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HSBC's Stuart Gulliver put £5m into Swiss bank account 'to keep bonus private from colleagues'

By Staff Writer 23/02/2015 17:03:00

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Stuart Gulliver's bonuses allegedly paid via Panama-registered company
Money put in Swiss account until 2003, leaked documents reportedly show
Mr Gulliver said this was the only way to hide earnings from colleagues
Claims without Panama business others in bank could search for earnings
He said: 'It was to enable confidentiality. There was no tax advantage'
Derby-born boss, 55, is domiciled in Hong Kong for legal and tax purposes
Comes after it emerged that Swiss HSBC Private Bank helped rich avoid millions in tax

By James Salmon for the Daily Mail

Published: 22:17 EST, 22 February 2015 | Updated: 19:03 EST, 23 February 2015

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The boss of HSBC was last night facing questions over his secretive tax affairs after claiming he sheltered money in a Swiss bank account to prevent prying colleagues from finding out his bonus.

Speaking publicly for the first time since revelations about HSBC’s Swiss private bank, Stuart Gulliver described his ‘shame’ at allegations that the lender routinely helped clients including arms dealers and blood diamond smugglers evade taxes.

But he was also forced to defend his own finances after leaked documents revealed he sheltered some £5million in bonuses in an HSBC account in Switzerland under the name of a Panamanian company.

Leaked files reportedly show that Stuart Gulliver (pictured), chief executive since 2011, held £5million in the bank's Geneva-based subsidiary that was at the centre of a huge tax avoidance scandal

This lasted from 1998 until 2011, when he became chief executive and his pay details had to be published anyway.

Last night one accountant described the complex arrangement in Switzerland as a ‘classic case of tax avoidance’.

The HSBC boss was also facing questions after revealing that he is domiciled in Hong Kong for tax purposes despite being born in Derby and living in the UK.

Mr Gulliver, 55, said the computer systems on the trading floor enabled staff to find out how much their colleagues were being paid in bonuses.

As he was often the best paid employee at the bank, he said he was particularly keen to stop this happening and set up a Swiss bank account to keep his pay secret.

Mr Gulliver added that he used the Panama structure purely to prevent colleagues in Switzerland finding how much he was being paid.

The revelation comes after leaked documents from HSBC Private Bank in Switzerland (pictured) between 2005 and 2007 showed it had helped the rich and famous avoid millions in tax

He said there was ‘no tax advantage’ and declared that he has paid full UK tax on his earnings since moving from Hong Kong to London with HSBC in 2003.

Springing to his defence, the bank’s chairman, Douglas Flint, said: ‘There is absolutely no story here. There is nothing that Stuart has done that is not absolutely transparent, legal and appropriate.’

Seeking to justify his tax status, Mr Gulliver said he had spent the majority of his 35-year career at HSBC in Hong Kong and plans to return there when he steps down from the bank.

BANKS 'HELD TO HIGHER STANDARDS THAN THE ARMY'

Businesses are expected to behave better than the armed forces and the church, HSBC’s chief executive complained yesterday.

Expressing his exasperation with regulators, Stuart Gulliver said: ‘We seem now to be holding publicly listed companies to a different standard than we might hold the armed forces, the church or any large organisation.

‘It seems to be a notion that Douglas [HSBC chairman Douglas Flint] and I should know what every single one of our 257,000 staff is doing all day long. That isn’t normally how large organisations can run.’

HSBC has been criticised as being ‘too big to manage’ after a series of scandals flared up on Mr Gulliver’s watch. It was fined £1.2billion by US regulators in 2012 after lax controls meant it became the ‘bank of choice’ for Mexican drug cartels wanting to launder money. It was also fined £400million by UK and US authorities last November for rigging the £3.5trillion a day foreign exchange market.

David Buik from broker Panmure Gordon said: ‘Mr Gulliver may be right that companies are being held to higher standards. But to complain about it does sound a bit rich given the litany of misdemeanours at banks. They have brought it on themselves.’

‘I would expect to die abroad,’ he added.

But the comments received short shrift last night. Richard Murphy, a tax accountant, said he was ‘astonished’ that HM Revenue & Customs has allowed Mr Gulliver to remain domiciled in Hong Kong despite the fact that he has lived in the UK for the past 12 years.

‘Being paid in a Swiss bank account via a company is a classic case of tax avoidance,’ he said. ‘But the big question is how on earth a man can leave the UK at the age of 21, come back 12 years ago and remain permanently domiciled in Hong Kong. I am astonished this has been accepted by the HMRC.

‘There are clearly advantages to this arrangement. Among other things it allows Mr Gulliver to avoid inheritance tax.’

Although there is no suggestion that Mr Gulliver has done anything illegal, the spotlight on his personal finances comes as HSBC is under scrutiny over allegations that its private Swiss bank helped clients evade taxes.

Yesterday Mr Gulliver said the wrongdoing was a ‘source of shame and reputational damage to HSBC’.

Despite this he received a £7.6million pay package last year, including a £1.3million bonus. This was a drop from his £8million package in 2013 – his bonus was cut by £500,000 to reflect other wrongdoing at the bank.

HSBC said its profits fell by 17 per cent last year to £12.2billion, while the bonus pool was cut from £2.6billion to £2.4billion.