Hervé Falciani, 41 years old is the tax dodger’s worst nightmare and one of the banking industry’s most dangerous whistleblower. He is from Monaco with dual French and Italian citizenships, and a computer systems engineer who has worked for ten years at the HSBC Private Bank Suisse, a subsidiary of HSBC Holdings Plc (HBC) in Switzerland. One day in 2008, he disappeared from the bank’s Geneva office with a cache of secret data on HSBCs thousands of clients.
While on the run with stolen data and violating Switzerland’s security laws in 2009, he turned over the information to several European governments to expose names of suspected tax cheats and money launderers with hidden Swiss bank accounts. Part of the information later became known as “Lagarde List of tax evaders.”
Repercussions in Europe and the U.S.
In 2010, Christine Lagarde, the former French finance chief and now IMF managing director, encouraged crack down on tax cheats, pointing to tax evasion as the cause of a financial malady by debt-ridden European economies such as Greece. As it turned out, the “Lagarde list” supplied to Greece were found to contain names of 2,000 Greeks with millions of dollars of secret stash in deposited in HSBC.
Falciani’s 2008 caper may have been a little-known non-event outside Europe, but his whistleblowing scandal in the middle of an economic crisis had shaken the foundations of Europe’s private-banking market. Bank account information he provided formed the basis for a wave of police raids and tax-evasion investigations and proceedings across the continent through the years.
Many European tax offenders with secret HSBC accounts have been prosecuted and billions of dollars in taxes collected in countries such as France, Spain and U.K., according to Bloomberg. High-profile cases on individuals included British real estate mogul Michael Shanly, who owed $751 million in taxes and fines, and in Spain, Emilio Botin, chairman of Banco Santander, paid $273 million in taxes and penalties. Last week in Brussels and Antwerp, Belgian authorities swooped down on scores HSBC clients.
The fall-out from Falciani’s exposé created a ripple effect that went beyond the shores of Europe and waded across the Atlantic – to the United States. An investigation by the U.S. Senate last year yielded evidence that HSBC committed errors in money-laundering controls and enabled known terrorists, drug syndicates and countries with U.S. economic sanctions to gain illegal access to the U.S. financially system. In July, HSBC entered into a money-laundering settlement deal with the U.S. district court of New York City to the tune of $1.92 billion.
In a recent interview with Germany’s news magazine Der Spiegel, Falciani says, “Banks such as HSBC have created a system for making themselves rich at the expense of society by assisting in tax evasion and money laundering.”
Some of his motivation may be measured in cash. Data supplied by Falciani was paid for by German authorities and later utilized to pursue thousands of Germans with hidden Swiss accounts in aggregate amount of $650 million.
While the five-year scandal continues to vex tax evaders and money-launderers, Falciani isn’t running for his life like his counterpart Edward Snowden, who’s in Russia at the moment. Following a Spanish judge’s decision to trashing his extradition order to Switzerland, the computer specialist now works in France as a research engineer at INRIA – with three armed bodyguards.
Notwithstanding threats to his life, Falciani says there are more revelations to come.
Written by: Janet Grace Ortigas