Fri | Dec 2, 2016

Venezuela, Brazil leaned heavily on secret Swiss accounts

Published:Thursday | February 12, 2015 | 12:00 AM

Venezuela was among the top clients for HSBC's Swiss private banking arm, which helped shield wealthy clients around the world from scrutiny and taxes.

A report from the International Consortium of Investigative Journalists (ICIJ) and several news organisations reveals that socialist Venezuela ranked third among countries with the largest dollar amounts tucked into secret Swiss HSBC bank accounts, trailing only Switzerland and the United Kingdom.

Government and individual clients from the South American oil-producing country accounted for US$14.8 billion in accounts, according to leaked data that covers a period ending in 2007.

Much of the funds were linked to Venezuela's Treasury Office. The official listed on that account is Alejandro Andrade, who got his start in the administration as a bodyguard for late Venezuelan President Hugo Chávez, and later served as National Treasurer. He left the role in 2010, and now reportedly lives in the US.

From 2008 to 2010, Andrade also led the Economic and Social Development Bank of Venezuela, known as Bandes, which is an arm of the government. US officials brought a case against bank officials for alleged involvement in a kickback scheme during the time Andrade was running Bandes, according to the report. Andrade was not named in the suit.

In terms of sheer number of accounts, Brazil came in at No. 4, with 8,667 accounts linked to clients who were Brazilian citizens or held a Brazilian passport.

The report comes at a time when corruption is under intense investigation in Brazil, in connection to what prosecutors call Brazil's biggest graft scandal yet uncovered, a massive kickback scheme at state-run oil company Petrobras.

Prosecutors have said some of the dozens of figures facing charges of corruption in the Petrobras case kept their kickback money in foreign accounts, but it hasn't been made public in which banks.

The only Brazilian singled out in the ICIJ report was Edmond J. Safra, the deceased scion of a banking family who founded financial institutions across Brazil. He sold his holdings in 1999 to HSBC for US$10.3 billion in cash. The ICIJ report linked him to seven HSBC client accounts holding upward of US$5.3 million.

BLIND EYE

HSBC bank turned a blind eye to illegal activities of arms dealers and blood diamond traders while helping rich people evade taxes, according to a report based on the documents that was published Monday.

The data relate to accounts worth US$100 billion held by more than 100,000 people and legal entities around the world.

A former HSBC employee-turned-whistleblower, Herve Falciani, gave the data to French tax authorities in 2008. France shared it with other governments and launched investigations.

The French newspaper Le Monde obtained a version of the data and shared the material with the ICIJ, which analysed the material together with The Guardian and the BBC in Britain.

The consortium said clients include former and current politicians from Britain, Russia, Ukraine, Kenya, India, Mexico, Lebanon, the Democratic Republic of the Congo, Zimbabwe, and Algeria.

Switzerland had the greatest number of clients of the data examined, followed by France, the United Kingdom, Brazil and Italy. In terms of ranking by value, Switzerland was first with US$31.2 billion, followed by the United Kingdom with US$21.7 billion; Venezuela with US$14.8 billion; the US with US$13.4 billion; and France with US$12.5 billion.

Though some of the details of such operations were disclosed previously, when HSBC was fined in 2012 by the US for allowing criminals to use its branches for money laundering, Monday's information suggests HSBC took an active role in assisting the wealthy in hiding their money from authorities.

"The bank repeatedly reassured clients that it would not disclose details of accounts to national authorities, even if evidence suggested that the accounts were undeclared to tax authorities in the client's home country," the consortium said. "Bank employees also discussed with clients a range of measures that would ultimately allow clients to avoid paying taxes in their home countries."

HSBC stressed that the documents were from eight years ago and said it has since implemented initiatives designed to prevent its banking services from being used to evade taxes or launder money.

- AP reports