Less Ads, More Data, More Tools Register for FREE

Pin to quick picksHSBC Holdings Share News (HSBA)

Share Price Information for HSBC Holdings (HSBA)

London Stock Exchange
Share Price is delayed by 15 minutes
Get Live Data
Share Price: 696.40
Bid: 693.50
Ask: 693.70
Change: 3.60 (0.52%)
Spread: 0.20 (0.029%)
Open: 693.90
High: 696.40
Low: 691.00
Prev. Close: 692.80
HSBA Live PriceLast checked at -

Watchlists are a member only feature

Login to your account

Alerts are a premium feature

Login to your account

SPECIAL REPORT-How Germany's taxman used stolen data to squeeze Switzerland

Thu, 21st Nov 2013 09:59

By Edward Taylor, Matthias Inverardi and Mark Hosenball

DUESSELDORF, Germany, Nov 21 (Reuters) - In the digital age,pen and paper are useful tools for intrigue. In 2007, SinaLapour, an assistant to a private banker at Credit Suisse,hand-copied the names of potential tax evaders listed on two ofthe firm's internal computer systems. By not downloadinginformation, Lapour avoided leaving electronic fingerprints. Hisemployer did not detect his actions.

He put the notes in his briefcase and took them home, wherehe created an Excel spreadsheet which he called"Mappe1-test1.xls." The spreadsheet held names, addresses, andamounts held by clients.

Despite trying to cover his tracks, Lapour was eventuallyconvicted of economic espionage, among other crimes. Accordingto a statement he made in a plea bargain, the data he stole gavedetails of as many as 2,500 clients with combined assets up to 2billion Swiss francs ($2.2 billion). He sold it to a middleman,who then sold it to German tax inspectors. The information ledto police raids in 2010 on Credit Suisse's main offices inGermany.

Lapour's spreadsheet was one of a half-dozen sets of stolendata for which Germany has paid millions of euros over the pastfive years. Those purchases pushed the boundaries of German law;Reuters' inquiries have found Germany's 16 federal states allcooperated in making them.

German parliament and court records, Swiss legal documentsand interviews with bankers and politicians show the states andthe central government in Berlin gradually constructed a system,partly funded by Germany's federal finance ministry, to buyinformation on tax evaders. It's a campaign which involveshundreds of Germany's roughly 2,500 tax inspectors, includes aformula to calculate each state's share of a purchase, andcontinues to this day, German tax officials say.

Some German politicians say buying stolen data added topressure on Switzerland to share more information about taxevaders. Last month, Switzerland, which for decades has nurturedbank secrecy as a cornerstone of its offshore wealth industry,signed a convention to exchange some tax information with othercountries. If approved by the Swiss parliament, it could be theend of a long and passionate battle.

Swiss officials accuse the Germans of breaking Swiss laws onbanking secrecy and of committing economic espionage. Accordingto arrest warrants seen by Reuters, the Swiss prosecutor isseeking the arrest of three German tax inspectors on thesecharges. Swiss finance minister Eveline Widmer-Schlumpf declinedto comment, but a spokesman for her ministry said Germany'shandling of stolen goods "is highly questionable with respect tothe rule of law."

In June this year, Germany's parliament received a draft lawwith a clause to exempt from prosecution civil servants whohandle stolen data. As Berlin parties haggle over a newgovernment, it has yet to be passed.

Nonetheless Norbert-Walter Borjans, finance minister forNorth Rhine-Westphalia, the state which bought the Lapour data,says he would support the purchase of such information "so longas there is data containing valuable tips to be bought." Hispredecessor, who signed off on the Lapour deal, could not bereached. Switzerland has filed no charges against thepoliticians involved.

Buying stolen data is an "emergency remedy", a spokesman forGermany's federal finance ministry told Reuters: It wasjustified because Germany and Switzerland did not have a dealthrough which Germany could enforce its tax claims. None of thetax inspectors could be reached, and the state declined tocomment on their behalf.

THE DECEASED WITNESSThe Swiss prosecutors suspect the German tax inspectors of morethan handling stolen goods. They allege the taxmen evensolicited the theft of specific information, according to aninternational request for legal assistance that Switzerland sentto Germany on the case.

In that confidential document, seen by Reuters, Lapour isquoted as saying a middleman showed him a text message in whichtax inspectors allegedly requested specific information.

Tax inspectors in North Rhine-Westphalia say they don'tsolicit data stealing. Ingrid Herden, a spokeswoman for thestate's finance ministry, said German tax authorities had notactively encouraged theft of client data from Swiss banks."There is no evidence that tax inspectors from NRW did such athing," she added in a written statement to Reuters.

However, Herden added that she could not rule out that amiddleman may have incited Lapour to steal information.

That go-between, named in the Swiss request as an Austriangraphic designer called Wolfgang Umfogl, committed suicide inprison in Switzerland in 2010, weeks after his arrest onsuspicion of money-laundering, according to police in Berne,Switzerland.

Lapour, who was given a two-year jail sentence but spentless than six months in custody, could not be reached forcomment. His lawyer declined to be interviewed. NorthRhine-Westphalia declined to comment on the details of the case. THE FITNESS CENTRE Lapour was born in 1983 in Tehran, Iran. By the mid-2000s he wasworking at Credit Suisse in Zurich and would meet up with Umfoglat the Banane Fitness Centre in Winterthur, according to theSwiss request for assistance, which is also based on Umfogl'stestimony and other material gathered by Swiss police. How thetwo got talking about stealing data is not revealed.

Lapour created a data file on March 2, 2008, containingnames, addresses, net worth and contact details for clients, therequest for assistance says; Umfogl flew to Duesseldorf to meetGerman tax inspectors at the end of that month to see what thisinformation was worth. His opening price: 6.75 million euros($9.13 million).

By that time, North Rhine-Westphalia already had experienceof handling stolen information from other sources. In 2008, itemerged that the state's tax inspectors had obtained data stolenfrom LGT Group, a Liechtenstein bank, from a thief whooriginally sold it to Germany's federal intelligence service,the BND.

That year, North Rhine-Westphalia officials commissioned alegal opinion from the regional prosecutors to determine if theywere within their rights to buy stolen data from Lapour. Theprosecutors found in their report that for civil servants,dealing with LGT data did not amount to handling stolen goods -the theft happened in Liechtenstein, to a foreign company. Theyalso said "emergency measures" are justified if tax claimscannot be enforced by other legal means: Authorities inLiechtenstein had not cooperated with requests for legalassistance.

Tax authorities at three German states would go ahead withdeals, buying at least five sets of data since 2008 according tomedia announcements they made; the data was stolen from banksincluding UBS, Julius Baer and HSBC. The banks declined furthercomment or said they had resolved the issues.

THE UPDATED FILE

In Switzerland, Lapour was busy. The Swiss prosecutor sayshis data file was updated on July 21, 2008, four months afterUmfogl allegedly first met the German tax inspectors, to add thedates each account was opened.

This, the Swiss prosecutor asserts, suggests he was stealingto order: German tax authorities needed the dates to see howlong a client had evaded taxes. In the request for legalassistance, Lapour is cited as saying Umfogl asked him to getthat extra data: Umfogl had shown him a text message from June24, 2008 in which the tax inspectors purportedly demanded moreinformation. The alleged message's exact contents are notdescribed.

In May 2009, Umfogl and the German tax inspectors met again,at the Kronen Hotel in Stuttgart, the Swiss document says.There, prosecutors say, tax inspectors asked for a sample of thedata and for information beyond names and dates.

According to the Swiss prosecutor, Lapour confessed he stoleand sold a PowerPoint presentation that Credit Suisse made forstaff on how to handle German clients who were "non compliant" -evading German tax. The presentation told staff how to avoidimplicating themselves or the bank in aiding tax evasion. TheSwiss say the Germans wanted to use it as evidence Swiss bankshad a strategy to look after foreign tax-evading clients.

Credit Suisse would eventually pay 150 million euros to thestate of North Rhine-Westphalia to end an investigation intoallegations it helped German citizens evade taxes. Neither thebank nor North Rhine-Westphalia would comment further.

Back in 2009, after another meeting in the German lakesidecity of Konstanz, Umfogl handed tax inspectors a USB stickcontaining a sample of 10 percent of the data, according to theSwiss request for assistance. In mid-July, he purportedly handedover the PowerPoint presentation. It's not clear from thedocument when or how the rest of the information was handed overor paid for.

In all, Umfogl allegedly paid Lapour at least 65,000 eurosfor his information; Lapour later told Swiss prosecutors that heused most of the money to support his Czech girlfriend. Heshowered her with gifts including a car, paid for vacations toItaly, Spain and Egypt, and helped her to pay off a mortgage inthe Czech Republic. She was not accused of wrongdoing and couldnot be reached for comment.

Germany's legal machinery continued to gather opinions onhow far tax inspectors could go. In 2010, the NorthRhine-Westphalia inspectors got some legal reassurance.

A CHANGE OF VIEW"With the LGT CD, many said it's a one-off, but then came 2010,"said Borjans, the finance minister of North Rhine-Westphalia.

On Feb. 23, representatives from the Federal Central TaxOffice, an authority under the jurisdiction of the GermanMinistry of Finance, contacted officials from what is nowBorjans' ministry and decided to coordinate bank data purchasesso different states would not all buy the same set,parliamentary questions show.

Days later, Borjans' predecessor, a member of ChancellorAngela Merkel's CDU party, announced he had struck a deal to buya "client data CD" - the Lapour data - for 2.5 million euros.

In November, a legal opinion from Germany's FederalConstitutional Court added weight to that plan. The court foundthat if data had been "received" rather than actively solicited,then those who used it were not guilty of abetting the theft.Whether it was legal to buy stolen data was a question itreferred to other courts.

"It's not like I commission a purchase, or people comedirectly to me," Borjans told Reuters this year. Tax inspectors,not politicians, are in the driving seat, he said. They act ontips and then ask him for resources. THE KEY OF KOENIGSTEIN By 2010, all Germany's tax collectors had reached agreement onhow to split the cost if the federal ministry decided to jointhe states in funding a purchase, parliamentary questions show.

Acquisitions of taxpayer names are funded using a formulaknown as the "Koenigsteiner Schluessel," which translates as"the key of Koenigstein." The formula, named after a wealthyFrankfurt suburb, was devised after World War Two to work outhow to spread the cost of funding scientific research inGermany.

"Should the Federal Ministry of Finance decide to make apurchase, it will contribute 50 percent of the acquisitioncosts," a spokesman for the ministry told Reuters. All 16 statestold Reuters they have helped pay for data: Berlin and Hamburgsay these purchases led to the recovery of more than 100 millioneuros each.

But not all are convinced the system is legal. Afterinitially joining in, one state - Brandenburg - said it wasopting out because of such doubts. Last June, when the draft lawon handling stolen data went to parliament, Brandenburg'sfinance minister issued a news release saying it would "providelong overdue legal certainty for our finance officials." Thestate which bought the material paid the shortfall, a spokesmanfor Brandenburg said.

Volker Kauder, head of the parliamentary group for the CDU,is still "highly critical" about buying such data, a spokesmantold Reuters. "In doing so the state is in danger of slippinginto the role of a dealer in stolen goods," he said. THE TELEVISION CABLEIn March 2010, Umfogl opened a bank account in Austria.According to the Swiss request for legal assistance, he wastrying to divide the 2.5 million euros he had received betweenbanks in Germany, Austria and the Czech Republic. Staff at asavings bank in Dornbirn, Austria, got suspicious about adeposit of 893,000 euros, and raised the alarm with police onMarch 25, 2010, believing Umfogl could be a money-launderer.

Austrian authorities froze Umfogl's funds that September,said the prosecutor's office in Feldkirch, Austria. SwissFederal Police were notified because Umfogl lived inSwitzerland. They arrested him at his work. A day later, Lapourwas tracked down and arrested in the Czech Republic where he wasvisiting his girlfriend.

Lapour was convicted in Switzerland's Federal CriminalCourt of economic espionage, violating bank secrecy andviolating trade secrecy, by passing client data outside thebank. Besides his 24-month sentence, he was fined 3,500 Swissfrancs.

At a house in a suburb on the outskirts of Winterthur, givenin the request for assistance as Lapour's parents' address, aman told a reporter he did "not know where Sina is."

At about 6.30 a.m. on Sept. 29 2010, just days after Umfoglwas arrested, he was found dead in his police cell in Berne. Hehad left a note before hanging himself with a television cable,according to a joint statement issued by the coroner and police.Both declined to reveal the note's contents.

That month, Switzerland's government said it had agreed toresolve the problem of untaxed money stashed away by Germans inSwiss accounts.

North Rhine-Westphalia's Borjans believes the purchase ofstolen names was crucial to that. "You could tell this was notonly a question of decency," he told Reuters. "It was also abouthardcore commercial interests. And that's why Switzerland wassuddenly willing to negotiate."

The Swiss finance ministry said it had been Swiss financialmarket policy since 2009 to seek international tax agreements.

By August 2011, Switzerland and Germany had reached anoutline deal on sharing tax information. But the pact failed towin political support within Germany and the upper house threwit out in November last year.

Borjans was one of the pact's opponents. He said he feltBerlin had sold itself short. "It left the door open to banksecrecy and tax evasion," he said.

Last month, Switzerland finally signed onto theinternational tax convention, giving Germany some of what itwanted. The Swiss request to Germany to arrest three taxinspectors has gone unanswered: Germany's finance ministry saidit is still evaluating it.

More News
20 Feb 2024 12:29

Wednesday preview: Fed meeting minutes, HSBC in the spotlight

(Sharecast News) - Investors' focus in the middle of the week will be on the release of the minutes of the Federal Reserve's most recent policy meeting, in January.

Read more
14 Feb 2024 14:15

UK earnings, trading statements calendar - next 7 days

Thursday 15 February 
Benchmark Holdings PLCQ1 Results
Centrica PLCFull Year Results
MJ Gleeson PLCHalf Year Results
Relx PLCFull Year Results
South32 LtdHalf Year Results
Friday 16 February 
NatWest Group PLCFull Year Results
Segro PLCFull Year Results
TBC Bank Group PLCFull Year Results
Monday 19 February 
Bank of Cyprus Holdings PLCFull Year Results
MoneySupermarket.com PLCFull Year Results
Transense Technologies PLCHalf Year Results
Wilmington PLCHalf Year Results
Tuesday 20 February 
Barclays PLCFull Year Results
BHP Group LtdHalf Year Results
Coca-Cola Europacific Partners PLCFull Year Results
Gran Tierra Energy IncFull Year Results
InterContinental Hotels Group PLCFull Year Results
Petra Diamonds LtdHalf Year Results
Springfield Properties PLCHalf Year Results
Wednesday 21 February 
BAE Systems PLCFull Year Results
Conduit Holdings LtdFull Year Results
Glencore PLCFull Year Results
HSBC Holdings PLCFull Year Results
Rio Tinto PLCFull Year Results
Riverstone Credit Opportunities Income PLCFull Year Results
Tate & Lyle PLCTrading Statement
  
Comments and questions to newsroom@alliancenews.com
  
A full 21-day events calendar is provided each day with a subscription to Alliance News UK Professional.
  
Copyright 2024 Alliance News Ltd. All Rights Reserved.

Read more
9 Feb 2024 17:02

LONDON MARKET CLOSE: FTSE 100 falls at end of tepid week

(Alliance News) - Stock prices in London closed lower on Friday, with the FTSE 100's losing streak extending to three days, as sentiment in Europe remains tetchy despite a largely stellar start to the day in New York.

Read more
2 Feb 2024 09:27

LONDON BROKER RATINGS: Barclays raises easyJet and Wizz Air

(Alliance News) - The following London-listed shares received analyst recommendations Friday morning:

Read more
30 Jan 2024 16:00

London close: Stocks finish higher on raft of global data

(Sharecast News) - London's stock markets managed modest gains on Tuesday, driven by the news that the eurozone had narrowly avoided a recession.

Read more
30 Jan 2024 09:34

Bank of England fines HSBC for "serious" deposit protection failures

(Alliance News) - HSBC Holdings PLC has been fined GBP57.4 million by the Bank of England's Prudential Regulation Authority for "serious failings" over customer deposit protection – the second highest penalty ever imposed by the financial watchdog.

Read more
30 Jan 2024 07:27

HSBC slapped with £57.4m fine for deposit protection failures

(Sharecast News) - HSBC bank has been fined £57.4m by the Bank of England after admitting serious failings in protecting customer deposits.

Read more
29 Jan 2024 14:25

Safestay annual trading to meet expectations; refinances borrowings

(Alliance News) - Safestay PLC on Monday said its annual trading was "comfortably" in line with market expectations.

Read more
25 Jan 2024 10:36

BoE says 'ring fencing' capital rules for retail banks need no big overhaul

LONDON, Jan 25 (Reuters) - The Bank of England said on Thursday that its rules requiring banks to "ring fence" their retail arms with bespoke buffers of capital have worked satisfactorily with no major overhaul needed.

Read more
25 Jan 2024 10:05

Bank of England says 'ring fencing' capital rules for retail banks need no major overhaul

LONDON, Jan 25 (Reuters) - The Bank of England said on Thursday that its rules requiring banks to "ring fence" their retail arms with bespoke buffers of capital have worked "satisfactorily" with no major overhaul needed.

Read more
23 Jan 2024 12:37

UK Chancellor Hunt meets top UK bank heads over plans to boost City

(Alliance News) - Jeremy Hunt has met the UK's biggest banks as part of efforts among the government to boost interest in the City.

Read more
22 Jan 2024 10:45

HSBC chair 'confident' on China investment, meets vice president - state media

BEIJING/HONG KONG, Jan 22 (Reuters) - China's Vice President Han Zheng on Monday met with HSBC Chairman Mark Tucker in Beijing and urged the banking giant to deepen cooperation with China to improve Hong Kong's status as a financial centre, the official Xinhua news agency reported.

Read more
18 Jan 2024 14:33

Britain's finance minister Hunt to quiz bank bosses on UK lending

LONDON, Jan 18 (Reuters) - Britain's finance minister Jeremy Hunt will meet the bosses of top British banks next Tuesday to seek reassurance they can keep lending to the economy, four sources familiar with the matter said on Thursday.

Read more
17 Jan 2024 17:05

European shares slide more than 1% on hawkish ECB remarks, disappointing China data

Dec. EZ final consumer prices at 2.9% on yearly basis

*

Read more
16 Jan 2024 09:27

IN BRIEF: RBC targets completion of HSBC Canada buy in late March

Royal Bank of Canada - Toronto-based lender - Targets March 28 as close date for acquisition of HSBC Bank Canada. RBC will begin conversion activities once the transaction closes and will open the branches and offices in Canada for business a few days later on April 1.

Read more

Login to your account

Don't have an account? Click here to register.

Quickpicks are a member only feature

Login to your account

Don't have an account? Click here to register.