HSBC share price dips as tax avoidance scandal deepens
HSBC Holdings Plc (LON:HSBA) shares were steady at 560.42p this morning, as the scandal revolving around HSBC’s Swiss unit tax avoidance scheme took a political turn. Tory and Labour have traded accusations, while on the international level Argentina has demanded cash payments from the lender as compensation.
Sir Alan Duncan, former Tory minister, accused Margaret Hodge, chair of the Public Accounts Committee (PAC), of damaging parliament’s reputation with “abusive and bullying” behaviour during Monday’s hearing of HSBC bosses. He also demanded she apologise.
“You were rude, abusive and bullying in a manner which brings your committee and the proceedings of the house into disrepute,” Duncan wrote.
The senior Tory’s letter follows the grilling of former and current HSBC bosses on Monday. Chris Meares, former head of private banking at the lender, Rona Fairhead, ex-risk chief at HSBC, and current CEO Stuart Gulliver were all questioned in relation to the unfolding tax-avoidance scandal at the bank’s Swiss unit.
Meanwhile, Labour members of the PAC had also wanted to question former HSBC boss Stephen Green. He was CEO and then chairman of HSBC from 2003 to 2010. He was also appointed head of the lender’s private banking operation, which oversees the Swiss unit, in 1998.
Tory MPs, however, have been accused of blocking the attempts to summon Green, who sits in the House of Lords as a conservative peer and was minister of trade until 2013. The PAC consists of eight Tory MPs, five Labour and one Liberal. A PAC spokesman confirmed that Green will not be questioned for now.
“The public has a right to know and parliament has a right to know,” Austin Mitchell, the MP for Grimsby said. “To say that he did not know what was going on is ludicrous.”
The leaked information which caused the scandal was sufficient for UK law enforcement agencies to open a formal investigation for conspiracy to defraud authorities, Lord Ken Macdonald QC, public prosecutions former chief said last week.
Elsewhere, Argentina has opened an investigation into the case, and on Monday demanded that HSBC repatriate $3.5 billion, which Buenos Aires says the bank assisted its Argentine clients in evading. HSBC said it is fully cooperating with Argentine authorities.
Argentina is currently experiencing severe financial hardships, having defaulted on most of its debt last year as it failed to stick to the repayment plan set in place in 2005, three years after the country’s previous default.
The scandal was revealed just as HSBC reported “disappointing” figures for the 2014 financial year. The bank’s annual report showed profit before tax had dropped 17.2 percent to $18.680 billion, while revenue declined 5.2 percent to $61.248 billion.
As of March 10, the consensus among 36 investment analysts polled by the Financial Times has it that investors should hold their position in the company, with five advising to “buy” and only one to “sell”.
