: "His pre-occupation is with the risk of disclosure to the Irish authorities. Once again I endeavoured to reassure him that there is no risk of that happening." Cashell did not respond to requests for comment.
The bank itself became uneasy over a €20 million transaction by a Serbian businessman. But the bank employees merely asked him to act less conspicuously: "Explained that as per today the bank did not interfered [sic] in his money transfer transactions," the relevant document says, "but would have preferred to reduce those activities on a lower scale. [He] understands our concerns and will use smaller amounts."
HSBC staff also appeared to show little concern at the description they received of a Canadian doctor, Irwin Rodier. "This client is somwhat [sic] paranoid, e.g. whenever he was coming to ZH [Zurich], he flew to Paris and hired a car to drive to ZH, in order not to re-enact his final destination etc."
Rodier told ICIJ media partner CBC/Radio-Canada that he had since settled his taxes with Canadian authorities.
In its statement to ICIJ, HSBC said: "In the past, the Swiss private banking industry operated very differently to the way it does today. Private banks, including HSBC's Swiss private bank, assumed that responsibility for payment of taxes rested with individual clients, rather than the institutions that banked them."

Getting around a new law

The files show that some European customers were given advice on how to avoid a withholding tax on bank savings that came into effect in European Union countries in 2005. Switzerland had agreed to implement the tax called the European Savings Directive, or ESD.
But the ESD pertained only to individuals, not to corporations. The files show HSBC Private Bank seized on this loophole to market products that transformed individuals into corporations for tax-reporting purposes.
The documents record that day by day throughout 2005, clients arrived in Switzerland to make cash withdrawals in British pounds, Euros, Swiss francs, U.S. dollars, even Danish krone sometimes asking for small used notes.
One of those being provided with cash supplies of dollars and euros was Arturo del Tiempo Marques, a property developer sentenced in 2013 to a seven-year jail sentence in Spain for smuggling cocaine. He controlled up to 19 HSBC accounts containing more than $3 million. He did not respond to requests for comment.
In one transaction, the British business tycoon Richard Caring, accompanied by security, was depicted in September 2005 collecting more than five million Swiss francs in cash.
HSBC staff explained handing Caring the huge sum of cash by quoting a statement by him that he planned to deposit the cash with another Swiss bank, and did not want either bank to be aware of the other. They wrote: "RC goes to great lengths to maintain discretion."
A representative of Caring told The Guardian that he did not avoid taxes and that his "use of offshore funds was conducted under widely used and accepted tax principles."
The files show Caring, a major donor to British politics, transferring $1 million to the Clinton Foundation, a nonprofit set up by the former U.S. President Bill Clinton with the stated mission to "strengthen the capacity of people in the United States and throughout the world to meet the challenges of global interdependence."
The donation to the Clinton Foundation was requested in December 2005. The previous month, Caring funded a champagne and caviar extravaganza at Catherine the Great's Winter Palace in St Petersburg, Russia, flying in 450 guests to be entertained by Sir Elton John and Tina Turner and addressed by Bill Clinton. The event raised more than £11 million for a children's charity.

More Clinton donors

JStone / Shutterstock.com" class="caption caption-processed" style="border: 0px; vertical-align: bottom; max-width: 100%; height: 349px; width: 334px;">Bill Clinton speaking at a Clinton Foundation event with wife Hillary and daughter Chelsea. Photo: JStone /Shutterstock.comA number of other prominent donors to the Clinton Foundation appear in the files, including the Canadian businessman Frank Giustra and German motor racing superstar Michael Schumacher, a seven-time Formula One champion. A representative of Schumacher, who is listed as a beneficial owner of an account closed in 2002, told ICIJ that he is a long-term resident of Switzerland.
The records show Giustra is the only person listed in an HSBC account holding more than $10 million in 2006/2007, although his role in the account is not specified
The New York Times reported in 2008 that Giustra donated to the Clinton Foundation shortly after Bill Clinton accompanied Giustra on a trip to Kazakhstan in 2005. When they landed, Nursultan A. Nazarbayev, who has served for decades as Kazakhstan's president, met his two visitors over a sumptuous midnight banquet.
The Times reported that Clinton made a public declaration of support for Nazarbayev that was at odds with the stance of the U.S. government and of Clinton's wife, then-Senator Hillary Rodham Clinton, who had criticized Kazakhstan's record on human rights. Two days later, corporate records showed, Giustra's company won the right to buy into three state-owned uranium projects in Kazakhstan.
Both Clinton and Giustra told the Times that Giustra traveled with Clinton to Kazakhstan to see first-hand the foundation's philanthropic work. A spokesman for Clinton told the newspaper that the former president was generally aware of Giustra's mining interests in Kazakhstan but did nothing to help those interests.
A representative for Giustra disputed the New York Times story and said that Giustra is "in full compliance and disclosure regarding any and all bank accounts." A spokesman for the Clinton Foundation told The Guardian it "has strong donor integrity and transparency practices that go well beyond what is required of U.S. charities, including the full disclosure of all of our donors."

Data disappears in Greece

The data shared by French authorities with other governments is now the basis of formal investigations in several countries. French magistrates are examining whether the bank helped some clients avoid paying 2006 and 2007 taxes. French authorities have required HSBC to deposit a bail bond of €50 million. Belgian prosecutors late last year also accused the bank of tax fraud.
In August 2014, Argentine tax agents raided HSBC's offices in Buenos Aires. The Buenos Aires Herald has reported that Argentine tax chief Ricardo Echegaray has accused HSBC of "rolling out a fraud-enabling platform" as "a maneuver to hide bank account information from tax collectors."
HSBC said in its statement to ICIJ that it was "fully committed to the exchange of information with relevant authorities" and was "actively pursuing measures that ensure clients are tax transparent, even in advance of a regulatory or legal requirement to do so. We are also cooperating with relevant authorities investigating these matters."
The documents raise questions about why there were investigations in some countries and not in others and whether some investigations were less than painstaking.
For instance, some of the most extensive material relates to the bank's U.K. clients. Initial investigations by French tax authorities identified more than 5,000 British clients linked to $61 billion in HSBC deposits more clients and more money than from any other country.
Though the French investigators likely initially over-estimated the true amounts held by clients, the British tax office concluded that 3,600 of the 5,000 names it received from the French in 2010 were "potentially non-compliant." A report to a House of Commons committee in September 2014 said the tax office had recovered just £135 million in back taxes from individuals on the list, compared to £220 million collected by Spain and £188 million collected by France. Lord Stephen Green, the head of HSBC during the period the records cover, later became trade minister in the Cameron government in Britain, a position he held until 2013.
Apart from isolated court cases in U.S. federal courts, it appears that the U.S. Internal Revenue Service has also gone about its work quietly despite French tax investigators having identified 1,400 people with U.S. connections, holding some $16 billion. Again, that figure was higher than the amounts identified by ICIJ.
In a statement to ICIJ media partner 60 Minutes, the IRS said that since U.S. taxpayers were first encouraged to voluntarily come forward with details of their offshore holdings in 2009, "there have been more than 50,000 disclosures and we have collected more than $7 billion from this initiative alone." The agency declined to disclose how many, if any, of those who came forward had accounts with HSBC.
What happened after France sent Greece the names of more than 2,000 Greek HSBC clients touched off a furor that now has Greece's former finance minister facing trial.
Hot Doc magazine, which published the Lagarde list.Greece received the names in 2010, but nothing happened until October 2012, when a Greek magazine, Hot Doc, published the names and noted the lack of an investigation into whether rich Greeks were evading taxes while the country was undergoing austerity measures, including pay cuts and tax increases for those who paid.
In contrast to the reluctance with which they had gone after possible tax evasion, Greek authorities were quick to arrest Hot Doc editor Kostas Vaxevanis and charge him with violating privacy laws. He was quickly acquitted, and his trial provoked anger when two former heads of the financial police testified that neither the former finance minister Giorgos Papakonstantinou nor his successor had ordered an investigation into the list. Papakonstantinou said it had been lost.
When the list finally surfaced, it was missing the names of three relatives of Papakonstantinou. He now faces criminal charges alleging breach of trust, doctoring an official document and dereliction of duty growing out of the removal of his relatives' names and out of his failure to act on the list when he received it.

Doing business with arms dealers

Links to arms dealing emerge repeatedly in the files obtained by ICIJ.
HSBC kept Aziza Kulsum and her family as clients even after Kulsum was named by the United Nations as financing the bloody Burundian civil war in the 1990s.
The 2001 United Nations report also said that Kulsum was a key player in the Democratic Republic of the Congo in the illicit trade in coltan, a strategically important mineral used in electronic devices. A big part of the world's supply of coltan comes from conflict zones in Central Africa, where armed factions control many mines, extort miners and profit from the sale of illegal ore.
While two of Kulsum's accounts were closed before 2001, a third account worth $3.2 million was frozen (though not closed) for unspecified "compliance reasons" at an unknown date. Kulsum's husband had an unspecified connection to a further account that was not closed and held an additional $1.6 million at one point in 2006/2007. HSBC referred to Kulsum as a "businesswoman (stone and noble metals)" and the owner of a cigarette factory.
Soldiers stand guard on a bridge in Liberia during fighting in 2003. Photo: APAnother questionable account appears under the name of Katex Mines Guinee. According to a 2003 report by the United Nations, Katex Mines was a front company used by Guinea's Ministry of Defense to traffic arms to rebel soldiers in Liberia during fighting in 2003. Inexperienced child soldiers were fighting on both sides; hundreds of people were killed and more than 2,000 were injured. The account is shown with $7.14 million in it three years after UN reports about Katex Mines were made public.
Other notes show HSBC staff meeting a customer, Shailesh Vithlani, in Dar es Salaam, Tanzania, in 2005, to advise him how best to invest his money. The Guardian reported in 2007 that Vithlani, who is listed as a beneficial owner of one account, was an alleged middleman who arranged for the British arms company BAE to secretly pay $12 million into an unspecified Swiss bank account in return for the Tanzanian government buying an overpriced military radar system. Vithlani, who could not be reached for comment, told The Guardian in 2007 that he did not pay money from Switzerland to officials in Tanzania.
Another HSBC customer linked to BAE was Fana Hlongwane, a South African political adviser and businessman. The U.K. Serious Fraud Office said in statements submitted to South African prosecutors in 2008 that Hlongwane received money from BAE through a disguised chain of offshore intermediaries in order to promote arms deals.
Hlongwane's lawyers did not respond to repeated requests for comment.
In a 2014 affidavit made to an ongoing inquiry into the arms contracts, Hlongwane denied "any evidence implicating myself and/or my Companies in any corruption or wrongdoing."
Hlongwane is listed as the beneficial owner of an account, Leynier Finance SA, that contained $888,000. Two other accounts that held $12 million at one point in 2006/2007 do not specify his exact role.
Another account holder appears to be linked to the so-called Angolagate scandal.
In 2008, French prosecutors began proceedings against more than 40 people implicated in corrupted arms sales to Angola in the 1990s. The scandal, which was alleged to have involved more than $50 million in bribes exchanged for contracts worth nearly $800 million, named high-profile French figures, including the son of former French President Francois Mitterrand.
The account likely linked to Angolagate, under the name Micheline Arlette Manuel, was dubbed Corday and was open from 1994 to 1999. Manuel's exact role with the account was not specified.
Corday is the name on a series of accounts at HSBC and other banks that have been publicly linked to Micheline Arlette Manuel's husband, Yves, who also held an account with HSBC and who died following a conviction for his role in the scandal. A French court ruling in October 2011 said Yves Manuel received and concealed $2.59 million that he knew had come from the company that disbursed bribes to French and Angolan officials. She did not respond to requests for comment.
Yet another account can be found under the name Wang Chia-Hsing, the son of the alleged middleman in an infamous Taiwan arms deal, Andrew Wang Chuan-pu.
Wang Chuan-pu is a fugitive wanted in Taiwan over his alleged role in the murder of Taiwanese Navy Capt. Yin Ching-feng and a series of kickback and corruption scandals implicating Taiwan, France and China.
The South China Morning Post reported that Wang Chuan-pu left Taiwan shortly after the body of Yin who was about to blow the whistle on alleged kickbacks and corruption in the navy's purchase of six French frigates was found floating off the island's north coast in December 1993. Despite Chuan-pu's death earlier this year, announced by his Swiss lawyers on 30 Jan., court cases continue in Switzerland and Taiwan.
The HSBC documents show conversations between Wang Chia-Hsing, who is described as an interior decorator and shown with an upmarket London address, and HSBC staff even during a period when the account with more than $38 million was under a court blocking order. The files do not make clear what Wang Chia-Hsing's exact role in the account was. However, the files record that he asked the bank to recognize his non-domicile residency status in the U.K., a reference to a foreign national living in the U.K. who doesn't pay income tax or capital gains tax on earnings abroad. It is generally regarded as a form of legal tax avoidance. The bank's notes further indicate that a HSBC staff member was willing to backdate a form.
A representative for Wang Chia-Hsing said he has "paid all proper taxes due and has not acted in any way improperly or unlawfully."

Diamond Traders

An analysis by ICIJ shows that almost 2,000 of HSBC clients who appear in the files are associated with the diamond industry. Among them is Emmanuel Shallop, who was subsequentlyconvicted of dealing in blood diamonds.
Blood diamonds, or conflict diamonds, are terms used for gems mined in war zones that are later sold to finance further war. Diamonds mined during the recent civil wars in Angola, Cote d'Ivoire, Sierra Leone and other nations have been given the label.
"Diamonds have a long history of being linked to conflict and violence," said Michael Gibb of the international human rights group Global Witness. "The ease with which diamonds can be converted into tools of war, when not sourced responsibly, is astonishing."
The documents show that HSBC was aware that Shallop was under investigation by Belgian authorities at the time it was helping him. "We have opened a company account for him based in Dubai. … The client is very cautious currently because he is under pressure from the Belgian tax authorities, who are investigating his activities in the area of diamond fiscal fraud."
Shallop's lawyer told ICIJ, "We dot [sic] not want to give any comment on this issue. My client does not want his name to be mentioned in any article because of reasons of privacy."
Other HSBC account holders can be linked to Omega Diamonds, which in 2013 settled a tax dispute in Belgium for $195 million, without admitting liability. Belgian authorities alleged in their civil suit that Omega shifted profits into Dubai by trading falsely valued diamonds from mines in Congo and Angola. During the period of these alleged transactions, the firm's two principals, Ehud Arye Laniado and Sylvain Goldberg, each had HSBC accounts. A third Omega shareholder, Robert Liling, appears in the files as the owner of several accounts.
An attorney for the three men said none were prosecuted for tax offences. "The tax dispute between Omega Diamonds and the Belgian tax authorities involved Omega Diamonds only, neither Mr Laniado, Mr Goldberg or Mr Liling were involved in this. The Omega Diamonds tax dispute has been settled in an amicable settlement."

Links to Al Qaeda?

HSBC's clients' links to Al Qaeda were first publicly raised in the July 2012 U.S. Senate report, which cited an alleged internal Al Qaeda list of financial benefactors. The Senate report said the list came to light after a search of the Bosnian offices of the Benevolence International Foundation, a Saudi-based nonprofit organization that the U.S. Treasury Department has designated as a terrorist organization.
Osama bin Laden, the mastermind behind the 9/11 attacks, referred to the handwritten list of the 20 names as the "Golden Chain."
From the moment the names on the Golden Chain list were made public in news reports in the spring of 2003, the Senate subcommittee stated that HSBC should have been "on notice" and aware these powerful business figures were high risk clients.
Though the significance of the Golden Chain list has since been questioned, the ICIJ found what appear to be three Golden Chain names with HSBC Swiss accounts that existed after that date.

Documents also reveal irony

Elias Murr. Photo: InterpolThe documents reveal so many grim stories, but at least one is ironic.
People on the Most Wanted list of Interpol, the international police agency, such as the diamond dealers Mozes Victor Konig and Kenneth Lee Akselrod, are among the HSBC account holders and so is Elias Murr, who is president of the board of Interpol's Foundation for a Safer World, an organization aimed at fighting terrorism and organized crime. Murr, who was a prominent businessman before entering politics, was interior minister of Lebanon in 2004 when an HSBC account owned by him was held through a company called Callorford Investments Limited. By 2006-2007, the account would contain $42 million.
A spokesman for Murr said his client's wealth and that of his family is public knowledge, and his family has held accounts in Switzerland since before he was born. The account was not connected to his political role. "It is not illegal and it is not suspicious that a Lebanese national opens and holds accounts anywhere."
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CORRECTION: This article initially said the U.S. Senate Permanent Subcommittee on Investigations requested the data from HSBC management and was refused. The subcommittee reached out to whistleblower Hervé Falciani and French authorities, but never received the data.



Contributors to this story: Gérard Davet, Fabrice Lhomme, Elliot Blair Smith, Ryan Chittum,Charles R. Babcock, Cécile Schilis-Gallego, Matthew Caruana Galizia, Hamish Boland-Rudder,Emilia Díaz-Struck, Marcos Garcia Rey, Delphine Reuter, Karen Chang, Frédéric Zalac, Michael Hudson, David Leigh and James Ball

[David Guyatt]

I thought I would just isolate and highlight the following from the above report

Though the French investigators likely initially over-estimated the true amounts held by clients, the British tax office concluded that 3,600 of the 5,000 names it received from the French in 2010 were "potentially non-compliant." A report to a House of Commons committee in September 2014 said the tax office had recovered just £135 million in back taxes from individuals on the list, compared to £220 million collected by Spain and £188 million collected by France. Lord Stephen Green, the head of HSBC during the period the records cover, later became trade minister in the Cameron government in Britain, a position he held until 2013.

along with the preceding para:

For instance, some of the most extensive material relates to the bank's U.K. clients. Initial investigations by French tax authorities identified more than 5,000 British clients linked to $61 billion in HSBC deposits more clients and more money than from any other country.

So our excellent tax authorities managed to recover back tax payment of £135 million on British funds in HSBC Suisse of, yup, £61 billion.

Brilliant work guys!

You really nailed 'em, eh...

[Magda Hassan]

I think there is a nice juicy bonus in there for the banksters too. All that extra shareholder profit and all. And with a straight face they can tell the government they are cracking down on tax avoidance. ::lilgreenman::