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SARS on HSBC leaks: Getting into gear

Thursday, 18 June 2015   (0 Comments)
Posted by: Author: Fiona Forde
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Author: Fiona Forde (Financial Mail)

The SA Revenue Service (SARS) has only recently finished analysing the leaked HSBC data, conceding that unpacking the 2 200-plus accounts that only came into its possession earlier this year was infinitely more complex than initially envisaged.

Unlike other jurisdictions around the world that were given the data by the French authorities six years ago, the SA government has been relatively late in receiving the files that form part of one the most spectacular banking leaks in history.

It dates back to the mid-2000s when Hervé Falciani, an erstwhile IT specialist with the bank, hit upon what he believed was a culture of tax evasion by more than 100 000 account holders who were allegedly abetted in their endeavours by their bankers in the Swiss division of HSBC.

Falciani proceeded to steal the data, which some claim he attempted to peddle in Lebanon before it was eventually seized by the French authorities sometime in 2009. That prompted a string of inquiries across Europe and beyond, that are still under way. SARS only received the data in the first few weeks of 2015, "but I must tell you that we at SARS are confident the information we are dealing with is not stolen data," says Vlok Symington, head of the legal and policy division at SARS.

"I’m not at liberty to say how we got it, but it is important that I state that it was through legal means and we can therefore take the appropriate legal action if needs be."

The data, which the Financial Mail assumes is identical to that in our possession, provides comprehensive information about each account holder. It’s not just his or her personal details, nor is it confined to the amount held in the account at the time the data was captured, but also a history of communication between the client and the bank, in some cases complete with instructions about movement of cash or assets, or in other cases unashamed statements about the unwillingness to declare the foreign-held money to the likes of SARS.

Most of that communication, however, is presented in French hence SARS has had to translate it and then decode the various bank instructions.

Once that was done, the information was run through the SARS database "and we found that some of them [the HSBC account holders] were tax compliant," according to Symington.

That would suggest then that the vast majority of the South Africans on that list are not, despite the mounting media attention on the files that ought to have prompted anyone with concerns to get their affairs in order.

The so-called Swiss leaks really only grabbed the broader public’s attention in February this year, when a number of media houses around the world began to simultaneously publish stories about the data. This was co-ordinated by the International Consortium of Investigative Journalists (ICIJ), who selected media partners around the world with whom they shared the data. In SA, they chose to work with our sister title, the Sunday Times.

However their investigations were short-lived when a number of individuals and companies whom they named took legal action against the newspaper, despite that fact that in some cases there was genuine tax fraud. The Financial Mail then became a partner of the ICIJ and a holder of the files.

If it is the case that the bulk of the account holders may have either avoided tax, which may be immoral but not illegal, or evaded it, which is wholly unlawful, then SARS has been unusually quiet on the matter, until now at least.

"You must remember that other jurisdictions have been sitting on the data for longer than we have, so they are more advanced in terms of their planning and the execution of their planning," says Symington.

"But now we are getting into first gear, so to speak."

The SA list comprises mainly individuals, though there are some companies and trusts among them, while other accounts refer back to third persons and financial institutions, "and they would all be part and parcel of the eventual action we take", he adds.

The accounts provide a snapshot of a specific period in 2007, when the accounts held a collective balance of around R20bn. Not a small amount, particularly when one considers this was but one division of one bank, albeit in the fabled Swiss banking haven.

Why and when, and indeed how, the money was taken offshore is not clear and those details may never be known.

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