After "Painful" Coverage, HSBC Buys Full-Page Ad to Apologize to UK

HSBC purchased a full-page ad on Sunday for a formal apology letter in several UK newspapers. The apology was for allegations that its Swiss branch had helped clients evade taxes between 2005 to 2007.

The advertisement is in the form of an open letter written and signed by HSBC Chief Executive Officer Stuart Gulliver saying, among other things, that recent coverage has been “painful.”

He also tried to put the situation "into context," saying that recent media coverage "has been on historical events that show the standards to which we operate today were not universally in place in our Swiss operations eight years ago.”

He goes on to again mention that the data is over eight years old.

In trying to reassure customers and staff, whom the letter was initially meant for, Gulliver said that the Swiss branch of the international bank had since been “completely overhauled.”

Of course, he also reaffirmed that the bank has “absolutely no appetite to do business with clients who are evading their taxes or who fail to meet [their] financial crime compliance standards.”

“We must show we understand that societies we serve expect more from us,” Gulliver says. “We therefore offer our sincerest apologies.”

UK Regulators Defend “Inaction”

The HSBC Whistleblower Whistleblower A whistleblower is an individual who manages to provide information or activity within a private or public organization that is deemed illegal, unethical, or not correct. In many countries, including the United States, whistleblowers are protected by law and in some cases can even recoup rewards if their information leads to successful prosecution.In the context of the financial services industry, whistleblowers play a large role in oversight, helping unmask several episodes of illicit behavior A whistleblower is an individual who manages to provide information or activity within a private or public organization that is deemed illegal, unethical, or not correct. In many countries, including the United States, whistleblowers are protected by law and in some cases can even recoup rewards if their information leads to successful prosecution.In the context of the financial services industry, whistleblowers play a large role in oversight, helping unmask several episodes of illicit behavior Read this Term, Herve Falciana, revealed this trove of data to French authorities in 2010. When the story broke recently, there was an international outcry over regulator inaction during the past five years.

UK regulators, for instance, pursued only a single prosecution since receiving the information in 2010. Lin Homer, chief executive officer of the country's tax authority, HM Revenue and Customs (HMRC), defended the "inaction."

She explained that out of the 3,600 customers revealed in the leaked data, most information was incomplete. Out of the bunch, 3,200 had been singled out and, out of those, 1,100 of the most serious cases were pursued. This led to the recovery of around £135 million in funds with 130 cases still outstanding.

She also said that two-thirds of all of the UK-based HSBC Switzerland account holders were “found to be compliant” with UK tax rules since they were foreign nationals (non-domiciled residents).

No Rest for the Wicked

Still, Gulliver made no mention of HSBC's recent settlement with international regulators over foreign exchange rate fixing last November. Or the bank's settlement with US authorities for targeting US clients in breach of Federal Securities law that same month. Nor did he apologize for HSBC's Money Laundering Money Laundering Money laundering is a blanket term to describe the process by which criminals disguise the original ownership and proceeds of criminal conduct by making such proceeds appear to be derived from a legitimate source.Money laundering is an issue that traverses countless industries and sectors, which includes the financial services space. Though criminal money may be successfully laundered without the assistance of the financial sector, billions of dollars’ worth of criminally derived money are laund Money laundering is a blanket term to describe the process by which criminals disguise the original ownership and proceeds of criminal conduct by making such proceeds appear to be derived from a legitimate source.Money laundering is an issue that traverses countless industries and sectors, which includes the financial services space. Though criminal money may be successfully laundered without the assistance of the financial sector, billions of dollars’ worth of criminally derived money are laund Read this Term with Mexican drug cartels and breaches of US sanctions between 2006 and 2010.

Under that deal, HSBC controversially managed to avoid criminal charges and keep its banking charter, allowing it to continue operations in the US.