The secret Swiss bank accounts of numerous wealthy Arabs have been revealed in an international expose into HSBC Private Bank’s operations in the country.
The investigation by The International Consortium of Investigative Journalists (ICIJ) has revealed unprecedented details of secret bank accounts worth $100 billion that were maintained for criminals, traffickers, tax dodgers, politicians, royals and celebrities.
The secret documents reportedly show the global banking giant, which is headquartered in London and has offices in 74 countries including GCC states, profited from doing business with arms dealers, bag men for Third World dictators, traffickers in blood diamonds and other international outlaws, as well as scores of high profile public figures.
The information, which dates back to 2006-07, shows Saudi citizens had channelled $5.8bn to secret HSBC accounts in Switzerland, renown as an offshore banking haven. That was the largest amount from Middle Eastern countries and 11th in the world.
Lebanese citizens had the second highest value of Middle Eastern accounts at $4.8 billion, followed by Egypt, the UAE and Turkey, each with $3.5bn.
Among the most high profile Arabs listed as account holders was Jordan’s King Abdullah II, who was connected to a client account created in 2004 under the name of a senior palace official, ICIJ said.
The account held a maximum $41.8m in 2006/2007. The leaked files do not specify the exact role that King Abdullah II had in relation to the account, ICIJ said. King Abdullah II's lawyers in the US told ICIJ the king was exempt from paying tax and that the account was for official business.
Saudi Arabia’s Prince Bandar bin Sultan, one of the most senior members of the Saudi royal family for the past 30 years, became a client of HSBC in June, 1999, according to the bank’s records. The former US ambassador who helped negotiate a massive $80bn arms sale by the UK to Saudi Arabia in 1985, was connected to four client accounts in Switzerland, ICIJ said.
One of those accounts was connected to three bank accounts that together held as much as $15.6m in 2006/2007. Of the other three client accounts, two were closed in 2000 and the third reported a balance of zero. Prince Bandar did not respond to ICIJ's repeated requests for comment, the organisation said.
Dozens of other members of Saudi Arabia's ruling family also were listed as account holders, ICIJ said. The Crown Prince of Bahrain, Prince Salman bin Hamad bin Isa Al Khalifa, is also mentioned in the leaks. HSBC files show that King Hamad’s son was a beneficial owner of two client accounts, “Vision Macro Fund Ltd.” of which he had an 11 percent stake and “Vision Arbitrage Fund Ltd.” of which he had a 9 percent stake. The two client accounts linked him to at least 10 bank accounts that together held as much as $20.9m in 2006/2007, with his share worth $2.2m, ICIJ said.
A spokesman for the Crown Prince told ICIJ, “The Crown Prince invested in a regional hedge fund over which he exercised no control and obtained no tax advantage”. Sultan Qaboos of Oman, who became an HSBC client in 1974, was linked to four client accounts that listed 10 bank accounts in 2006. Together they held as much as $44.6m in 2006/2007, ICIJ said.
Of the four client accounts, two had his name, one was a numbered account, and the other one was under the name of “The Yacht Squadron Oman Limited” of which he was beneficial owner. The leaked files do not specify the exact role that Sultan Qaboos had in relation to the other three accounts. Sultan Qaboos did not respond to ICIJ's repeated requests for comment.
The King of Morocco, Mohammed VI, the wealthiest African monarch, was linked to an account served by five bank accounts that together held as much as $9.1m in 2006/2007, ICIJ said. Other family members were also HSBC clients.
The leaked files do not specify the exact role that Mohammed VI had in relation to the account. King Mohammed VI did not respond to ICIJ's repeated requests for comment.
The UAE is also mentioned in the leaks, which show that HSBC set up 1702 accounts for 1126 UAE-based clients. It adds that 91 percent of these clients were expats, with just 9 percent holding Emirati passports. The maximum amount held by a single UAE client was $800m.
ICIJ emphasised that holding a Swiss bank account was not in itself illegal and the organisation did not intend to suggest or imply that any persons, companies or other entities included in the ICIJ Swiss Leaks investigation had broken the law or otherwise acted improperly. The secret files also show that HSBC helped convicted blood diamond trader, Emmanuel Shallop, to open a bank account in Dubai to avoid paying taxes in Belgium.
The documents show that HSBC was aware that Shallop was under investigation by Belgian authorities at the time it was helping him, ICIJ said. “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,” the file reportedly said.
Other HSBC account holders were linked to Omega Diamonds, which in 2013 settled a tax dispute in Belgium for $195m, 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, ICIJ said.
Documents also appeared to show some of HSBC’s Saudi clients were linked to Al Qaeda. In 2003, a list of 20 names written by the terrorist group’s former leader Osama bin Laden and referred to as the Golden Chain were revealed following a search of the Bosnian offices of the Benevolence International Foundation, a Saudi-based non-profit organisation deemed a terrorist group by the US.
At the time, US authorities said HSBC should have been “on notice” and aware the powerful business figures were high risk clients. But more than 10 years later, ICIJ said it found “what appear to be three Golden Chain names with HSBC Swiss accounts” that still existed in 2006-07.
Known as the Swiss Leaks project, the investigation is based on almost 60,000 files leaked by a former employee that provide details on more than 100,000 HSBC clients and their bank accounts. The files were thoroughly investigated by journalists in 45 countries, ICIJ said.
The details, which also were given to the French government and have been used by several countries to initiate legal action against suspected tax evaders, reportedly show the bank’s dealings with clients engaged in various criminal behaviour, particularly in hiding hundreds of millions of dollars from tax authorities.
“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 behaviour in recent years at HSBC, one of the world’s largest banks,” ICIJ said.
Other well-known account holders included Hollywood actor John Malkovich, British actress Joan Collins, American rock star Tina Turner, daughter of former Chinese Premier Li Peng, Li Xiaolin, former New York Mayor Rudi Giuliani, Australian model Elle MacPherson, media mogul Kerry Packer, musician Phil Collins, tobacco magnate Roger Boka, the Prince and Princess of Kent and motorcyclist Valentino Rossi.
Franco Morra, CEO, HSBC Private Bank (Suisse) SA, told Arabian Business in a statement: "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, including closing the accounts of clients who did not meet our high standards and ensuring we have strong compliance controls in place.
"We have no appetite for business with clients or potential clients who do not meet our financial crime compliance standards. These disclosures about historical business practices are a reminder that the old business model of Swiss private banking is no longer acceptable."