Friday, October 23, 2020

Ex-HSBC Banker Pleads Guilty in $1.8 Billion French Tax Case


The former chief executive officer of HSBC Holdings Plc’s Swiss private bank pleaded guilty to helping wealthy clients hide assets worth at least 1.6 billion euros ($1.8 billion) as French prosecutors flex their muscles to tackle white-collar crime.

Peter Braunwalder was fined 500,000 euros and given a one-year suspended jail sentence, according to a Paris court ruling on the plea. The 68-year-old admitted that he took part in helping clients evade taxes between 2006 and 2007 by opening clandestine Swiss bank accounts and setting up offshore trusts or providing fake loans.

The former HSBC executive also pleaded guilty to illegally approaching French residents to encourage them to shift funds to Switzerland during the period, according to the previously unreported French ruling dated Jan. 29 and released this week. Braunwalder retired from his role at HSBC a decade ago.

The HSBC case is part of a French crackdown on tax fraud and money laundering operated through Switzerland that’s seen the conviction of a former minister and UBS Group AG ordered in February to pay a record 4.5 billion-euro fine after being chastised by a judge for criminal wrongdoings of “an exceptionally serious nature.”

Seeking Convictions

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The Braunwalder guilty plea comes over a year after HSBC paid 300 million euros to resolve allegations in the same case. It’s a sign that French financial prosecutors are determined to pursue individuals even after collecting large settlements.

Related: HSBC agrees to 300 million euro settlement of Belgian tax fraud case: prosecutors

Marion Lambert-Barret, a Paris lawyer who isn’t involved in the HSBC investigation, says Braunwalder’s sentence sends a clear deterrent message.

“The Parquet National Financier is heading the direction it said it would: Even if a company reaches a settlement, prosecutors will seek convictions for individuals to punish the underlying behavior they consider fraudulent,” she said by phone.

Lambert-Barret said the outcome for Braunwalder shows suspects can negotiate with criminal authorities to avoid a drawn-out and uncertain process, but discussions and a voluntary plea deal don’t lead to a more lenient sentence.

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In the UBS over similar allegations that covered a much lengthier time period, three former executives each got 12-month suspended jail terms and 200,000-euro fines, while a fourth received a more severe penalty, a suspended sentence of 18 months and a penalty of 300,000 euros.

Related: Ex-HSBC employee in jail over $87,000 customer accounts scam

Stolen Data

French authorities began scrutinizing HSBC’s Swiss private bank after Herve Falciani, a former information technology worker at the firm, stole client account details from the Geneva office in 2008 and shared the data with investigators.

France’s PNF and Braunwalder’s lawyer, Jean-Pierre Spitzer, declined to immediately comment, while HSBC representatives in France didn’t respond to calls and an email. French investigators dropped charges targeting another suspect in the HSBC Private Bank case.

HSBC’s November 2017 settlement was the first using a new procedure in France that enables companies to resolve investigations without pleading guilty. Societe Generale SA agreed last year to pay 250 million euros to end a bribery case and French fund manager Carmignac Gestion said in June it would pay 30 million euros to settle a tax-fraud case.


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