Former HSBC chief admits he helped clients hide assets worth €1.6bn

Paris — The former CEO of HSBC Holdings’s Swiss private bank pleaded guilty to helping wealthy clients hide assets worth at least €1.6bn as French prosecutors flex their muscles to tackle white-collar crime.

Peter Braunwalder was fined €500,000 and given a one-year suspended jail sentence, according to a Paris court ruling on the plea. He admitted that he took part in helping clients evade taxes between 2006 and 2007 by opening clandestine Swiss bank accounts and setting up offshore trusts or providing fake loans.

The former HSBC executive also pleaded guilty to illegally approaching French residents to encourage them to shift funds to Switzerland during the period, according to the previously unreported French ruling dated January 29 and released this week. Braunwalder retired from his role at HSBC a decade ago.

The HSBC case is part of a French crackdown on tax fraud and money-laundering operated through Switzerland that has seen the conviction of a former minister and UBS Group ordered in February to pay a record €4.5bn fine after being chastised by a judge for criminal wrongdoings of “an exceptionally serious nature”.

Seeking convictions

The Braunwalder guilty plea comes more than a year after HSBC paid €300m to resolve allegations in the same case. It is a sign that French financial prosecutors are determined to pursue individuals even after collecting large settlements.

Marion Lambert-Barret, a Paris lawyer who is not involved in the HSBC investigation, said Braunwalder’s sentence sends a clear deterrent message.

“The Parquet National Financier is heading the direction it said it would: Even if a company reaches a settlement, prosecutors will seek convictions for individuals to punish the underlying behaviour they consider fraudulent,” she said by phone.

Lambert-Barret said the outcome for Braunwalder shows suspects can negotiate with criminal authorities to avoid a drawn-out and uncertain process, but discussions and a voluntary plea deal do not lead to a more lenient sentence.

In the UBS over similar allegations that covered a much lengthier time period, three former executives each got 12-month suspended jail terms and €200,000 fines, while a fourth received a more severe penalty, a suspended sentence of 18 months and a penalty of €300,000.

Stolen data

French authorities began scrutinising HSBC’s Swiss private bank after Herve Falciani, a former information technology worker at the firm, stole client account details from the Geneva office in 2008 and shared the data with investigators.

France’s Parquet National Financie and Braunwalder’s lawyer, Jean-Pierre Spitzer, declined to immediately comment, while HSBC representatives in France did not respond to calls and an e-mail. French investigators dropped charges targeting another suspect in the HSBC Private Bank case.

HSBC’s November 2017 settlement was the first using a new procedure in France that enables companies to resolve investigations without pleading guilty. Société Générale agreed in 2018 to pay €250m to end a bribery case and French fund manager Carmignac Gestion said in June it would pay €30m to settle a tax-fraud case.

Bloomberg