Over 100,000 Kiwis caught up in HSBC tax scam

WELLINGTON: More than  100,000 Rich Kiwis have been caught with extra tax bills as the result of a huge file leak revealing the global super wealthy hid millions of dollars from tax authorities with the help of HSBC’s Swiss private bank.

Inland Revenue investigated New Zealand links to the leaked files and revised people’s tax bills upward as a result. The tax department could not confirm whether anyone would be prosecuted, saying investigations were still ongoing.

While tax avoidance is legal, deliberately hiding money to evade tax is not, and a tranche of leaked files appear to show HSBC’s overseas staff actively helping some clients dodge detection. The secret files list more than 100,000 clients with links to Swiss bank accounts, including a highly respected former New Zealand judge. The leaked bank documents, showing HSBC using its Swiss private banking subsidiary to hide millions, have accounts owned by shell companies registered to Niue, a single island of 1600 people, legally part of the Realm of New Zealand, 2400 kilometres northeast of Auckland. Niue’s currency is the New Zealand dollar. The International Consortium of Investigative Journalists (ICIJ), which obtained the files, has highlighted 63 prominent people globally who were linked to Swiss bank accounts, while stressing they may not have broken the law.

People caught up in the splash include the late New Zealand judge and top barrister Sir Ian McKay, who died a year ago aged 84, the actor Christian Slater, model Elle MacPherson and a slew of bankers, politicians and sportspeople. The documents do not reveal Sir Ian’s exact links to accounts holding a total of US$31,118 (NZ$41,851), says ICIJ. The leaks also drew links between HSBC and less savoury characters. “HSBC profited from doing business with arms dealers who channelled mortar bombs to child soldiers in Africa, bag men for Third World dictators, traffickers in blood diamonds and other international outlaws,” ICIJ reported.

Ad Feedback . The files secreted away by a former HSBC employer were passed to tax authorities in different countries, including France in 2008 and Britain in 2010.In a statement Franco Morra, chief executive of the HSBC Private Bank in Switzerland, said much had changed since the period in 2006/2007 to which many of the financial information relates.”HSBC’s Swiss Private Bank began a radical transformation in 2008 to prevent its services from being used to evade taxes or launder money. New senior management have comprehensively overhauled the business,” he said.

Inland Revenue had investigated New Zealanders based on the leaked files, Nash said he could not disclose any information about specific tax payers.But Inland Revenue confirmed that it investigated the information as part of its “regular offshore programme of work”.  Asked if it resulted in extra payments or prosecutions it said it had assessed additional tax, however investigations were ongoing. HSBC faces criminal investigations in the United States, France, Belgium and Argentina but not its home country of Britain, according to the BBC.

The files showing accounts holding more than US$100 billion in total are based on data secreted by Hervé Falciani, a former HSBC employee. Thousands of pages of data were obtained by the French newspaper Le Monde and passed to the International Consortium of Investigative Journalists, the Guardian newspaper, Panorama and other media outlets in a joint investigation.

British HM Revenue and Customs has identified 1,100 people from the list of 7,000 British clients who had not paid their taxes. But almost five years later, the BBC reports that only one tax evader has been prosecuted.HMRC said £135m (NZ$276.6m) in tax, interest and penalties have now been paid by those who hid their assets in Switzerland.