HSBC Private bank agrees to pay €300 million to avoid tax fraud trial

HSBC Private Bank, a Swiss unit of banking giant HSBC, has agreed to pay €300 million to avoid going to trial in France for enabling tax fraud, prosecutors said on Tuesday.  HSBC was accused last year of helping French clients to hide at least €1.67 billion from the tax authorities, according to a source close to the probe. 

The deal struck between the financial crime prosecutor's office and the bank is a first in France under a new procedure that allows companies under suspicion of corruption or dissimulation of tax fraud to negotiate a fine to stop a case from going to trial.

“HSBC has publicly acknowledged historical control weaknesses at the Swiss private bank on a number of occasions and has taken firm steps to address them,” the bank said.

Governments around the world are working to clamp down on tax evasion, given public anger at the perception that the richest members of society may not be paying their full dues. 

HSBC’s Swiss private bank was plunged into turmoil in 2008 when Herve Falciani, a former IT employee, leaked client data that has spawned investigations in several countries.

Falciani, a French citizen, has said he is a whistleblower trying to help governments to track down citizens who used Swiss accounts to evade tax. He was sentenced in absentia in November in Switzerland to five years in prison. The leaked files led to investigations by tax authorities in several European countries including, in addition to France, Spain and Belgium.

For HSBC, which according to court documents turned down an earlier 1.4 billion euro fine involving a guilty plea, the settlement dismisses the investigation. UBS has been close to a deal several times, but CEO Sergio Ermotti has made it clear that he doesn't want to settle at any price.