1 00:00:45,920 --> 00:00:48,500 Herve Falciani is responsible 2 00:00:48,500 --> 00:00:53,160 for the biggest banking scandal in history: Swiss Leaks. 3 00:00:53,160 --> 00:00:56,940 In 2006, while working as an IT specialist 4 00:00:56,940 --> 00:01:00,840 for HSBC Private Bank, he obtained access 5 00:01:00,840 --> 00:01:03,620 to their secure client database. 6 00:01:03,620 --> 00:01:07,223 For the next two years, he copied customer data. 7 00:01:40,310 --> 00:01:42,420 Do you have to do all this by yourself? 8 00:01:42,420 --> 00:01:44,320 There are person that help me, of course, 9 00:01:44,320 --> 00:01:46,560 to organize a few things. 10 00:01:46,560 --> 00:01:47,850 So did they check me out? 11 00:01:47,850 --> 00:01:49,418 Yeah? 12 00:01:49,418 --> 00:01:50,251 Actually it's better. 13 00:01:54,010 --> 00:01:55,880 How big is your database, 14 00:01:55,880 --> 00:01:57,290 how many gigabytes? 15 00:01:57,290 --> 00:02:00,223 It's over 100 gigabytes. 16 00:02:01,090 --> 00:02:02,753 God, that's enormous. 17 00:02:04,110 --> 00:02:07,543 The battle against tax evasion is a war. 18 00:02:08,740 --> 00:02:11,100 Do you think you can win this war? 19 00:02:11,100 --> 00:02:14,193 Well, of course the first step is to know where, 20 00:02:16,316 --> 00:02:17,416 what we have to fight. 21 00:02:42,010 --> 00:02:46,280 HSBC is the second largest bank in the world. 22 00:02:46,280 --> 00:02:49,280 Then, as now, the Geneva branch specializes 23 00:02:49,280 --> 00:02:52,663 in managing the assets of major private clients. 24 00:02:54,180 --> 00:02:58,573 This is Falciani's list, the data he took from HSBC. 25 00:03:00,180 --> 00:03:04,570 What you see here is the names, their official address, 26 00:03:04,570 --> 00:03:06,890 and the amounts on the accounts. 27 00:03:06,890 --> 00:03:11,770 For example, here you see a couple of million dollars, 28 00:03:11,770 --> 00:03:16,740 but also $70 million, $200 million are even found. 29 00:03:16,740 --> 00:03:20,823 It's a lot of money that was kept in Switzerland. 30 00:03:53,860 --> 00:03:56,400 There are diamond dealers on this list, 31 00:03:56,400 --> 00:03:58,983 a politician, nobility, 32 00:04:00,180 --> 00:04:04,490 entertainment people, tennis players, football players, 33 00:04:04,490 --> 00:04:09,490 lawyers, heads of companies, known companies, bankers. 34 00:04:14,550 --> 00:04:16,520 It's incredible, all this data 35 00:04:16,520 --> 00:04:18,893 has been stolen by Herve Falciani. 36 00:04:45,600 --> 00:04:48,310 For decades, governments treated tax evasion 37 00:04:48,310 --> 00:04:51,220 by the wealthy as a minor crime. 38 00:04:51,220 --> 00:04:54,250 People who became rich moved to tax havens 39 00:04:54,250 --> 00:04:57,510 or found ways to transfer their money across the border 40 00:04:57,510 --> 00:04:59,863 where it could be hidden from the tax man. 41 00:05:07,020 --> 00:05:10,240 Some banks were renowned for the special services 42 00:05:10,240 --> 00:05:11,290 they offered clients. 43 00:06:01,750 --> 00:06:05,050 Whether it was the Bahamas, Cayman Islands, 44 00:06:05,050 --> 00:06:09,140 or Luxembourg, tax havens offered low rates of tax, 45 00:06:09,140 --> 00:06:12,170 and their banks guaranteed the utmost discretion 46 00:06:12,170 --> 00:06:14,173 when dealing with foreign assets. 47 00:06:15,270 --> 00:06:19,030 Bank secrecy is something which is absolutely useful 48 00:06:19,030 --> 00:06:21,290 and necessary, because I don't want to know 49 00:06:21,290 --> 00:06:23,650 about your bank account, and you don't want me to know 50 00:06:23,650 --> 00:06:27,850 about your bank account, except that, for tax purposes, 51 00:06:27,850 --> 00:06:30,930 for the tax man, their should be no such secrecy, 52 00:06:30,930 --> 00:06:32,480 otherwise you facilitate fraud. 53 00:06:33,610 --> 00:06:37,470 If I can hide from my tax man by putting my money 54 00:06:37,470 --> 00:06:40,760 in another country which will not exchange information 55 00:06:40,760 --> 00:06:42,640 with other countries, like Switzerland, 56 00:06:42,640 --> 00:06:45,463 then I can avoid taxes. 57 00:06:49,390 --> 00:06:53,643 In secrecy thrive all kind of criminal activities. 58 00:06:54,670 --> 00:06:56,250 You can also do money laundering, 59 00:06:56,250 --> 00:06:58,643 you can facilitate corruption or fraud. 60 00:07:35,559 --> 00:07:40,150 In the 1910s, 1920s, Germany, France, the U.K. 61 00:07:40,150 --> 00:07:42,550 introduced personal income tax. 62 00:07:42,550 --> 00:07:45,940 The Swiss bank industry realizes there is a lot of money 63 00:07:45,940 --> 00:07:49,530 to be made from people who's gonna hide their assets 64 00:07:49,530 --> 00:07:53,100 to escape, to avoid personal income tax. 65 00:07:53,100 --> 00:07:55,770 And then bank secrecy, for tax purposes, 66 00:07:55,770 --> 00:07:59,080 is spread over the world through small jurisdictions 67 00:07:59,080 --> 00:08:01,860 in the Caribbean and then financial centers 68 00:08:01,860 --> 00:08:04,930 like Singapore or Hong Kong which did specialize 69 00:08:04,930 --> 00:08:06,180 in this type of business. 70 00:08:10,840 --> 00:08:12,530 According to the data that we have, 71 00:08:12,530 --> 00:08:15,640 Switzerland is the number one center 72 00:08:15,640 --> 00:08:17,823 for cross-border wealth management. 73 00:08:19,080 --> 00:08:22,025 They may estimate there's about 8% 74 00:08:22,025 --> 00:08:24,480 of the world's financial wealth stashed 75 00:08:24,480 --> 00:08:27,030 in tax havens globally. 76 00:08:27,030 --> 00:08:30,673 And one-third of this is in Switzerland approximately. 77 00:08:31,890 --> 00:08:33,793 So that's the number one tax haven. 78 00:08:35,310 --> 00:08:39,280 The evidence that we have suggests that 80% 79 00:08:39,280 --> 00:08:43,180 of the wealth held by European account holders 80 00:08:43,180 --> 00:08:47,750 is not declared to the country of origin 81 00:08:47,750 --> 00:08:52,030 of these depositors, so 80% of the offshore wealth 82 00:08:52,030 --> 00:08:55,253 in Switzerland seems to be evading taxes. 83 00:09:02,150 --> 00:09:05,760 Herve Falciani is himself the son of a banker, 84 00:09:05,760 --> 00:09:10,063 and he grew up in one of Europe's oldest tax havens: Monaco. 85 00:12:13,620 --> 00:12:17,960 They set up these offshore companies in tax havens, 86 00:12:17,960 --> 00:12:21,580 which you can hide behind, and this company 87 00:12:21,580 --> 00:12:24,690 will be the official owner of your account, 88 00:12:24,690 --> 00:12:28,080 but no worries, you will be beneficial owner. 89 00:12:28,080 --> 00:12:32,170 Nobody can trace who is behind these secret companies, 90 00:12:32,170 --> 00:12:35,660 and for just a couple of thousands of dollars, 91 00:12:35,660 --> 00:12:39,750 they can set it up, and it's in fact HSBC itself 92 00:12:39,750 --> 00:12:43,450 that has set up all these… 93 00:12:43,450 --> 00:12:46,003 offshore companies for their clients. 94 00:12:47,970 --> 00:12:51,610 In a way that makes it hard for investigators 95 00:12:51,610 --> 00:12:54,950 to track the ownership of wealth, 96 00:12:54,950 --> 00:12:58,540 because if a tax authority has a suspicion 97 00:12:58,540 --> 00:13:02,500 that Madame Pierrot in Paris has an undeclared bank account 98 00:13:02,500 --> 00:13:05,660 in Geneva, then French tax authorities 99 00:13:05,660 --> 00:13:08,877 are going to ask Swiss authorities, 100 00:13:08,877 --> 00:13:12,100 "Does Madame Pierrot have a bank account in Geneva?" 101 00:13:12,100 --> 00:13:15,913 But if the account is held through 30… 102 00:13:16,940 --> 00:13:21,320 trusts, shell companies, holding companies, foundations, 103 00:13:21,320 --> 00:13:26,320 intertwined, you know, then there's a higher probability 104 00:13:26,590 --> 00:13:29,067 for the Swiss banks to actually say, 105 00:13:29,067 --> 00:13:32,127 "No, there's not such thing as a bank account 106 00:13:32,127 --> 00:13:33,677 "belonging to Madame Pierrot." 107 00:13:40,360 --> 00:13:43,230 In 2008, the American government 108 00:13:43,230 --> 00:13:46,790 launched a major campaign against tax evasion. 109 00:13:46,790 --> 00:13:50,070 For the first time, representatives of a Swiss bank 110 00:13:50,070 --> 00:13:53,663 were summoned to give evidence to a U.S. Senate committee. 111 00:13:54,700 --> 00:13:56,480 Today we will look at banks that relied 112 00:13:56,480 --> 00:14:01,103 on secrecy and deception to facilitate U.S. tax evasion. 113 00:14:01,960 --> 00:14:05,000 Swiss bankers regularly traveled to United States 114 00:14:05,000 --> 00:14:08,740 to target U.S. citizens for net new money. 115 00:14:08,740 --> 00:14:11,140 These Swiss bankers maintained a low profile, 116 00:14:11,140 --> 00:14:14,930 using business cards that did not mention wealth management, 117 00:14:14,930 --> 00:14:16,970 sometimes declaring they were in the United States 118 00:14:16,970 --> 00:14:21,660 for non-business purposes, and carrying encrypted computers 119 00:14:21,660 --> 00:14:26,220 that allegedly even U.S. Customs agents could not read. 120 00:14:26,220 --> 00:14:28,960 The subcommittee even obtained a document 121 00:14:28,960 --> 00:14:31,620 showing that major international banks 122 00:14:31,620 --> 00:14:35,100 provided its Swiss private bankers with training 123 00:14:35,100 --> 00:14:39,410 on how to detect surveillance by U.S. Customs agents 124 00:14:39,410 --> 00:14:42,930 and law enforcement officers while traveling here. 125 00:14:42,930 --> 00:14:44,300 Think about that. 126 00:16:10,096 --> 00:16:12,380 Falciani continued to collect 127 00:16:12,380 --> 00:16:16,690 more and more data: accounts, transfers, 128 00:16:16,690 --> 00:16:21,530 the complete financial histories of HSBC's clients. 129 00:16:21,530 --> 00:16:24,493 The question was: what would he do with it? 130 00:17:58,623 --> 00:18:01,500 Georgina Mikhael and Herve Falciani 131 00:18:01,500 --> 00:18:04,590 founded a company called Palorva. 132 00:18:04,590 --> 00:18:08,550 In January 2008, their website went live, 133 00:18:08,550 --> 00:18:13,120 offering sensitive information about wealthy individuals. 134 00:18:13,120 --> 00:18:16,751 The contact name on the site was one Ruben Al-Chidiack. 135 00:18:26,877 --> 00:18:31,620 Palorva also contacted financial services businesses directly 136 00:18:31,620 --> 00:18:36,553 by email, offering the data at $1,000 per client. 137 00:18:42,370 --> 00:18:45,760 The emails did not lead to any deals. 138 00:18:45,760 --> 00:18:50,760 So, in February 2008, Falciani and Mikhael flew to Lebanon. 139 00:18:51,600 --> 00:18:53,210 They showed banks in Beirut 140 00:18:53,210 --> 00:18:55,653 their profiles of potential customers. 141 00:19:41,951 --> 00:19:45,190 After a week, the couple returned to Geneva, 142 00:19:45,190 --> 00:19:47,130 empty handed again. 143 00:19:47,130 --> 00:19:50,640 The Swiss police placed Georgina Mikhael under surveillance, 144 00:19:50,640 --> 00:19:54,650 but they had no idea who Ruben Al-Chidiack was. 145 00:19:54,650 --> 00:19:57,600 At the same time, another case of data theft 146 00:19:57,600 --> 00:19:59,930 was making the headlines. 147 00:19:59,930 --> 00:20:03,060 The German Secret Service have bought stolen data 148 00:20:03,060 --> 00:20:07,110 about Lichtenstein's banks from an informant. 149 00:20:07,110 --> 00:20:10,793 They had given him a large sum of money and a new identity. 150 00:20:25,714 --> 00:20:29,890 The Lichtenstein scandal occurs in February 2008, 151 00:20:29,890 --> 00:20:32,713 and it spreads over the world in one night. 152 00:20:35,030 --> 00:20:37,890 The German Secret Services got information 153 00:20:37,890 --> 00:20:39,880 from a whistleblower who was an employee 154 00:20:39,880 --> 00:20:43,410 of the LGT Bank, which is the bank 155 00:20:43,410 --> 00:20:46,020 in Lichtenstein owned by the prince family. 156 00:20:46,020 --> 00:20:48,510 And the guy just copied the name 157 00:20:48,510 --> 00:20:53,280 of all the beneficial owners of trusts in Lichtenstein. 158 00:20:53,280 --> 00:20:56,090 He sold that to the German Secret Service, 159 00:20:56,090 --> 00:20:58,290 who shared it with the tax administration, 160 00:20:58,290 --> 00:21:01,900 which shared it with 41 tax administrations. 161 00:21:01,900 --> 00:21:06,653 Billions of euros, thousands of people, massive fraud. 162 00:21:29,510 --> 00:21:30,640 But there was doubt 163 00:21:30,640 --> 00:21:34,760 if this stolen bank data could be used in court. 164 00:21:34,760 --> 00:21:37,090 There had never been a case of this kind 165 00:21:37,090 --> 00:21:39,323 in the history of German tax law. 166 00:22:24,350 --> 00:22:27,940 In March 2008, the German Secret Service 167 00:22:27,940 --> 00:22:29,847 received an email: 168 00:22:29,847 --> 00:22:31,627 "I have the whole list of clients 169 00:22:31,627 --> 00:22:34,477 "of one of the world's top five private banks." 170 00:22:40,770 --> 00:22:43,753 The German Secret Service rejected the offer. 171 00:22:46,920 --> 00:22:50,290 Instead, they requested the full name, date of birth, 172 00:22:50,290 --> 00:22:52,593 and address of the anonymous sender. 173 00:22:56,970 --> 00:22:59,060 Later, Falciani got in touch 174 00:22:59,060 --> 00:23:01,873 with the German tax investigations department. 175 00:23:03,220 --> 00:23:04,713 But nothing came of it. 176 00:23:48,670 --> 00:23:52,570 In summer 2008, French tax investigators 177 00:23:52,570 --> 00:23:55,300 offered to meet Falciani secretly 178 00:23:55,300 --> 00:23:58,377 in a French village close to the Swiss border. 179 00:30:21,320 --> 00:30:24,710 In spring 2009, the heads of state 180 00:30:24,710 --> 00:30:27,280 of the world's 20 leading economies 181 00:30:27,280 --> 00:30:30,103 met at the G20 Summit in London. 182 00:30:31,190 --> 00:30:33,840 For the first time, the topic of tax evasion 183 00:30:33,840 --> 00:30:38,100 was on the agenda, and they came to a decision. 184 00:30:38,100 --> 00:30:39,810 The tax havens of the world 185 00:30:39,810 --> 00:30:42,753 should be identified and abolished. 186 00:31:25,493 --> 00:31:28,650 11 ministers from OECD countries turned to us 187 00:31:28,650 --> 00:31:31,970 and say we need to put an end to bank secrecy. 188 00:31:31,970 --> 00:31:35,440 We'll identify jurisdictions that fail to cooperate, 189 00:31:35,440 --> 00:31:37,710 including tax havens, and take action 190 00:31:37,710 --> 00:31:39,660 to defend our financial system. 191 00:31:39,660 --> 00:31:43,220 We have agreed that there will be an end to tax havens 192 00:31:43,220 --> 00:31:47,240 that do not transfer information on request. 193 00:31:47,240 --> 00:31:50,740 The banking secrecy of the past must come to an end. 194 00:31:50,740 --> 00:31:54,440 So you could see the huge political pressure 195 00:31:54,440 --> 00:31:55,930 which was expressed there. 196 00:31:55,930 --> 00:31:59,290 That was the first time that neighbors of Switzerland 197 00:31:59,290 --> 00:32:02,163 had such an undiplomatic language. 198 00:32:12,430 --> 00:32:15,580 The 34 most important economies of the world 199 00:32:15,580 --> 00:32:19,210 are members of the OECD, the Organization 200 00:32:19,210 --> 00:32:21,823 for Economic Cooperation and Development. 201 00:32:22,750 --> 00:32:26,640 Directly after the G20 summer, the OECD published 202 00:32:26,640 --> 00:32:30,143 a list of so-called uncooperative tax havens. 203 00:32:32,510 --> 00:32:34,620 Our role is to develop standards 204 00:32:34,620 --> 00:32:36,930 and to manage diplomatic mechanism 205 00:32:36,930 --> 00:32:39,210 to make sure that the countries really move, 206 00:32:39,210 --> 00:32:41,973 and that's by organizing the political pressure. 207 00:32:44,360 --> 00:32:47,620 We were asked to shake the tree. 208 00:32:47,620 --> 00:32:48,620 And to shake the tree, 209 00:32:48,620 --> 00:32:51,553 at some point you need to name and shame. 210 00:32:53,260 --> 00:32:56,680 The OECD created three lists, 211 00:32:56,680 --> 00:33:00,380 a white one, a gray one, and a black list, 212 00:33:00,380 --> 00:33:03,760 measuring each territory's willingness to cooperate 213 00:33:03,760 --> 00:33:06,943 in the pursuit of tax evasion and money laundering. 214 00:34:13,270 --> 00:34:16,610 The OECD announced that it would only remove countries 215 00:34:16,610 --> 00:34:19,150 from the gray list if they signed agreements 216 00:34:19,150 --> 00:34:21,100 with at least 12 other states 217 00:34:21,100 --> 00:34:23,683 to tax the foreign money in their banks. 218 00:34:45,380 --> 00:34:48,700 The Swiss Finance Minister came up with a deal. 219 00:34:48,700 --> 00:34:52,570 Swiss banks would tax foreign-owned accounts themselves 220 00:34:52,570 --> 00:34:55,520 and transfer that revenue to the account holder's 221 00:34:55,520 --> 00:34:59,660 country of origin, but the names of the account holders 222 00:34:59,660 --> 00:35:02,483 would continue to remain anonymous. 223 00:35:03,750 --> 00:35:07,790 The Swiss said, "We stand ready to collect your taxes," 224 00:35:07,790 --> 00:35:10,500 and they offered significant amounts 225 00:35:10,500 --> 00:35:13,950 at a time where their partners 226 00:35:13,950 --> 00:35:17,340 were lacking money because of the fiscal crisis. 227 00:35:17,340 --> 00:35:21,913 So that was a deal that you may be willing to consider. 228 00:35:23,170 --> 00:35:24,827 So you have the Swiss government telling you, 229 00:35:24,827 --> 00:35:26,437 "Why don't I collect your tax, 230 00:35:26,437 --> 00:35:28,107 "and by the way, as you're a nice guy, 231 00:35:28,107 --> 00:35:30,170 "I'm gonna pay you a check for the past," 232 00:35:30,170 --> 00:35:33,280 and the check could reach billions of Euros. 233 00:35:33,280 --> 00:35:35,103 So, may be interesting. 234 00:36:31,250 --> 00:36:33,190 The plan agreements envisage 235 00:36:33,190 --> 00:36:37,620 so-called enhanced administrative assistance. 236 00:36:37,620 --> 00:36:40,100 The Swiss would hand over information 237 00:36:40,100 --> 00:36:43,070 only when the foreign tax officials requested it 238 00:36:43,070 --> 00:36:46,470 on specific names or account numbers. 239 00:36:46,470 --> 00:36:50,430 But the Swiss also insisted that stolen banking data 240 00:36:50,430 --> 00:36:53,986 could not be the source for these requests. 241 00:37:47,386 --> 00:37:50,360 The attitude of international diplomats 242 00:37:50,360 --> 00:37:51,423 had hardened. 243 00:37:55,050 --> 00:37:58,263 More radical solutions were now being urged. 244 00:38:10,130 --> 00:38:13,310 Europe, that's the main problem at this stage, 245 00:38:13,310 --> 00:38:16,050 needs to change its attitude from 246 00:38:17,250 --> 00:38:21,403 what we have today that is amnesties, little fines, 247 00:38:22,410 --> 00:38:26,020 no sanctions against non-incorporative tax havens, 248 00:38:26,020 --> 00:38:27,843 to a much more aggressive… 249 00:38:29,280 --> 00:38:33,680 attitude which will be no amnesties, sanctions, fines, 250 00:38:33,680 --> 00:38:36,760 withdrawing banking charters of the financial institutions 251 00:38:36,760 --> 00:38:39,780 convicted of criminal activity, 252 00:38:39,780 --> 00:38:44,780 and sanctions against non-incorporative tax havens. 253 00:39:00,070 --> 00:39:02,200 By now, the French authorities 254 00:39:02,200 --> 00:39:05,740 had had the HSBC data for months. 255 00:39:05,740 --> 00:39:08,780 But nothing appeared to have been done with it. 256 00:39:08,780 --> 00:39:11,810 The Finance Minister at the time, Christine Lagarde, 257 00:39:11,810 --> 00:39:13,890 was accused of indecision. 258 00:40:40,560 --> 00:40:43,390 Until now, the name of Herve Falciani 259 00:40:43,390 --> 00:40:45,930 was unknown to the world's media. 260 00:40:45,930 --> 00:40:49,780 Now he decided to change that by going public, 261 00:40:49,780 --> 00:40:52,863 even if it meant facing critical questions. 262 00:41:51,586 --> 00:41:53,520 However, there was a limit 263 00:41:53,520 --> 00:41:56,510 to what the French authorities could do. 264 00:41:56,510 --> 00:41:59,980 Stolen data could not be used in court, 265 00:41:59,980 --> 00:42:03,699 so the tax inspectors decided to try their luck. 266 00:42:41,630 --> 00:42:44,700 Many of the tax evaders who received these letters 267 00:42:44,700 --> 00:42:47,220 refused to be intimidated. 268 00:42:47,220 --> 00:42:49,870 They hired lawyers and won their cases 269 00:42:49,870 --> 00:42:51,120 against the French state. 270 00:42:55,960 --> 00:42:59,230 Finally, France complied with a Swiss request 271 00:42:59,230 --> 00:43:01,550 to return Falciani's list. 272 00:43:01,550 --> 00:43:03,360 They gave them a copy. 273 00:43:03,360 --> 00:43:08,360 Only now did HSBC discover the huge size of Falciani's haul. 274 00:44:06,170 --> 00:44:09,143 The bank told its clients that all was well. 275 00:44:10,340 --> 00:44:13,760 Today, the former heads of HSBC Geneva 276 00:44:13,760 --> 00:44:15,793 won't talk about this subject. 277 00:44:54,059 --> 00:44:55,800 The European Union's rules 278 00:44:55,800 --> 00:44:58,110 on the exchange of bank information 279 00:44:58,110 --> 00:45:00,920 oblige the French tax authorities to share 280 00:45:00,920 --> 00:45:05,273 relevant information from the HSBC data with other states. 281 00:45:06,210 --> 00:45:09,420 In 2010, Paris began to send material 282 00:45:09,420 --> 00:45:12,930 to the finance ministers of many nations. 283 00:45:12,930 --> 00:45:16,000 Now, a hunt for tax evaders would commence 284 00:45:16,000 --> 00:45:18,143 in each of these countries. 285 00:45:22,230 --> 00:45:27,050 The British list contained 3,600 names, 286 00:45:27,050 --> 00:45:28,790 but the whole investigation 287 00:45:28,790 --> 00:45:31,883 led to only one single prosecution. 288 00:45:33,500 --> 00:45:34,983 MPs were appalled. 289 00:45:37,444 --> 00:45:38,780 Where's your priority? 290 00:45:38,780 --> 00:45:41,430 I want to get a sense of where the priority lies. 291 00:45:41,430 --> 00:45:44,519 Our priority is to get the tax in that's due. 292 00:45:44,519 --> 00:45:46,170 - I think for the government… - Okay, if that's your… 293 00:45:46,170 --> 00:45:47,030 Go on. 294 00:45:47,030 --> 00:45:49,010 But we have always taken a view 295 00:45:49,010 --> 00:45:51,820 that the important thing is to get the money in 296 00:45:51,820 --> 00:45:54,630 and to persuade people to pay the tax that is due. 297 00:45:54,630 --> 00:45:57,810 We have very well-published approaches 298 00:45:57,810 --> 00:45:59,910 which say that people that come to us 299 00:45:59,910 --> 00:46:02,050 and voluntarily disclose, 300 00:46:02,050 --> 00:46:05,890 we will tend not to even penalize, let alone prosecute. 301 00:46:05,890 --> 00:46:08,480 People where we have to work harder we will penalize, 302 00:46:08,480 --> 00:46:10,910 and we will take that all the way through to prosecution. 303 00:46:10,910 --> 00:46:12,760 So we have always taken a view 304 00:46:12,760 --> 00:46:14,890 that we have to have our whole toolkit. 305 00:46:14,890 --> 00:46:16,360 But on these particular cases, 306 00:46:16,360 --> 00:46:18,060 we do think we're having some success, don't we? 307 00:46:18,060 --> 00:46:20,150 You've had one prosecution. 308 00:46:20,150 --> 00:46:20,983 Yes. 309 00:46:20,983 --> 00:46:24,360 Can I sort of put some of the facts on this on the record? 310 00:46:24,360 --> 00:46:28,780 By 2012, around 700 British HSBC clients 311 00:46:28,780 --> 00:46:33,100 had paid $172 million euros to the tax man. 312 00:46:33,100 --> 00:46:36,700 But there were no fines, except in one case. 313 00:46:36,700 --> 00:46:39,770 The British authorities went for a pragmatic solution, 314 00:46:39,770 --> 00:46:42,120 because here too no one was sure 315 00:46:42,120 --> 00:46:44,980 that the data could be used in court. 316 00:46:44,980 --> 00:46:46,040 It is only a list. 317 00:46:46,040 --> 00:46:48,650 It's intelligence, not evidence. 318 00:46:48,650 --> 00:46:50,720 Criminal prosecutions always take longer 319 00:46:50,720 --> 00:46:51,553 because of the additional… 320 00:46:51,553 --> 00:46:52,386 You've got one at the moment. 321 00:46:52,386 --> 00:46:53,340 We've had one so far. 322 00:46:53,340 --> 00:46:55,759 We've got another dozen criminal ones in train. 323 00:46:55,759 --> 00:46:56,592 Another dozen? 324 00:46:56,592 --> 00:46:58,010 Another dozen criminal ones. 325 00:46:58,010 --> 00:46:59,810 We've got 500 who actually 326 00:46:59,810 --> 00:47:02,090 we have settled with and got money. 327 00:47:02,090 --> 00:47:05,600 We've got another 200 who have voluntarily fessed up. 328 00:47:05,600 --> 00:47:07,980 We've got over $120 million of cash in, 329 00:47:07,980 --> 00:47:11,300 which I think is more actually than we'd anticipated, 330 00:47:11,300 --> 00:47:12,800 and the number's still rising. 331 00:47:12,800 --> 00:47:15,930 So actually we've got a very good story to tell on this, 332 00:47:15,930 --> 00:47:19,977 and the selective choice of one prosecution out of 6,000, 333 00:47:19,977 --> 00:47:22,502 it is indeed selective. 334 00:47:22,502 --> 00:47:25,550 Why have a selective prosecution system on tax? 335 00:47:25,550 --> 00:47:29,460 You've got a car theft cartel, you'd prosecute. 336 00:47:29,460 --> 00:47:33,690 Why, if you got a tax avoidance evasion cartel, 337 00:47:33,690 --> 00:47:35,640 are you selective in who you prosecute? 338 00:47:43,420 --> 00:47:45,480 Most European tax offices 339 00:47:45,480 --> 00:47:49,250 face the problem that tax evasion is only punishable 340 00:47:49,250 --> 00:47:51,743 when there is intention to commit fraud. 341 00:47:55,170 --> 00:47:57,370 The Germans already had experience 342 00:47:57,370 --> 00:48:00,010 dealing with stolen bank data. 343 00:48:00,010 --> 00:48:03,910 Their tax officials had bought several CDs since 2008, 344 00:48:03,910 --> 00:48:06,173 with the support of the German government. 345 00:48:08,620 --> 00:48:12,430 In 2010, the German Constitutional Court 346 00:48:12,430 --> 00:48:16,442 rejected all legal objections to this practice. 347 00:49:04,230 --> 00:49:09,230 By 2010, the HSBC data leak was already two years old. 348 00:49:09,670 --> 00:49:13,230 Plenty of time for the tax inspectors to investigate. 349 00:49:13,230 --> 00:49:16,560 In the German region of Nordrhein Westfalen 350 00:49:16,560 --> 00:49:18,530 most of the tax evaders on the list 351 00:49:18,530 --> 00:49:20,990 made voluntary declarations. 352 00:49:20,990 --> 00:49:23,930 Only two people were prosecuted. 353 00:49:23,930 --> 00:49:27,550 The authorities have released very little information, 354 00:49:27,550 --> 00:49:30,300 but according to Swiss Leaks, citizens hid 355 00:49:30,300 --> 00:49:33,773 over four billion Euros in Switzerland. 356 00:49:56,560 --> 00:49:58,480 Nevertheless, in Germany, 357 00:49:58,480 --> 00:50:02,550 those who make voluntary declarations also go unpunished, 358 00:50:02,550 --> 00:50:06,407 an amnesty that applies to no other crime. 359 00:51:29,675 --> 00:51:31,960 Vaxevanis published the list 360 00:51:31,960 --> 00:51:35,080 that should have led to a full investigation, 361 00:51:35,080 --> 00:51:38,060 but the Greek Finance Ministry and tax department 362 00:51:38,060 --> 00:51:41,060 played ping pong with Falciani's data, 363 00:51:41,060 --> 00:51:44,190 sending it to and fro between each other 364 00:51:44,190 --> 00:51:46,480 and never investigating it. 365 00:51:46,480 --> 00:51:50,570 They claimed official documentation from Paris was missing. 366 00:51:50,570 --> 00:51:54,010 And of course, data form an unidentifiable source 367 00:51:54,010 --> 00:51:55,743 cannot be used in court. 368 00:53:28,254 --> 00:53:30,230 So, no investigation, 369 00:53:30,230 --> 00:53:34,143 because Falciani's list was just small change. 370 00:53:37,830 --> 00:53:40,580 The Greek state did not get a single Euro 371 00:53:40,580 --> 00:53:43,230 from the HSBC data. 372 00:53:43,230 --> 00:53:45,940 Instead, Vaxevanis was prosecuted 373 00:53:45,940 --> 00:53:48,493 for breaking data protection laws. 374 00:54:34,678 --> 00:54:37,010 It later emerged that three names 375 00:54:37,010 --> 00:54:38,823 from the list had been removed. 376 00:54:39,970 --> 00:54:42,850 Venizelos's predecessor at the Ministry of Finance 377 00:54:42,850 --> 00:54:46,490 has since been convicted for deleting these names, 378 00:54:46,490 --> 00:54:48,897 which belong to his relatives. 379 00:55:30,410 --> 00:55:35,230 In Spain, the laws on tax evasion contain severe penalties. 380 00:55:35,230 --> 00:55:37,890 So would the Spanish use Falciani's list 381 00:55:37,890 --> 00:55:40,240 and come down hard? 382 00:56:00,173 --> 00:56:03,673 Santandar is Europe's second-largest bank. 383 00:56:04,600 --> 00:56:07,660 Emilio Botin had at least two billion euros 384 00:56:07,660 --> 00:56:12,103 of his family's fortune hidden away in HSBC Geneva. 385 00:56:38,766 --> 00:56:40,350 At a shareholders meeting, 386 00:56:40,350 --> 00:56:43,693 one investor tried to get answers from Botin. 387 00:57:45,330 --> 00:57:48,870 The tax authorities were unusually lenient. 388 00:57:48,870 --> 00:57:51,620 Then, in 2012, the Spanish parliament 389 00:57:51,620 --> 00:57:55,210 passed a special amnesty law for tax evaders. 390 00:57:55,210 --> 00:57:58,980 Anyone who declared their hidden fortune could settle up 391 00:57:58,980 --> 00:58:01,840 by paying just a third of the normal tax 392 00:58:01,840 --> 00:58:03,493 without prosecution. 393 00:59:16,200 --> 00:59:18,440 In France, it took three years 394 00:59:18,440 --> 00:59:20,310 for the parliament to pass a law 395 00:59:20,310 --> 00:59:25,023 finally allowing the use of the HSBC data in French courts. 396 01:00:11,150 --> 01:00:15,420 French citizens had hidden almost 12 billion euros 397 01:00:15,420 --> 01:00:18,040 at the Swiss branch of HSBC. 398 01:00:18,040 --> 01:00:21,090 Only five of the total of over 9,000 399 01:00:21,090 --> 01:00:23,403 account holders were prosecuted. 400 01:00:26,780 --> 01:00:30,690 Meanwhile, Falciani himself was still based in France 401 01:00:30,690 --> 01:00:32,730 and was helping the French authorities 402 01:00:32,730 --> 01:00:34,683 with the analysis of his data. 403 01:02:02,720 --> 01:02:04,050 We don't like whistleblowers, 404 01:02:04,050 --> 01:02:06,230 we don't like the breach of bank secrecy, 405 01:02:06,230 --> 01:02:08,700 but as long as their strict bank secrecy 406 01:02:08,700 --> 01:02:10,930 for tax purposes you're exposed to that. 407 01:02:10,930 --> 01:02:15,123 So what we favor is to organize that in a legal process. 408 01:02:20,640 --> 01:02:22,030 Dealing with whistleblowers 409 01:02:22,030 --> 01:02:24,980 is still a problem in the EU today. 410 01:02:24,980 --> 01:02:27,250 Most states have no clear laws 411 01:02:27,250 --> 01:02:29,023 about how to respond to them. 412 01:03:01,928 --> 01:03:05,220 The situation in America is very different. 413 01:03:05,220 --> 01:03:08,370 They offer large cash rewards to whistleblowers, 414 01:03:08,370 --> 01:03:10,430 often in the millions. 415 01:03:10,430 --> 01:03:12,420 One of the most spectacular cases 416 01:03:12,420 --> 01:03:14,773 concerned the Swiss bank UBS. 417 01:03:16,730 --> 01:03:20,050 Mr. Birkenfeld was a high wealth manager for UBS 418 01:03:20,050 --> 01:03:25,050 and he did at one time come into the Department of Justice 419 01:03:25,075 --> 01:03:29,650 and also the Senate finance hearings and testify there 420 01:03:29,650 --> 01:03:34,650 what UBS was doing, and they awarded him an award. 421 01:03:35,300 --> 01:03:36,470 Of? 422 01:03:36,470 --> 01:03:38,402 A little over $100 million. 423 01:03:43,250 --> 01:03:45,720 In America, the government gives whistleblowers 424 01:03:45,720 --> 01:03:49,750 up to 30% of the money which the state recoups. 425 01:03:49,750 --> 01:03:52,180 Birkenfeld, a former bank manager, 426 01:03:52,180 --> 01:03:55,500 walked out of court a traitor to his employers 427 01:03:55,500 --> 01:03:57,533 but also a very rich man. 428 01:04:02,910 --> 01:04:06,782 Mr. Falciani had contacted the U.S. government 429 01:04:06,782 --> 01:04:08,926 Department of Justice and he contacted 430 01:04:08,926 --> 01:04:12,853 the IRS special agents also, our New York field office. 431 01:04:13,970 --> 01:04:15,400 He wanted asylum. 432 01:04:15,400 --> 01:04:18,240 That's not something that the Internal Revenue Service 433 01:04:18,240 --> 01:04:19,310 has the power to grant. 434 01:04:19,310 --> 01:04:22,100 And this guy wanted to be in the media. 435 01:04:22,100 --> 01:04:23,390 That's the furthest thing 436 01:04:23,390 --> 01:04:25,820 that we would want our informant to be. 437 01:04:25,820 --> 01:04:28,400 The Department of Justice did come with their decision 438 01:04:28,400 --> 01:04:31,310 to not use him because we wouldn't be able 439 01:04:31,310 --> 01:04:33,470 to use that information that he got anyway. 440 01:04:33,470 --> 01:04:36,110 Because that was information that was stolen 441 01:04:36,110 --> 01:04:40,350 from a bank in Europe, which violated certain European law, 442 01:04:40,350 --> 01:04:41,910 we wouldn't be able to use that 443 01:04:41,910 --> 01:04:44,497 in a court of law in the U.S. courts. 444 01:04:50,060 --> 01:04:52,300 There was no offer of asylum, 445 01:04:52,300 --> 01:04:56,000 not even of cooperation from the U.S. 446 01:04:56,000 --> 01:04:59,233 So why did Falciani still want to leave France? 447 01:07:51,830 --> 01:07:53,730 While Spanish judges considered 448 01:07:53,730 --> 01:07:56,930 whether they should extradite Falciani to Switzerland, 449 01:07:56,930 --> 01:07:59,852 the Americans upped their game. 450 01:08:06,390 --> 01:08:09,490 United States is losing perhaps $100 billion 451 01:08:09,490 --> 01:08:14,490 in tax revenues each year due to offshore tax abuses. 452 01:08:14,660 --> 01:08:17,893 Swiss bankers should be stopped form profiting from it. 453 01:08:19,420 --> 01:08:20,840 It is a treasure hunt. 454 01:08:20,840 --> 01:08:21,720 The treasure is the money 455 01:08:21,720 --> 01:08:23,750 that belongs to the U.S. government. 456 01:08:23,750 --> 01:08:27,270 And that's where the U.S. started nuclear war 457 01:08:27,270 --> 01:08:28,866 with the Swiss banks. 458 01:08:49,440 --> 01:08:52,660 I'm here to make absolutely clear 459 01:08:53,500 --> 01:08:57,550 that UBS genuinely regrets any compliance failures 460 01:08:57,550 --> 01:08:58,763 that may have occurred. 461 01:09:00,020 --> 01:09:02,420 HSBC has learned some very hard lessons 462 01:09:02,420 --> 01:09:04,410 from the experience of the past few years, 463 01:09:04,410 --> 01:09:06,820 but we have taken very substantial steps 464 01:09:06,820 --> 01:09:09,860 to address the problems that we, our regulators, 465 01:09:09,860 --> 01:09:12,060 and this subcommittee have identified. 466 01:09:12,060 --> 01:09:13,550 Credit Suisse's management team 467 01:09:13,550 --> 01:09:17,160 regrets very deeply that, despite the industry-leading 468 01:09:17,160 --> 01:09:19,310 compliance measures we put in place, 469 01:09:19,310 --> 01:09:21,680 we had some Swiss-based private bankers 470 01:09:21,680 --> 01:09:23,683 who appear to have violated U.S. law. 471 01:09:30,310 --> 01:09:33,230 Several major banks have been found guilty 472 01:09:33,230 --> 01:09:36,303 and are ordered to pay record-breaking fines in America. 473 01:09:38,090 --> 01:09:41,760 Many cases are still open, not only for facilitating 474 01:09:41,760 --> 01:09:44,883 tax evasion, but also for money laundering. 475 01:10:00,290 --> 01:10:01,840 You gotta get names. 476 01:10:01,840 --> 01:10:04,083 Names, names, names. 477 01:10:04,930 --> 01:10:09,560 And what we need is to see aggressive implementation 478 01:10:09,560 --> 01:10:11,173 by the Department of Justice. 479 01:10:40,460 --> 01:10:42,540 They passed legislation FATCA, 480 01:10:42,540 --> 01:10:45,070 Foreign Account Tax Compliance Act, 481 01:10:45,070 --> 01:10:48,860 which basically says all the banks in the world, 482 01:10:48,860 --> 01:10:53,860 you have to report all the income, all the bank accounts, 483 01:10:54,070 --> 01:10:59,070 of your U.S. clients, or we will more or less kill you. 484 01:11:00,720 --> 01:11:03,340 And that triggered a lot of reaction from many countries, 485 01:11:03,340 --> 01:11:05,440 saying we'll give you all the information. 486 01:11:18,870 --> 01:11:21,610 The OECD has been working on new rules 487 01:11:21,610 --> 01:11:25,170 for the exchange of tax information between countries. 488 01:11:25,170 --> 01:11:26,870 If America can do it, 489 01:11:26,870 --> 01:11:29,233 than Europe should be able to do it too. 490 01:11:30,540 --> 01:11:32,260 We told the G20 it would be good 491 01:11:32,260 --> 01:11:34,770 to have one global standard. 492 01:11:34,770 --> 01:11:37,360 If the Americans get this information from Switzerland 493 01:11:37,360 --> 01:11:40,060 or from Luxembourg, why wouldn't the French, 494 01:11:40,060 --> 01:11:42,420 the German, the UK, or the developing countries 495 01:11:42,420 --> 01:11:44,223 get the same type of information? 496 01:11:46,480 --> 01:11:49,810 At the same time, a tax controversy in Germany 497 01:11:49,810 --> 01:11:52,870 was leading to a new showdown. 498 01:11:52,870 --> 01:11:54,800 The tax agreement with Switzerland 499 01:11:54,800 --> 01:11:57,500 which preserved the anonymity of bank accounts 500 01:11:57,500 --> 01:11:59,623 was now under attacks. 501 01:12:58,030 --> 01:13:01,790 In November 2012, the upper house of the German Parliament 502 01:13:01,790 --> 01:13:04,943 refused to ratify the tax treaty with Switzerland. 503 01:13:30,060 --> 01:13:32,620 Famous German names surfaced 504 01:13:32,620 --> 01:13:35,610 amidst the flood of voluntary declarations, 505 01:13:35,610 --> 01:13:38,160 among them the feminist Alice Schwarzer 506 01:13:38,160 --> 01:13:40,010 and the president of the football club 507 01:13:40,010 --> 01:13:42,198 Bayern Munich, Uli Hoeness. 508 01:14:37,500 --> 01:14:40,570 In December 2012, Falciani was given 509 01:14:40,570 --> 01:14:42,940 a conditional release from prison, 510 01:14:42,940 --> 01:14:46,823 but the Swiss extradition warrant still hung over his head. 511 01:15:13,031 --> 01:15:15,900 Falciani was placed under police protection 512 01:15:15,900 --> 01:15:18,110 and began to help the Spanish authorities 513 01:15:18,110 --> 01:15:19,576 investigate his list. 514 01:16:20,660 --> 01:16:23,540 In May 2013, the Spanish high court 515 01:16:23,540 --> 01:16:26,173 rejected the Swiss extradition request. 516 01:18:51,360 --> 01:18:55,000 The international arrest warrants still remained active, 517 01:18:55,000 --> 01:18:57,890 so Falciani stayed in Spain. 518 01:18:57,890 --> 01:19:00,900 He joined Partido X, a political party 519 01:19:00,900 --> 01:19:04,210 with a platform against tax evasion and corruption. 520 01:19:04,210 --> 01:19:07,883 They made him a candidate for the European Parliament. 521 01:21:20,340 --> 01:21:23,960 By 2014, the American example was being followed 522 01:21:23,960 --> 01:21:28,960 across the world, and investigators in Belgium and France, 523 01:21:29,790 --> 01:21:33,070 Argentina and India began probing HSBC. 524 01:22:17,560 --> 01:22:19,810 There is a criminal investigation ongoing 525 01:22:19,810 --> 01:22:22,510 against HSBC as a bank. 526 01:22:22,510 --> 01:22:25,140 And this is the biggest investigation 527 01:22:25,140 --> 01:22:28,520 of the Belgian tax authorities ever 528 01:22:28,520 --> 01:22:31,230 regarding money laundering, fiscal fraud, 529 01:22:31,230 --> 01:22:34,610 but also illegal banking activities, 530 01:22:34,610 --> 01:22:38,200 and that's because they do things like this 531 01:22:38,200 --> 01:22:40,940 without a license here in Belgium. 532 01:22:40,940 --> 01:22:44,150 So they meet people in hotels, in restaurants, 533 01:22:44,150 --> 01:22:47,782 at their homes, because they don't do it 534 01:22:47,782 --> 01:22:51,893 in a regular way as a bank should do it. 535 01:22:54,780 --> 01:22:58,180 When you talk about secrecy, what we found 536 01:22:58,180 --> 01:23:02,170 in the Falciani files is the internal communication 537 01:23:02,170 --> 01:23:05,433 between the Swiss bankers and the clients. 538 01:23:06,450 --> 01:23:08,913 For example, you have this client. 539 01:23:09,890 --> 01:23:12,820 He will always call the bankers in Switzerland, 540 01:23:12,820 --> 01:23:17,180 and when he calls, he will give not his real name 541 01:23:17,180 --> 01:23:20,890 but the name of a famous football player, 542 01:23:20,890 --> 01:23:22,963 for example, Zidane, Kurov, 543 01:23:23,970 --> 01:23:27,310 and then he will ask for the price of the caviar, 544 01:23:27,310 --> 01:23:29,760 and that is just code language 545 01:23:29,760 --> 01:23:33,350 for the amount of money on his account. 546 01:23:33,350 --> 01:23:38,350 So they are really using almost James Bond-like practices 547 01:23:38,670 --> 01:23:41,300 just to keep everything secret. 548 01:23:41,300 --> 01:23:44,320 This is inside information of HSBC 549 01:23:44,320 --> 01:23:46,860 that would have never been revealed 550 01:23:46,860 --> 01:23:49,793 if Falciani didn't steal this list. 551 01:23:57,550 --> 01:23:59,630 Europe's leaders are now attempting 552 01:23:59,630 --> 01:24:02,120 to chart a new political course. 553 01:24:02,120 --> 01:24:05,030 The campaigning group Tax Justice Network 554 01:24:05,030 --> 01:24:09,650 estimates that every year up to 260 billion euros of income 555 01:24:09,650 --> 01:24:12,070 goes untaxed in Europe. 556 01:24:12,070 --> 01:24:15,410 The European Union wants to achieve through negotiation 557 01:24:15,410 --> 01:24:17,483 what America imposed through law. 558 01:24:36,240 --> 01:24:41,200 In October 2014, the OECD achieved a historic agreement 559 01:24:41,200 --> 01:24:44,680 which established the automatic exchange of information 560 01:24:44,680 --> 01:24:47,700 about foreign private bank accounts. 561 01:24:47,700 --> 01:24:49,600 Any state signing up to this 562 01:24:49,600 --> 01:24:51,773 will have to follow strict rules. 563 01:25:36,180 --> 01:25:38,440 But are these rules really enough 564 01:25:38,440 --> 01:25:42,163 to put an end to tax evasion once and for all? 565 01:25:43,390 --> 01:25:45,150 The idea that all of a sudden 566 01:25:45,150 --> 01:25:50,150 the very people who were actively facilitating tax evasion 567 01:25:50,710 --> 01:25:52,400 are going to switch side 568 01:25:52,400 --> 01:25:54,820 and are going to play the tax man's job, 569 01:25:54,820 --> 01:25:58,260 are going to make sure that their clients 570 01:25:58,260 --> 01:26:01,693 pay their taxes, I think is a bit naive. 571 01:26:04,290 --> 01:26:08,010 How do we make sure that offshore bankers 572 01:26:08,950 --> 01:26:13,230 respect their obligations, that they play by the rules? 573 01:26:13,230 --> 01:26:14,900 How do we make sure? 574 01:26:14,900 --> 01:26:19,493 There's no verification mechanism in place. 575 01:26:20,410 --> 01:26:23,170 And if there's no mechanism to check, 576 01:26:23,170 --> 01:26:26,300 and if it remains profitable to violate the law, 577 01:26:26,300 --> 01:26:29,653 then tax evasion is going to continue. 578 01:27:47,693 --> 01:27:49,410 It is likely that in the future 579 01:27:49,410 --> 01:27:51,680 we will still have to rely on whistleblowers 580 01:27:51,680 --> 01:27:55,453 and informants to uncover the schemes of tax evaders. 581 01:27:56,960 --> 01:27:59,030 On the basis of the stolen data, 582 01:27:59,030 --> 01:28:04,030 HSBC has become the center of international investigations. 583 01:28:04,220 --> 01:28:08,450 They are accused of aiding tax evasion and money laundering. 584 01:28:21,000 --> 01:28:25,450 {\an8}Improved By Namikage