HSBC Response to Tax Evasion Scandal Earns a D-Minus

Translation: "Yes, but we've changed!"

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If you’ve logged onto any news site or social media account this morning, you’ve likely heard that files obtained through a collaboration of international news outlets have exposed some seriously dodgy behavior on the part of HSBC‘s Swiss banking arm.

Specifically, the company often allowed clients to withdraw bricks of cash in foreign currencies; actively marketed strategies for wealthy clients to avoid European taxes; helped clients to conceal undeclared “black” accounts; and even allowed international criminals and other individuals of questionable repute to open accounts.

In light of the scandal these findings have ignited, HSBC has released a statement to The Guardian which — while technically admitting responsibility — reads less like a mea culpa than a laundry list of excuses and “but we’ve changed!” declarations.

While the bank concedes that “We acknowledge and are accountable for past compliance and control failures,” it then spends nearly a full page justifying itself, first by pointing out that the Swiss banking industry once “operated very differently from the way it does today” and that its Swiss arm “assumed that responsibility for payment of taxes rested with individual clients, rather than the institutions that banked them.” This, according to the company, meant that “in some cases individuals took advantage of bank secrecy.”

Isn’t that what Swiss bank accounts are all about?

Further, the statement explains that HSBC acquired its Swiss business back in 1999 and that the Swiss bank “focused on a very different client base and had a significantly different culture to HSBC. The business acquired was not fully integrated into HSBC, allowing different cultures and standards to persist.”

The bank also points out that “In January 2011…HSBC completely overhauled its entire private banking business, adding to initiatives it had previously taken in connection with US clients beginning in 2008,” and that “In April 2012 HSBC chief executive, Stuart Gulliver, announced HSBC’s commitment to implement the highest or most effective standards across the group to combat financial crime. HSBC is following through on that commitment to Global Standards, and is now just over two years into a five-year programme to transform the way that HSBC manages financial crime risk.”

Our translation of the statement:

“Yes, this happened, but we inherited the Swiss bank’s low standards — HSBC didn’t create them! Plus, regulations were lighter back in the day, and big, bad clients took advantage of our trusting nature and naivete. And hey! We even took steps to remedy the situation before we got caught; so really, are we so bad?”

So HSBC just admitted that it did nothing to crack down on chronic, widely acknowledged corruption for 12 years.

The first step on the path to recovery is admitting that you have a problem…and HSBC couldn’t even get that one right.