Arab leaders "hiding" $26 billion in Swiss HSBC accounts

Arab leaders "hiding" $26 billion in Swiss HSBC accounts
3 min read
18 February, 2015
As a criminal inquiry opens into allegations of money laundering at HSBC's Swiss office, documents reveal large lists of prominent Arab clients.
HSBC's Swiss unit has been in the spotlight since 2008 [Getty]

Swiss prosecutors have been searching offices of the Geneva subsidiary of HSBC on Wednesday, in a probe into alleged money-laundering at the banking giant.

Europe's largest lender is in regulators' sights after details about how its private Swiss arm allegedly helped wealthy clients evade taxes were leaked to the media, with documents also revealing the involvement of a large number of Arab clients.

"A search is currently under way in the premises of the bank, led by Attorney General Olivier Jornot and the prosecutor Yves Bertossa," Geneva's prosecutor said in a statement on Wednesday.

The reports published by Washington-based International Consortium of Investigative Journalists (ICIJ) appear to show how HSBC's private bank in Switzerland has helped 11,088 Arab clients hide an estimated $26 billion fortune outside their countries.

No data is available after 2007, however, making it likely that the real figure of lost revenues is significantly higher.

Some of the names mentioned in the documents include officials connected to King Abdullah of Jordan and King Mohammad of Morocco, as well as leading figures in the Bahraini and Omani establishments. The regimes of Bashar al-Assad and Hosni Mubarak have also been implicated in the scandal.

Although there are conflicting estimates about how much money was smuggled out of Egypt during Mubarak's 30 years in power, analysts suggest the amount was in the region of $70 billion, invested in banks and property arounbd the globe.

     HSBC's private bank has helped 11,088 Arab clients hide an estimated $26 billion fortune outside their countries.

Le Monde revealed that the Swiss bank had put its expertise at the disposal of Saudi princes to "attract [their] wealth".

According to Le Monde, the list also included Princess Lolowah, the daughter of the late King Faisal bin Abdul Aziz Al Saud, who is reportedly listed as a "housewife" - despite being the deputy chairperson of the first women's university in Saudi Arabia.

Furthermore, it was also discovered that Saudi clients were on top of the bank's Arab list, ranking 11th on the overall international clientele. The bank has a total of 2,762 bank accounts for 1,504 Saudi clients, believed to be valued at a total of $5.8 billion.

The former Saudi intelligence chief, Prince Bandar bin Sultan, is among one of the names reported to appear on the list and has apparently been a client at HSBC's private bank in Switzerland since 1999.

Bandar is understoof to have had four bank accounts, including one opened in 2005 under the name CAF Invest Operating Ltd, with three sub-accounts opened in 2006 and 2007, valued at a total of $15.6 million.

Two accounts were closed in 2000, while the third remained empty.

In January 2015, King Salman bin Abdul Aziz issued a royal decree dismissing Bandar from his position as head of the Saudi National Security Council.

Egyptian clients ranked third, after the Lebanese, among HSBC's Arab clients. They were listed 20th on the international clients' list, with 700 members and 1,478 accounts valued at a total of $3.5 billion.

Egypt's former trade minister, Rachid Mohamed Rachid, was also reportedly found on the list. He is understood to have become a client at the private Swiss bank in 2003, holding ten accounts with a reported value of $31 million in 2006-2007.

The list also included Lebanese, Moroccan, Syrian and Kuwaiti individuals.

HSBC's Swiss unit has been in the spotlight since 2008, when a former IT employee fled Geneva with files allegedly showing evidence of tax evasion by clients.

The French tax authorities later passed the information to revenue agencies around the world.

HSBC has apologised to customers and investors over the previous failings of its Swiss business and has said the operation has since been overhauled.