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| People walk along the corridors outside the HSBC building in Singapore. |
The records, obtained by the Washington-based International Consortium of Investigative Journalists (ICIJ) are based on the inner workings of HSBC’s private banking arm, and provide a rare glimpse inside the secretive offshore banking system.
The disclosures show how HSBC, one of the world’s largest banks, provided its clients — including criminals, politicians, celebrities and old money families — with secrecy-cloaked companies in British Virgin Islands and other offshore centres.
While it is not illegal to hold a secret account, and not all of HSBC clients are involved in illegal activity, investigations by ICIJ have exposed accounts where tax dodgers, politicians, illegal diamond traders, arms dealers and despots stash their cash.
According to ICIJ, a total of $102 billion was stashed in secret accounts on behalf of more than 100,000 people and entities from 203 countries.
In the East African region, Kenya leads in having the largest dollar amount deposited in HSBC’s Switzerland-based private banking arm, with 742 Kenyans or individuals with Kenya links collectively holding $559 million in 1,093 bank accounts.
In Tanzania, 99 HSBC clients hold $117 million in 286 accounts, while 57 Ugandans hold $89.3 million in 212 bank accounts. Burundi comes fourth in the region with 14 individuals holding $30.2 million in 32 Swiss accounts.
Rwanda has the least dollar amount deposited at HSBC — only two clients, none of whom hold citizenship, hold $2.1 million.
The leaked files were smuggled away by a former HSBC employee-turned-whistle blower, Hervé Falciani, and handed to French authorities in 2008.
France’s Le Monde newspaper obtained material from the French tax authority and then shared it with ICIJ, on condition that the latter would pull together a team of journalists from multiple countries that could sift through the data.
Consequently, a team of journalists from 45 countries have been analysing a trove of almost 60,000 leaked files over the past two years, and shedding light on the secretive world of tax haven clients — for the first time ever on such a scale.
ICIJ still has more than two million files that it is yet to analyse, but says it is carefully releasing basic information of public interest.
“We won’t release personal data en masse; the Offshore Leaks Database doesn’t include records of bank accounts and financial transactions, e-mails and other correspondence, passports and telephone numbers,” said the consortium.
Among the prominent people ICIJ has linked to Tanzania as holding tens of millions of dollars in tax havens are three individuals not new to the public. Last year, the three were accused by authorities of using their offshore entities to offer money laundering services to local leaders and businessmen.
The three, whose nationalities are yet to be established, reportedly acted on behalf of locals with illegal cash to provide them with extra layers of secrecy by setting up offshore entities for them.
In Burundi, a businesswoman has been cited in various UN reports for pillaging precious metals in the DR Congo and financing and providing weapons to rebels during Burundi’s civil war in the early 1990s.
She is one of the many HSBC clients linked to conflicts across Africa. While the bank adopted tough anti-weapons financing measures in 2000, this has not stopped it from operating accounts for clients involved in arms trafficking and conflict.
In 2002, Swiss authorities charged the businesswoman and members of her immediate family with money laundering. The case was later dropped and she won nominal court costs, ICIJ reports. Currently living in Belgium, she has been linked to three HSBC accounts opened between 1990 and 1997. One account holding some $3.26 million between 2006 and 2007, was blocked for unspecified reasons. The other two were closed in 1995 and 2000.
According to ICIJ, between 2006 and 2007, the accounts of people linked to arms trafficking or corrupt weapon contracting in seven African countries collectively totalled $56 million.
In Kenya, senator Johnston Muthama of Machakos County was names in the HSBC files in connection with an account “Rockland96,” which was set up in 1996 and closed in 2000, and “20443NM,” which operated over the same period. Bank files also linked eight of his relatives to the latter.
Mr Muthama confirmed that the account Rockland96 was opened in 1996 because of his foreign directors and partners who “were in the process of setting up a mining company.”
“The account was opened to facilitate remittance of funds into one central account for the sole purpose of purchasing mining equipment and spare parts. Once the mine was set up, the account was consequently closed,” Mr Muthama said.
In Zimbabwe, HSBC made huge profits by engaging in deals worth over $270 million with some citizens seven years ago, at a time the country’s economy was collapsing, according to ICIJ. The records released cover bank accounts up to 2007 said to have allegedly belonged to 198 clients connected to Zimbabwe by birth or residence, amounting to $272 million.
There were 1,787 South Africans on the list, holding $2.09 billion in 2,221 accounts.
Last month, a report from an African Union panel led by former South African President Thabo Mbeki revealed that financial crime including tax dodging and corruption drains at least $50 billion a year from the continent.
The East African
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