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SWISS LEAKS

TAX EVASION

Swiss Leaks scoop started on a USB drive

The damaging Swiss Leaks revelations are rooted in a massive cache of whistleblower data handed to two overwhelmed French reporters who decided they would need the help of an international collective to decrypt it.

Swiss Leaks scoop started on a USB drive
Le Monde offices in Paris. Photo: Manuel Cohen/AFP

A thumb drive containing hundreds of thousands of documents had landed at the front desk of French daily Le Monde in early 2014, days after the paper published an expose about people using Swiss bank accounts to hide money from the tax man.
   
At the weekend, the International Consortium of Investigative Journalists (ICIJ) published the data, claiming banking giant HSBC's Swiss division helped clients in more than 200 countries evade taxes on accounts containing $119 billion.
   
The source of the documents had seen Le Monde's tax story, written by Gérard Davet and Fabrice Lhomme, and wanted to "give them a hand," Lhomme told France Inter radio, refusing to divulge the source.

The documents were originally provided to the French government by whistleblower Hervé Falciani, a former IT employee of the HSBC private bank in Geneva.
   
On the thumb drive were "all of HSBC's clients from the end of 2006 to March 2007, customers from around the globe, more than 100,000 people and corporate entities," he said.

Also included was internal bank correspondence.
   
"One night we printed the files. The printer went wild. We piled up hundreds of pages," Lhomme told AFP, who added it left him and his colleague "snowed under."
   
So the reporters decided to call in the Washington-based ICIJ in order to share the data with other outlets all while retaining editorial control of the investigation.

Lhomme said they were aiming to expose the names of public figures, but only after giving them a chance to explain themselves.
   
Thus 154 reporters from nearly 50 countries and 55 outlets, including Britain's The Guardian and Swiss newspapers such as Tages Anzeiger and Le Temps, got to work.

In September 2014 about 40 of the journalists gathered and met for nine hours at Le Monde's office in Paris to give the investigation a boost, Lhomme said.
   
The journalist said he made several trips to the United States to work with ICIJ "because there are things you can't do by secure phone lines and restricted email. It was too risky."
   
When the collective could not meet face-to-face they used an encrypted forum to exchange information.
   
"We devoted a manic attention to checking everything several times, to ensuring the numbers weren't doctored," Lhomme said.
   
The documents showed that HSBC opened Swiss accounts for international criminals, businessmen, politicians and celebrities, according to the ICIJ.
   
"We went a lot further, a lot faster than the authorities," Lhomme said.

"We learned things that neither law enforcement nor tax authorities had.

"The investigation is global, there are no borders."

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TAX EVASION

Switzerland’s banks remain among the world’s most secretive

Despite the progress made over the years, the Swiss financial sector continues to be one of the least transparent in the world. But there is good news too.

Switzerland’s banks remain among the world’s most secretive
Switzerland remains one of the world's least transparent nations. Photo AFP

Switzerland is in the third place in the 2020 Financial Secrecy Index released by the non-governmental organisation (NGO) Tax Justice Network (TJN), which rates 133 nations based on their financial transparency.

Two other European countries, Luxembourg and the Netherlands, are also ranked among the top 10 least transparent nations on the TJN’s list.

Despite being in the third place, Switzerland ranks better this year than it did in the previous edition of the Index, which is released every two years — it slipped from the first to third place. The Cayman Islands and the United States took the first and second spots, respectively.

Switzerland reduced its risk of being an offshore haven for tax cheats by 12 percent, “finally improving enough to move off the top of the index”, TJN said. 

READ MORE: Switzerland's strangest taxes – and what happens if you don't pay them

This improvement is mainly due to Switzerland extending its international network for the automatic exchange of customer information to more than 100 countries. 

Also, in a referendum held last year, Swiss voters accepted the Federal Act on Tax Reform and AVS Financing (TRAF). This legislation introduced major changes in the Swiss tax system by ending some preferential tax schemes and replacing them with new regulations which are in line with international standards.

This tax reform prompted the European Union to change Switzerland's status from ‘tax haven' to one which is EU-compliant, removing strict controls on transactions within the EU. 

So why, despite all the reforms, does Switzerland still rank among the world’s least transparent nations?

According to a Swiss NGO Alliance Sud, wealthy people from poor countries can still hide their money here from the tax authorities of their home nations.

Alliance Sud noted that despite the progress made in the past years by Swiss financial institutions, “the fight against tax evasion remains insufficient”.

Switzerland is the world’s biggest centre for managing offshore wealth, with a quarter of global assets invested here.

For years, it has been placed on various lists of tax havens where wealthy foreigners could park their money. Faced with widespread criticism for this practice, Switzerland passed an anti-money laundering law in 1997 and introduced strict regulations against tax evasion.
 

 

 
 

 

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