STOLEN computer files with more than 100,000 names, nationalities, account information and detailed notes between the Swiss arm of Europe’s biggest bank HSBC and its clients have been revealed, and along with them, a lot of dirty laundry.
The disclosure, now dubbed “Swiss Leaks”, is the biggest such exposure in Swiss banking history. It started when a computer security specialist named Hervé Falciani stole a huge cache of data in 2007 and gave it to the French government.
The International Consortium of Investigative Journalists, obtained the leaked files and have created a database which has given the world a rare glimpse into the secretive world of Swiss banking.
The data are now being used to go after tax cheats all over the world, even as information shows many governments have done little with it, despite having been in possession of the files since 2010.*
The leaks have revealed that some of the bank’s business dealings included with a collection of international outlaws - from tax dodgers and arms dealers to drug smugglers and money launderers. They also reveal how the bank tried to accommodate the secrecy needs of clients-including offering various ways of concealing the ownership of the account—thereby actively helping them to evade and cheat.
Not all the people on the database have been exposed, but the information so far reveals a particularly interesting trend. In 11 of the 12 African countries that ranked highest (in terms of client money) on the list, less than 35% of the clients actually held a passport or the nationality of the corresponding country.
South Africa was the only country in Africa where over 50% of the clients associated with the country had a South African passport or nationality.
There could be several explanations for this. A high income inequality often means that the bulk of the wealth is concentrated in the hands of a few nationals.
There are also clients who were African nationals but relinquished their citizenship. A strong reason for this would be for security purposes—that of protecting your assets from a potentially unstable government and economy.
Another reason could be the ease and cost of doing business. For those whose businesses are global, it is far easier to have a Western passport with more visa-free access points.
Also, for those looking to start or grow a business, and need to borrow to do so, lending rates are often much higher in African countries than in their Western counterparts. For example, in 2013 the lending interest rate was 13.5% in Liberia, compared to 3% in Canada. These loans are differentiated according to creditworthiness of borrowers and objectives of financing, but typically, it is much harder for a foreigner to obtain a loan, adding to the incentive of adopting a new nationality.
These reasons could explain why South Africa had the highest percentage (52%) of the top 12 African country’s whose clients were in fact South African. The South African passport is the third most powerful on the continent after Mauritius and Seychelles, but the country has a wider base of wealthy individuals: there are three South Africans in the top 10 of Africa’s richest—more than any other African nation. This means that there is more of a wealthy domestic base who are able to exploit economic opportunities.
From out of town
The other explanation for why there are so few local HSBC clients on the list, is that high-wealth individuals are either not originally from those African countries, profiting from business opportunities or resources.
This could also shed light on a potentially more sinister situation - an exploitative relationship where corruption and money laundering in resource-rich, economically poor countries is taking place. This could be the case for the Seychelles were 0% of clients associated with the island nation, a well-known tax haven, are Seychellois.
Unfortunately, since the leaks have not yet provided the full list of people it is difficult to ascertain who the clients were and their motivations. It should also be remembered that some people on the list simply had Swiss accounts with HSBC, that there are of course legitimate uses for Swiss bank accounts, and that the clients may not have not broken the law or acted improperly.
The interesting revelations
From the information that was leaked, here are some other interesting revelations from the files. Countries with low GDPs such as Eritrea, Zimbabwe and Liberia all featured in the top 12 African countries with the most amount of wealth in the HSBC accounts.
From the personal files some dodgy clients were also revealed, here are some as cited in the ICIJ report:
Abdul-Karim Dan Azoumi
The owner of Badica, the largest diamond exporter in the Central African Republic (CAR). An October 2014 United Nations report by a panel of experts branded Dan-Azoumi’s company a key financial backer of the rebel Seleka group that has been fighting government forces in the CAR conflict, resulting in the deaths of thousands of civilians. The UN alleged that fees paid by Dan-Azoumi’s companies to Séléka rebels in order to illegally export diamonds allowed the rebels to remain armed. Dan-Azoumi lives in Antwerp, Belgium’s diamond capital.
Aziza Kulsum Gulamali
A cigarette factory owner and alleged arms dealer, Aziza Kulsum Gulamali, born in Burundi in 1944 is also known as the “Coltan Queen” for her alleged role in trafficking the precious metal, central to much of modern-day mobile phone technology. The United Nations has criticised Gulamali for financing and providing weapons to rebels during Burundi’s civil war in the early 1990s. In 2002, Swiss authorities charged Gulamali and members of her immediate family with money laundering. The case was later dropped and Gulamali won nominal court costs.
A former owner of the biggest business holding in Tunisia, Belhassen Trabelsim now in exile, became a wealthy man during the presidency of his brother-in-law Zine el Abidine Ben Ali (1989-2011). His sister Leila, a former hairdresser, married Ben Ali in 1992 and began positioning her 10 siblings in key positions in government and the economy. Belhassen Trabelsi became the chieftain of the Trabelsi clan. He fled the country in 2011 in the midst of a popular revolt that ousted Ben Ali. He and his family members now live in Canada, where they arrived in 2001 on a private jet and where they are seeking refugee status. Trabelsi was convicted for corruption in absentia in 2011 and sentenced to 15 years in prison.
Tobacco magnate Roger Boka, who died in 1999, owned one of Africa’s biggest tobacco trading floors. Boka was “the first black Zimbabwean to own a private plane and drive a Rolls Royce, and one of the first black Zimbabweans to own a bank. At the time of his death. Boka was wanted for questioning over the alleged illegal transfer abroad of $25 million from his collapsed United Merchant Bank,” according to the Associated Press, which also described him as “a leading African black empowerment advocate.”
Corporate executive Rachid Mohamed Rachid was appointed Egypt’s minister of trade and industry in 2004. He kept his post until he fled Cairo shortly after the uprising that ousted President Hosni Mubarak began in early 2011. Before entering the cabinet, he played prominent corporate roles in international business. Rachid served as president of Unilever for North Africa, the Middle East, and Turkey and was a member of the board of directors of HSBC Egypt.
In three trials held in Egypt during 2011 and 2014, the former minister was convicted in absentia and sentenced to a total of 35 years in prison and ordered to pay at least $330 million for illegal profiteering and squandering public funds. According to an Egyptian media report, local authorities are “investigating Rachid’s accounts since he fled the country and have reportedly sought Interpol intervention in apprehending both him and his daughter abroad.” In 2013, Rachid settled two other corruption charges by paying a fine of around $2.2 million to Egyptian authorities.
Advisor, business consultant and alleged arms broker, Fana Hlongwane is the chairman of consulting and manufacturing companies in the military equipment sector. A former commander of South Africa’s African National Congress’s military, he was the special adviser to the Defense Minister Joe Modise from 1995 to 1998. In 1999 he acted as an alleged arms dealer go-between South Africa and British Aerospace (BAE).
By the end of 2015, the Seriti Commission of Inquiry, assigned by President Jacob Zuma, is expected to issue a report about Hlongwane’s alleged involvement in “fraud, corruption, impropriety or irregularity in the Strategic Defence Procurement Packages” for the 1999 multibillion-dollar arms purchase by South Africa from BAE.