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Former HSBC boss apologises for Swiss and Mexican business scandals

Article By: ,  Financial Analyst
July 15, 2015 3:36 PM

Lord Green, the former boss of HSBC has apologised for problems that were raised during his tenure at the bank.

He has admitted that the company "should have drilled into" the problems more when the scandals at the Swiss and Mexican arms of the business were discovered.

Lord Green has rarely spoken about his role at the bank since he left to become trade minister in 2010. However, he has admitted to the House of Lords economic affairs committee that HSBC did not grasp the urgency of the problem in its international business units until after they were caught up in investigations for tax evasion and money laundering.

"We did a lot of acquisitions that went just fine, but nevertheless you can't help but becoming conscious of the risks. We were maybe stretching ourselves quite quickly, and with the benefit of hindshight one might reflect on some of the widsom of that," he explained.

Swiss tax evasion

Lord Green said that he believed no one was aware of an "industrial scale of tax evasion" in the Swiss private banking unit.

Last month, HSBC paid £28 million to authorities in Geneva to settle an investigation into "suspected aggravated money laundering". The bank is still under investigation in other jurisdiction and leaked documents show that the Swiss unit helped more than 8,800 British people avoid tax, reports the Telegraph.

Mexican money laundering

In 2002, HSBC acquired Bital, a Mexican bank. The deal was part of the company's push to break into the Central American market.

Lord Green explained the reasons behind the acquisition: "You could hardly ignore the fact it was an emerging market," he said and added: "There were plenty of good reasons to believe this was the kind of emerging market which HSBC has flourished in, in so many other parts of the world."

In 2012, HSBC was fined $1.9 billion for poor money laundering controls in Mexico and the US Senate said the bank had provided a channel for "drug kingpins and rogue nations".

"With the benefit of hindsight we should have drilled in more closely and more quickly on the anti-money laundering side," said Lord Green.

He also explained that checks carried out by the company did not indicate there was a "sufficiently serious problem in the bank to need very close attention very urgently, and I'm sorry about that".

Today (July 15th), at 13:00 BST, shares for HSBC Holdings were up 0.40 per cent to 574.97.

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