A whistleblower who has helped Europeans recover billions in taxes

Even though it was the French tax office that handed over encrypted information to AFIP head Ricardo Echegaray, the source of the revelations was former HSBC employee and whistleblower Hervé Falciani, a man responsible for giving the details of up to 130,000 Swiss bank accounts he suspected were linked with tax evasion.

Known as “the Snowden of Banking,” Falciani now works for the French government as part of an information technology institute. After leaving his post at HSBC, he travelled to Lebanon in 2008 in an attempt to alert Swiss banking authorities about elements of the banking system that allowed tax evasion to take place.

But the HSBC and Swiss banking authorities have maintained that the trip was in fact an effort to sell data that Falciani had stolen from the bank for personal gain. Detained and subsequently released after his return from Lebanon, Falciani fled days later to France, where he subsequently became a source for French tax authorities and handed over CDs containing information about the Swiss bank accounts.

Investigations have lead to the creation of the so-called “Falciani List,” which contains the information of the suspected tax evaders. Businessweek reported in 2013 that as a result of his cooperation with European governments such as the French, Spanish and the United Kingdom, about US$1.34 billion had been reclaimed in back taxes from suspected tax evaders.

Falciani turned out to be a key source for the Spanish authorities as out of the 1,500 names France gave to Spain 659 were identified in 2010. But former president José Luis Rodríguez Zapatero put tax collection on top of sending tax evaders to jail by offering them an amnesty if they paid their debts. Spain collected 260 million euros thanks to the amnesty from well-known individuals such as former Banco Santander head Emilio Botín and several of his relatives.

Nevertheless, the scenario seems to have changed recently as Judge José Alberto Coloma in Barcelona sentenced this month businessman Rogelio Mestre to spend three months in jail and pay 34,448 euros because of tax evasion. Coloma said the tax amnesty given by Rodríguez Zapatero had “dubious legal standing” and left the “fraudulent conduct of high-income” individuals and companies unpunished.

Falciani was also an important source for the Justice Department of the United States, which accused HSBC of laundering money for Mexican drug traffickers and North Korea and Iran. In December 2012, HSBC agreed to pay the record figure of US$1.9 billion to put an end to the investigation.

British tax authorities have so far recovered 135 million pounds thanks to Falciani’s list. Britain received the details of 6,800 bank accounts from the list that were linked to 5,000 addresses in the country. The data provided was strong enough to pursue up to 3,800 taxpayers for payments. A total of 13 investigations are still ongoing and one person has been prosecuted and fined 830,000 pounds

Meanwhile, in Greece, the data, which is often referred to as the “Lagarde List” as France Finance minister at the time to whom Falciani gave the information was Christine Lagarde, was largely forgotten until it returned to the headlines during the debt crisis.

Lagarde had handed her then Greek counterpart, George Papaconstantinou, a list of 2,062 suspected Greek tax dodgers with undeclared deposits at the Geneva branch of HSBC for the express purpose of clamping down on tax avoidance. Lagarde claimed she received death threats for speaking about tax evasion in Greece, which lead to an investigation by local courts.