HSBC under pressure to lower bonuses following tax dodging inquiry
Top executives at HSBC are being encouraged to waive their bonuses for the year, following allegations the bank abetted tax dodging clients.
Shareholders, politicians and large sections of the media will place the bank’s bonuses under intense scrutiny when its annual reports are released on Monday.
According to the Financial Times, shareholders are encouraging HSBC to “show restraint” as it has “been in the headlines for all the wrong reasons.”
In its annual report, chief executive Stuart Gulliver is expected to see a slight decrease in his pay from £8m to £7.5m while other executives are expected to see falls following the $618m in fines the bank paid to US and UK regulators last year for its involvement in the foreign exchange rigging scandal.
HSBC has become the subject of a political row in recent weeks, with Labour accusing the government of not doing enough to follow up allegations of tax dodging with prosecutions.
Labour’s Ed Balls wrote to George Osborne this week to demand answers to a series of questions. Balls wrote: Why has there only been one prosecution out of 1,100 names?
“Did you and David Cameron discuss tax evasion at HSBC with Lord Green, or did you turn a blind eye? Did you discuss allegations of money laundering at HSBC during Lord Green’s time at HSBC which led to the bank being fined $1.9bn?”
In response, Osborne said it would not be right for “the chancellor of the exchequer to direct prosecutions against individuals or individual companies.”
The Treasury Select Committee has launched an enquiry against the bank in an attempt to get to the bottom of the allegations.
Chairman Andrew Tyrie commented:
The Committee is concerned about allegations involving HSBC and its Swiss private bank. It has decided to take oral evidence from both HSBC and HMRC.Banks have repeatedly told the Committee that, since the crisis, they have put in place reforms to ensure that they operate on the basis of sharply improved standards. The Committee will need reassurance that they have done so in private banking. The Committee will also examine whether part of the banks’ apparent ‘solution’ – de-risking – may have created another problem, that of unreasonably denying customers access to banking services.