This week we saw yet another scandal involving our banking system, when it turned out that HSBC have not only been facilitating large-scale tax avoidance and tax evasion via their Swiss subsidiary, but have even been advising their wealthy clients on how is the best way to go about it.* It is estimated that up to $21.7bn has been sheltered from the treasury in this way, at a vast cost to the British taxpayer.
This all came to light as the result of a leak from a whistleblower in 2007, details of which were passed to the Inland Revenue in 2010. However, despite an estimated 1100 individuals being guilty of underpaying their tax, to date there has only been one prosecution. Even more scandalous, the man in charge of HSBC during this period, Lord Green, was made a Conservative peer and appointed to the government as minister for Trade & Investment 8 months after the Inland Revenue was made aware of wrongdoing at the bank. Far from being punished for his misdemeanors, Lord Green was handsomely rewarded with a position in the heart of government. HSBC’s response to all this is to admit to ‘past failures’ but assures us all that things have now changed. Lord Green himself has consistently said ‘no comment’. Full details of the scandal are in this BBC Panorama documentary.
Of course we all know this is far from being a one-off, as it comes hot on the heels of various other banking scandals including fiddlng interest rates (Lloyds, Barclays, Royal Bank of Scotland); fixing foreign exchange rates (HSBC, Barclays, Royal Bank of Scotland); money laundering (HSBC); sanctions busting (Standard Chartered); ‘dark pool manipulation‘ (Barclays); and fiddling precious metal prices (Barclays, HSBC).
The reality is that the priority of companies, and in particular banks, is to make money for themselves, and to do it they will employ whatever dodgy practices they think they can get away with. The less regulation there is the more corrupt they can become, so this idea that ‘light touch’ regulation and free markets is the best way to run things is a complete nonsense, and is in effect just putting the foxes in charge of the chicken coop. Given the chance, the clever and the unscrupulous will just fleece us all, and that is exactly what they are doing.
Even more evidence of how corrupt our system has become was produced a couple of weeks ago when it was announced that Price Waterhouse Coopers (PwC), the accountancy firm, has also been facilitating corporate tax avoidance on ‘an industrial scale’.* PwC is also a major corporate donor to both the Labour and the Conservative parties. Why would anyone support both the major parties? Ah yes… that’ll be a bribe, so that whichever party gets into power lets them carry on with their corrupt business practices. What a rotten system we live in, that allows such things to go on while poor people are forced to undergo ever-increasing Austerity.
And the government’s response? At a business leaders’ meeting recently David Cameron pathetically asked bosses if they would give their staff a pay-rise, and so spread their ever-increasing wealth around*. I thought in a Free Market Economic system wealth was supposed to naturally ‘trickle down’ anyway? Clearly not, and if Cameron thinks his desperate pleas will make any difference to their behaviour, he clearly has little understanding of the business community he claims to represent.