Hervé Falciani awaits outcome of legal tussle between Spain and Switzerland over his role in exposing potential tax cheats
When he appeared in a Madrid court, banking whistleblower Hervé Falciani was disguised with a wig and thick-framed glasses.
Facing extradition, the man behind the "Lagarde list" of potential tax cheats said in a newspaper interview he had fled to Spain last year when the US authorities told him it was the only country in Europe where his life would not be in danger.
Now Falciani, 41, whose spectacular theft of account data in 2006-7 from a Swiss subsidiary of HSBC has helped uncover thousands of wealthy tax fraudsters, is about to find out if he will be extradited to Switzerland where he faces prosecution and up to seven years jail.
The man seen as the Bradley Manning of global tax fraud awaits a decision from Spanish judges, which may come this week. But the Spanish do not seem eager to hand him over.
If Switzerland views Falciani as a common thief who deserves jail, in Spain and other cash-strapped European countries he is a hero for having helped governments in their efforts to recover hundreds of millions of pounds from tax cheats.
Tax authorities in Britain, Spain and France are known to have recovered money from the estimated £200bn-worth of missing taxes hidden in Falciani's encrypted files of bank accounts belonging to wealthy Europeans. The files became known as the Lagarde list after France's then finance minister, Christine Lagarde, now IMF chief, passed on the data, then in the hands of the French authorities, to the US and several EU members.
Spain's attorney general's office is clear that, having handed over files on tens of thousands of clients without asking for money, Falciani has not committed an extraditable crime.
"His help is not just in finding money that was hidden from tax authorities but in revealing methods employed by HSBC that allow money-laundering by drug-traffickers and terrorists," said Dolores Delgado, the state attorney who opposed the extradition request in court on April 15, referring to a recent decision by US authorities.
In court Falciani claimed he had long been co-operating with the US Justice Department. It had advised him to move from France to Spain in July last year, where he was arrested at a Barcelona port and jailed for five months on a Swiss warrant.
Despite reports that he first tried to sell the data in the Lebanon after downloading details on what French authorities say are 130,000 accounts in 2009, French and Spanish authorities confirmed he had never asked for payment. The French public prosecutor, Eric de Montgolfier, gave court evidence on Falciani's behalf.
Falciani claimed he told a Lebanese bank about the list, using the false name of Ruben Al-Chidiak, to provoke a reaction from Swiss authorities who had refused to let him make a complaint anonymously to expose the HSBC accounts. "I wanted it to be anonymous because I feared for my life," he said.
David Cameron's trade minister, Lord Green, was chairman of HSBC's private banking division at the time.
Delgado said Falciani held the key to the encrypted documents, meaning they could be accessed only with his help, which he had so far volunteered. "We can't punish people who, when they observe criminal conduct where they work, denounce it to the authorities," she said.
Falciani said he had deliberately sought the relative safety of a Spanish jail after US authorities had warned him they were about to act against HSBC for laundering money from drugs cartels.
"They told me that from that moment my life was at risk," Falciani, who has French and Italian citizenship, told El País newspaper this week. "They told me the only safe place in Europe was Spain."
Swiss attempts to extradite him from France backfired when Falciani offered to help prosecutors track down tax fraudsters. His list sparked operations across Europe, with Spanish and British tax authorities recovering vast sums of unpaid tax.
British authorities reportedly believe Falciani will help them recover some £200m from details on 6,000 accounts. And, in the first high-profile conviction last summer, the property developer Michael Shanly admitted evading £430,000 in inheritance tax and was fined £470,000.
Spanish tax authorities have pursued hundreds of tax evaders and recovered hundreds of millions of euros. Among those investigated were Spain's mighty Botín banking fa mily, including the Santander UK boss, Ana Patricia Botín, and her father, Emilio. The courts dropped a criminal investigation when it was revealed they had paid €200m in back taxes.
In Greece, meanwhile, the Hot Doc magazine editor, Kostas Vaxevanis, was arrested for publishing 2,056 Greek names allegedly on the Falciani list. Two people on the list have reportedly since died in mysterious circumstances.
HSBC has said that despite Falciani's claims that he was a whistleblower, it had no record that he had reported anything to his supervisors in Geneva. A spokesman said only 15,000 accounts are involved.
But the bank is under increasing pressure from authorities around the world over what they say is lax control of money laundering.
The US action that sparked Falciani's move to Spain slapped a record $1.9bn fine on the bank for allowing itself to be used to launder money from Mexico's infamous Sinaloa cartel and rogue states such as Libya, Sudan, Burma and Iran.
A senate committee accused Britain's biggest bank of exposing the US financial system to "a wide array of money laundering, drug trafficking and terrorist financing risks."
Authorities decided not to prosecute because HSBC would almost certainly have lost its US banking licence, threatening its future and destabilising the banking system.
The assistant attorney general, Lanny Breuer, blamed the bank's "incredibly lax" monitoring for the laundering of more than $881m in drug-trafficking money.
HSBC said it was "profoundly sorry".
On Tuesday, prosecutors in Paris opened an investigation based on the list into whether HSBC had offered illicit products to help French clients avoid tax. A bank spokesman said the bank had not been officially informed of that investigation. And last week, Spain's supreme court confirmed a €2.1m fine on the bank for infringing money-laundering rules by refusing to identify 138 Swiss accounts.
British tax authorities are also reportedly working through a separate list of thousands of HSBC account holders in Jersey.
Switzerland's $2tn offshore-banking sector, built on strict secrecy laws, is under fire from campaigners. In 2009, its largest bank, UBS, paid $78m and handed over thousands of client names to settle charges that it helped US citizens hide funds.
Tax evasion deprives EU governments of roughly €1tn annually, according to the European commission, and NGO Transparency Now campaigners have launched an online petition calling for international action against Switzerland.
If Spanish judges approve the extradition request, authorities can still prevent him being taken to Switzerland. "The final decision is in the hands of the government," said Falciani's lawyer, Joan Garcés.
 |
| READ THE ORIGINAL POST AT www.guardian.co.uk |