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HSBC Scandal: UK PAC chief demands resignation of BBC Trust chair

HSBC Bank is facing probe in several countries for alleged irregularities by its Swiss banking unit. In the latest, the chief of Public Accounts Committee, has demanded resignation from BBC Trust chair owing to her position as non-executive director of HSBC Bank 

 

The HSBC Bank scandal continues to rock UK Parliament on the alleged involvement of lender's Swiss arm in helping wealthy clients dodge millions of pounds of British taxes. According a report from the Daily Mail, Margaret Hodge, Member of Parliament (MP) and Chair of the House of Commons Public Accounts Committee (PAC) has demanded resignation of Rona Fairhead, the Chair of the BBC Trust, owing to the latter's position as non-executive director of HSBC Bank. 
 
Fairhead's questioning by the PAC was scheduled after the newspaper reported that she was paid £513,000 for just 50 days work at HSBC last year, which far exceeds her £110,000 salary for her job as the full-time Chair of BBC Trust.
 
HSBC bank has been ensnared in quite a few scandals for some time now, which has scarred its reputation. Besides the current scandal, which involves the bank allowing  massive tax avoidance by some of its wealthy customers, a US Senate Committee report in 2012 had accused the Bank’s management of failure after failure, which had led to it being used by ‘drug kingpins and rogue nations’ to channel their money. 
 
The Senate Committee also found that HSBC often evaded rules preventing financial dealings with rogue states such as North Korea, Iran and Burma. In fact, HSBC continued to work with a Saudi Arabian bank even after it had been linked to funding of terrorism.
 
In addition to all this, an HSBC shareholder Michael Mason-Mahon has now alleged that the BBC may have deliberately excluded his interview in their segment on the HSBC scandal because he had clearly stated in the said interview that he was against Fairhead's appointment as the head of the BBC Trust, the newspaper report says. 
 
Mason-Mahon claims that he had been providing Fairhead with information about the bank's wrongdoings since 2010, and she did absolutely nothing about it. BBC however did not comment on why the interview was not broadcast or whether Fairhead was informed about his statements. Mason-Mahon also confirmed to The Daily Mail that a legal action against HSBC is in process.
 
Fairhead, on the other hand, has refused to accept any accusations of being involved in, or being unable to prevent the shady activities in the bank. She chose instead to blame the customers. “I think that first and foremost the people who are most culpable are those people who evade taxes,” she told the newspaper. She also claimed that none of the incidences had been brought to her attention.
 
MP Hodge refused to buy any of that. Before the PAC, she reportedly said – “I think you knew. Either you colluded in tax evasion or you did not know. In that case you are either incredibly naive or totally incompetent...The performance you have shown here as a guardian of HSBC does not give me confidence as a licence fee-payer in your ability as a guardian of the licence fee-payers’ money, and I think you should consider your position and resign.” 
 
In her verdict, Hodge also stated that if Fairhead failed to step down, the Government should sack her. 
 
How safe and untouched Fairhead's exit from this scandal is would perhaps have a lot to do with her extremely powerful friends in the British media. One of her fiercest defenders has been Sir David Bell, ex-chairman of the Financial Times group. Financial Times is owned by the Pearson Group, where Fairhead has previously served as CFO under Sir Bell.
 
He also helped in setting-up of the Media Standards Trust (MST), a lobby group of which he is chairman. MST established an anti-Press pressure group called Hacked Off, which pushes for State involvement in the regulation of the print media. He is also a trustee of Common Purpose, a ‘leadership training charity’. And according to The Daily Mail, Common Purpose exerts considerable influence on Britain’s public services, including the BBC.  
 
Sir David Bell is still very much on Fairhead's side. In his statement to The Daily Mail, he said, “In all my many dealings with her I have found her to be a person of scrupulous integrity. I support her continued tenure in the (BBC Trust) post.”
 
Last month, according to a report from The Guardian, HSBC chief executive Stuart Gulliver, who vowed to reform the scandal-hit bank, himself, had kept millions of dollars in a Swiss account. Gulliver held about $7.6 million in 2007 in a Swiss account in the name of Worcester Equities Inc, a Panama-registered company, the report said. 
 
In February 2015, HSBC said it had been served summons by the Indian tax department. Separately, the UK-based bank said it has also received “subpoenas and requests for information” from the US and other authorities with respect to certain US-based clients of an HSBC company in India. This case relates to some non-resident Indian (NRIs) facing investigation in the US for alleged violation of the American tax laws.
 
Earlier, in an interview to Moneylife, the UK-based Michael Mason-Mahon, who is helping bank customers to resolve their grievances, had said he has been shocked and disgusted by the behaviour of HSBC towards their customers in India as well.
 
“Just a simple search on the Internet will show you thousands of complaints about HSBC and its behaviour. Especially, several people from India have complained about being threatened, intimidated and blackmailed by the staff. Some customers, who never received any statement for their credit cards are being asked to pay huge money and are being threatened with credit bureau like CIBIL reporting. Some customers are falsely reported to CIBIL for failing to comply with the rules and regulations. Some customers are even being asked to sign blank letters of instructions (LOIs). All this is violating people’s rights and violating the Indian Penal Code (IPC),” he had said. (Read: HSBC’s behaviour in India is questionable, says activist-investor Michael Mason-Mahon http://www.moneylife.in/article/hsbc-behaviour-with-customers-in-india/37240.html) 
 
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Cairn India gets Rs20,495 crore demand notice from I-T dept
Cairn India, the unit of Vedanta, said it received a demand notice of Rs20,495 crore from income tax department for alleged failing to deduct withholding tax on alleged capital gains arising during 2006-07 in the hands of its parent Cairn UK Holdings
 
The Income Tax (I-T) department has issued a Rs20,495 crore tax demand on Cairn India Ltd for failing to deduct withholding tax on alleged capital gains made by Cairn Energy Plc, which holds around 10% stake in the company.
 
In a regulatory filing, the company, the unit of Vedanta Resources Plc said, "We would like to inform you that Cairn India has received an order from the Income Tax Department on Friday, for an alleged failure to deduct withholding tax on alleged capital gains arising during 2006-07 in the hands of Cairn UK Holdings Ltd (CUHL), our erstwhile parent company, a subsidiary of Cairn Energy Plc."
 
The Rs20,495 crore demand notice from I-T department includes a tax of about Rs10,248 crore and interest of around Rs10,247 crore. 
 
"Income tax assessments including transfer pricing assessment were duly completed for FY 2006-07, earlier. As was communicated Thursday, from the media reports we understand that tax demand has also been made by the Income Tax Department on CUHL on this matter," Cairn India said in the filing.
 
In a statement, Cairn Energy said it has received "a draft assessment order from the Indian Income Tax Department."
 
Cairn Energy, which had in 2011 sold majority stake in its Indian unit to mining group Vedanta for $8.67 billion, still holds 9.8% stake in Cairn India.
 
It has filed a dispute against the I-T Department "under the terms of the UK-India Investment Treaty, meaning the government and Cairn will now start negotiations to find a resolution to the dispute," a report from Reuters said.
 
At 11.04am, Cairn India was trading marginally down at Rs232 on the BSE, while the 30-share Senses was 140 points down at 28,790.
 

 

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