Former HSBC employee Herve Falciani has been convicted of economic espionage and sentenced to five years in jail in absentia, a Swiss court has ruled.
Herve Falciani was on trial for leaking bank data that led to tax evasion probes worldwide against prominent clients with accounts in Switzerland.
He did not attend the trial and because France does not extradite its own citizens, it is unlikely he will serve the sentence.
Herve Falciani told AP news agency he had “no reaction” to the sentencing.
He had refused to travel from France to appear before the Swiss Federal Tribunal in Bellinzona for a trial that began last month.
Herve Falciani was charged with illegally obtaining data, economic espionage, breach of business confidentiality and breach of bank secrecy while working at a Swiss HSBC subsidiary between 2006 and 2008.
The court rejected all the charges except for one alleging a violation of economic intelligence, for having made public information about foreign entities in Lebanon, France, Germany, and the UK.
HSBC, which argued that Herve Falciani had illegally downloaded details from clients and accounts, welcomed the decision against its former employee, who was an IT worker at HSBC Private Bank (Suisse).
“HSBC has always maintained that Falciani systematically stole clients’ information in order to sell it for his own personal financial gain,” the bank said in a statement.
According to new reports, HSBC helped wealthy clients across the world evade hundreds of millions of dollars worth of tax.
Accounts from 106,000 clients in 203 countries were leaked by whistleblower Herve Falciani in 2007.
HSBC admitted that some individuals took advantage of bank secrecy to hold undeclared accounts. But it said it has now “fundamentally changed”.
The banking giant now faces criminal investigations in the US, France, Belgium and Argentina.
HSBC said it is “co-operating with relevant authorities”. However, in the UK, where the bank is based, no such action has been taken.
Offshore accounts are not illegal, but many people use them to hide cash from the tax authorities. And while tax avoidance is perfectly legal, deliberately hiding money to evade tax is not.
India’s finance minister Arun Jaitley has said that all Indian names on the list will be investigated, although he cautioned that some accounts might be legitimate. A current inquiry looking into more than 600 people who hold accounts overseas, will now be widened to look into the current list of names.
The French authorities concluded in 2013 that 99.8% of their citizens on the list were probably evading tax.
The thousands of pages of data were obtained by the French newspaper Le Monde. In a joint investigation, the documents have now been passed to the International Consortium of Investigative Journalists, The Guardian and more than 50 media outlets around the world.
HSBC did not just turn a blind eye to tax evaders – in some cases it broke the law by actively helping its clients.
The bank gave one wealthy family a foreign credit card so they could withdraw their undeclared cash at cashpoints overseas.
HSBC also helped its tax-dodging clients stay ahead of the law.
When the European Savings Directive was introduced in 2005, the idea was that Swiss banks would take any tax owed from undeclared accounts and pass it to the taxman.
It was a tax designed to catch tax evaders. But instead of simply collecting the money, HSBC wrote to customers and offered them ways to get round the new tax.
HSBC denies that all these account holders were evading tax.
Meanwhile, HSBC said it has completely overhauled its private banking business and has reduced the number of Swiss accounts by almost 70% since 2007.
In a statement, the bank said: “HSBC has implemented numerous initiatives designed to prevent its banking services being used to evade taxes or launder money.”
HSBC said it now puts compliance and tax transparency ahead of profitability.
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