HSBC bosses reject calls to quit over tax scandal

London

HSBC bosses rejected calls from British lawmakers for them to quit over the bank's Swiss tax scandal, but said they were having to clean up after a "terrible list" of control and compliance failings.

HSBC chairman Douglas Flint and chief executive Stuart Gulliver told a panel of UK lawmakers they shared collective responsibility for failings at HSBC's Swiss bank that allowed clients to dodge taxes. "It clearly was unacceptable, we very much regret this and it has damaged HSBC's reputation," Mr Gulliver told the Treasury Committee with regard to practices in its Swiss bank in the mid-2000s. "I am responsible for clearing it up. I have made substantial changes," he said.

Europe's biggest bank has admitted failings in compliance and controls in its Swiss private bank after media reports said it helped wealthy customers conceal millions of dollars of assets in a period up to 2007.

It adds to a long list of banking scandals that have emerged since the financial crisis, including several at HSBC. The bank was fined US$1.9 billion two years ago by US authorities for lax controls that allowed criminals to launder money and was also hit with a US$611 million penalty by regulators in November for alleged manipulation of currency markets. "It's a terrible list," Mr Flint said when a UK member of parliament read out the recent fines and investigations.

He said the bank was more than halfway through a transformation to make it simpler and create more central control. "I sincerely hope there are no more skeletons," Mr Flint added.

Mr Flint said the allegations of wrongdoing had had a devastating impact on the bank's reputation that would take time to rebuild.

This has also caused a political storm in Britain ahead of an election in May. The opposition Labour Party has criticised Prime Minister David Cameron for appointing former HSBC chairman Stephen Green as a trade minister after he left the bank.

Mr Green was responsible along with the rest of the management team for the control environment at the time, but Mr Flint said the people most responsible for the Swiss bank failings were local management.

Mr Gulliver's own tax affairs have been thrust into the centre of the scandal after Britain's Guardian newspaper said he had sheltered millions of pounds in HSBC's Swiss private bank via a Panamanian company. Mr Gulliver denied any wrongdoing and said being domiciled in Hong Kong did not represent aggressive tax avoidance. He said he had paid all his UK taxes and opened his Swiss account via a Panama company so colleagues could not see his finances. REUTERS