![](https://taxjustice.net/wp-content/uploads/2020/07/nicshax-1-150x150.jpg)
Nick Shaxson ■ HSBC, tax evasion and the link to lax financial regulation
![Tax-wars-300x210](https://taxjustice.net/wp-content/uploads/fly-images/1504/Tax-wars-300x210-4-1400x600-c.jpg)
Two quotes of the day, both from an article by Prof. Bill Black, a former U.S. bank regulator:
“Taxes were once termed the price we paid for civilization, but they now represent the price the wealthy brag to each other about refusing to pay as they pillage civilization.”
Quite so.
And then, in the following sentence:
“Because the City of London “won” the “regulatory race to the bottom” it is the worst “vector” for the epidemic of sleaze led by our most elite bankers.”
The first quote is, as we will explain, the direct consequence of the second, with the result being what the Washington Post call places like London “Tax havens for despots, criminals and the Fortune 500.”
As the WaPo notes of the latest HSBC tax evasion scandal:
“The [HSBC] report alleges that the bank serviced a mix of tax-dodging plutocrats, dictators’ bagmen, blood-diamond dealers, cocaine traffickers, and Al Qaeda financiers.”
Bill Black calls HSBC
“the modern incarnation of BCCI (the Bank of Crooks and Criminals International)”, [registered in Cayman and Luxembourg but headquartered in London.]
BCCI is a hell of a noxious bank to be bracketed with. There are of course a number of BCCI-related things (such as being involved in trafficking nuclear materials) that we don’t suspect HSBC of being involved in, but still: goodness, that’s bad. [We should note here that the BCCI scandal was broken open partly by Tax Justice Network Senior Adviser Jack Blum]
So: how are tax evasion and lax financial regulation related?
One of the easiest ways to attract hot money and élite wealth managers and their élite clients, of course, is to assure them (discreetly, of course) that they won’t be prosecuted for misdemeanours. That has long been part of the City of London’s ‘competitive’ business model.
Another way is to ensure that they won’t be regulated effectively, allowing them to do what they want.
But these two things are all part of the very same criminalising business model: an offering to the world’s hot money that is based on an insidious version of the concept of trust, which goes like this:
“You can trust us not to steal your money – but we will deliberately turn a blind eye if you want to steal someone else’s.”
And as a result of this race to the bottom, we get statistics like this:
a) Number of prosecutions for (mostly poor) people who failed to buy a television licence: almost 200,000
b) Number of prosecutions among the 6,800 (wealthy) people on HSBC list of Swiss account holders: one.
One set of rules for the rich and powerful, another set for the rest of us.
The Finance Curse, in action.
More on the links between tax havens and the financial crisis here. And Bill Black’s short article on London is excellent: read it.
Related articles
![A large sculpture of face sits in the middle of a garden hedge maze - UNSPLASH A large sculpture of face sits in the middle of a garden hedge maze](https://taxjustice.net/wp-content/uploads/fly-images/18379/A-large-sculpture-of-face-sits-in-the-middle-of-a-garden-hedge-maze-UNSPLASH-380x210-c.jpg)
Another EU court case is weaponising human rights against transparency and tax justice
Submission to Special Rapporteur on the independence of judges and lawyers on undue influence of economic actors on judicial systems
![OECD podium - U.S. Department of State from United States, Public domain, via Wikimedia Commons OECD podium](https://taxjustice.net/wp-content/uploads/fly-images/16449/OECD-podium-U.S.-Department-of-State-from-United-States-Public-domain-via-Wikimedia-Commons-380x210-c.png)
Litany of failure: new briefing sets out OECD’s manifold shortcomings in international tax talks
![Outline of Africa (cover image from report) Outline of Africa filled with water, forests, money to represent Africa's climate finance](https://taxjustice.net/wp-content/uploads/fly-images/18104/Cover-image-for-blog3-1-380x210-c.png)
Financing Africa’s Climate Action
![ab062332-0d4e-45f5-ab59-ad1d7a074939](https://taxjustice.net/wp-content/uploads/fly-images/18119/ab062332-0d4e-45f5-ab59-ad1d7a074939-380x210-c.jpeg)
Tax injustices are eroding women’s rights in Brazil, and we need to talk about it
Submission to the Committee on the Elimination of All Forms of Discrimination against Women
20 May 2024
The fiscal social contract and the human rights economy
29 April 2024
![Ireland Tech Sector The tech sector in Dublin, Ireland](https://taxjustice.net/wp-content/uploads/fly-images/14059/ireland_dublin_tech_sector-scaled-380x210-c.jpg)
Ireland (again) in crosshairs of UN rights body
![Tax_The_Rich_V4.2](https://taxjustice.net/wp-content/uploads/fly-images/16014/Tax_The_Rich_V4.2-380x210-c.png)
Inequality Inc.: How the war on tax fuels inequality and what we can do about it
![podcasts-new-look](https://taxjustice.net/wp-content/uploads/fly-images/17696/podcasts-new-look-380x210-c.png)