news Monday, March 09, 2015 - 05:30

Chitra Subramaniam| The News Minute| February 16, 2015| 7.11 pm IST

Money laundering for criminals, narco-dollars, arms dealers and terrorist organisations cleaning or parking their money in Swiss banks is not new for Francois Pilet, Swiss investigative journalist of L'Hebdo, the French newsmagazine which was part of the International Consortium of Investigative Journalists (ICIJ) initiative leading to #SwissLeaks. Pilet wrote a 12 page story last week detailing the extent of damage and the complicity of the bank in this process. Switzerland cannot live in denial anymore he tells Chitra Subramaniam, Editor-in-Chief of The News Minute adding that the biggest help from the whistle blower Hervé Falciani will be his role as a witness when proceedings commence in India. Excerpts.

1. Narco-dollars, connections with Al Qaeda, the Medellin cartel all transiting through HSBC. Were you surprised when you read the documents?

Yes. Before having access to this data, it was already obvious that Swiss banks were used regularly by criminals - and I’m not talking
about « mom and pop » tax evaders here - to launder money from a criminal origin. The main question was the real extent of it. The Falciani files show that - at least for HSBC - money laundering was not just the matter of a few « accidents » on the road. It shows that the bank was deliberately closing it’s eyes on the most suspicious situations in order to attract - or just to keep - client accounts, no matter how shady. Of course, some employees seemed to be genuinely honest and were trying to do their job in the right way. But in all, the data still gives the impression that whenever it was possible to hide money without too much risk of getting caught, HSBC would do it.

2. Over the past few years, Switzerland has tried to clean up it's banking system and image. Where has this succeeded and where are the failures?

Switzerland lived for long in denal. On the tax issues, the reality started hitting back in 2009 with the UBS case in the United States.
Since then, the conscience (complete understanding) about the true face of banking secrecy slowly evolved. It was very a painful process. In 2012, the new Finance minister, Evelyne Widmer-Schlumpf, took a great leap forward by saying Switzerland should eventually accept the automatic exchange of tax information with it’s biggest partners, mainly the European Union (EU) and the United States (US). It was only two years ago, and many bankers were horrified! Now the law is almost enacted and starting in 2017, Swiss banks will automatically hand over the names of their clients to some foreign countries each year. This was totally unimaginable 24 months ago. The problem of money laundering is still unsolved. We could imagine that the day automatic exchange will be in force, criminals would not use Swiss banks anymore. Maybe. The
question of the laundering crimes commited until now is still open. Swiss authorities are not investigating these cases.

3. Is it possible for one country to combat the menace of dirty money or in other words, is it possible for a bank like the HSBC to deal
with criminals without the knowledge of more powerful international actors like the USA, UK, for example?

The true extent of dirty money - especially from the huge drug trade - in the modern banking system is largely unknown. And not just in
Switzerland. The Falciani data shows that one of the largest banks in the world was not taking the anti money laundering rules seriously, to
say the least. But what about all the others?

4. Why do you think the Swiss government will have to assist India if it demands information on specific cases?

The priority of the Swiss governement is to enact the automatic exchange of tax information with it’s immediate neighbors inside the
EU and with the USA. But the Swiss also took an engagement to expand their collaboration with other countries under the basis of « on
demand » exchange. It’s a first step, but it will still greatly help foreign governments in getting information from Swiss banks. India
and Brasil are very high on this list. Although Switzerland seems to be reluctant today, it will have no choice but to extend it’s accords
with those two countries.

5. The whistle-blower Hervé Falciani has offered to help the Indian government. What do you think of this?

Why not? As a journalist who spent months working on it, I can tell you that the Falciani data can be difficult to understand! Falciani
was a very valuable help for the French authorities. Why not for India? And there’s more than just the technical side. Most importantly, Falciani is a witness. His testimony could be used to back up the validity and integrity of the data. If the data is someday brought into courts, all kind of questions will be raised about it. Falciani knows it better that anyone, that’s for sure. If it’s possible under Indian law, why not reward him on a percentage of the revenue the government will be able to collect? That’s exactly what the US did with the UBS whistle blower Bradley Birkenfeld. He received 104 million USD under a whistle blower protection law. It’s a lot of money, but the government got even much, much more.

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