Saturday, November 28, 2015

Falciani sentenced to five years in prison

Former HSBC employee Hervé Falciani is seen in a file photo.

Former HSBC employee and whistleblower was found guily of leaking bank’s data

GENEVA — A Swiss court convicted yesterday in absentia Hervé Falciani, a former employee with international bank HSBC, for economic espionage and sentenced him to five years in prison.

Falciani, 43, was on trial for leaking bank data that led to a worldwide wave of tax evasion probes against prominent clients with accounts in Switzerland. He leaked a cache of documents allegedly indicating that HSBC’s Swiss private banking arm helped more than 120,000 clients hide funds from tax authorities.

His information then formed the basis of the revelations by many media outlets that showed how HSBC turned a blind eye to illegal activities of arms dealers and helped wealthy people evade taxes.

Seen by some as a crucial whistleblower, he had refused to travel from his native France to appear before the Swiss Federal Tribunal in Bellinzona in proceedings that began in October. France does not extradite its own citizens and Falciani appears unlikely to serve the sentence.

Falciani had been charged with illegally obtaining data, economic espionage, breach of business confidentiality and breach of bank secrecy while working at a Swiss HSBC subsidiary between 2006 and 2008.

The court in the southern Swiss town of Bellinzona threw out all the charges except for one alleging a “serious” violation of economic intelligence, for having made public information about private and public foreign entities in Lebanon, France, Germany, and Britain, according to court documents.

He was ordered to serve five years in prison, minus 170 days that he had served in pre-extradition detention in Spain.

Falciani, reached by Skype, said he had “no reaction” and said he had little consideration for the trial in Switzerland. He had previously insisted that he didn’t believe he would receive a fair trial in Switzerland. He also reaffirmed his commitment to rooting out illegal banking secrecy.

“There’s no surprise,” with the verdict, he said. “Some people don’t negotiate on the issue of terrorism. I don’t negotiate with financial opacity.”

HSBC, which argued that he had illegally downloaded details from clients and accounts, welcomed the decision against Falciani, who worked as an information technology specialist at HSBC Private Bank (Suisse). Some of the data, allegedly detailing accounts worth US$100 billion held by more than 100,000 people and legal entities, were later published by international news organizations.

“HSBC has always maintained that Falciani systematically stole clients’ information in order to sell it for his own personal financial gain,” HSBC said in a statement. “The court heard that he was not motivated by whistleblowing intentions and that this was not a victimless crime.”

HSBC was fined by the Geneva authorities this year, after investigators concluded that “organizational deficiencies” had allowed money laundering to take place at its Swiss subsidiary. French magistrates are conducting a criminal investigation into the bank, alleging “complicity in aggravated money laundering and financial fraud”.

The Argentine connection

AFIP tax bureau head Ricardo Echegaray received last year an encrypted CD from the French government containing information on 4,040 undeclared bank accounts of Argentine origin. But the original source of information was whistleblower Hervé Falciani, who led to an still-open investigation on the account holders.

Echegaray originally met with whistleblower Falciani earlier last year during an official visit to Lyon. Falciani had reportedly contacted the Argentine authorities to talk about the list and offered to give the information but the government instead chose to receive it through its so-called double taxation treaty with France in order to give the data more validity when used in court.

Some of the accounts in Geneva are allegedly owned by HSBC Argentina’s president and other bank executives, according to a partial list of the bank account holders. The list includes major firms such as Clarín Group’s Cablevisión, power distributor Edesur and cement manufacturer Loma Negra and individuals such as former YPF head Sebastián Eskenazi and late journalist Bernardo Neustadt.

A congressional bicameral committee was created to investigate the HSBC scandal and many of the supposed account holders, individuals and companies, were summoned to testify. Representatives of Cablevisión were repeatedly asked to attend but they always have refused, even through a judiciary order. With a final report pending, the committee is supposed to give suggestions on changes to the country’s financial regulations.

Herald with AP