letter to the PM on India’s black-money probe

Hervé Falciani, a former employee of HSBC Private Bank in Geneva, has been collaborating with multiple governments in investigating illicit offshore banking.

On 15 December 2014, Indian black-money investigators travelled to Paris to meet Hervé Falciani, a former employee of HSBC Private Bank (Suisse) in Geneva. This was after Falciani said he could help India get a lot more information for its black-money probe in this interview to NDTV.

Falciani’s disclosures had earlier revealed how the bank had been helping clients shield billions of dollars’ worth of deposits from public and governmental scrutiny, and had been aiding money laundering and tax evasion on a massive scale. It all started in 2008 when Falciani, who had worked as a technical analyst at HSBC Private Bank (Suisse) in Geneva, leaked bank data to French authorities. The French handed parts of this data, segmented into country-specific portions, to authorities in several other countries. These became known as the “HSBC lists.” India got its list in 2011. Falciani has consistently insisted that countries need access to the entire set of leaked data for their investigators to draw the connections necessary for meaningful results, and to help them expand their probes to look at other banks too.

Following the Paris meeting, in February Falciani said he had signed and returned a proposal from the Indian government requesting him to assist in its black-money probe. India’s income tax department has offered Falciani 5 percent of any tax revenues recovered on account of information furnished by him.

In February 2015, the French newspaper Le Monde published the first part of an investigation based on the HSBC data, as part of which it shared information with journalists in over 40 countries. This operation, called “Swissleaks,” led to a fresh wave of scandals across the globe. In India, the Indian Express published the names of 100 Indians whom the leaks show to have held accounts at the Swiss bank. Swissleaks also revealed more Indian clients of the bank to investigators; Indian authorities earlier knew of 628 account holders, but the number now grew to 1,195. But India still doesn’t have the full set of data leaked by Falciani. The whistle-blower says he “needs help to be able to help India,” and has written an open letter to Narendra Modi on the eve of the Indian prime minister’s upcoming visit to France. We present that letter in full below.

Noopur Tiwari interviewed Falciani prior to the letter’s release.

Noopur Tiwari: Why an open letter to the prime minister?

Hervé Falciani: As you are aware, we have recently offered our expertise and cooperation to Indian investigators. We now urgently request the support of the Indian government to enable us to take our work with Indian investigators forward rapidly. Contrary to popular belief, the already existing channels between countries are not sufficient for this kind of assistance.

NT: How are other countries moving forward? Can India collaborate with any of them?

HF: We believe Mr Modi’s visit to France is a great opportunity to start a collaboration for exchange of information as this can enable some of us to start the work necessary for India to move forward in its black-money probe related to offshore banks. India can hugely benefit from the information France can share. Spain and Belgium are also in a position to help in a way that would boost the reach and capability of investigators in India.

NT: How are you working with other countries? What do you think needs to be done in terms of a way forward for India?

HF: The strategy we used for most countries was following Clausewitz’s principles: that it’s easier to defend than to attack. It’s easier to confront opponents on your soil rather than going out. But this requires deep interaction between countries first. We need all the intelligence we have in many countries to get from them what they learn about banks they know are helping clients to commit fraud. With this intelligence we can go after local banks.

The US recently collaborated with the Swiss to obtain information from one bank that showed them which other banks they were working with. That’s exactly the path I suggest we follow in India.

Many other countries we have offered help to have gone a step ahead and asked us how they can help us help them. We are hoping that India will also move in that direction.

NT: Our sources tell us Indian investigators got the feeling you can’t deliver any data. What would you say to that?

HF: There exist many ways to deliver the data to investigators. There is a simple way, but it is a very risky way for me—I can hand over the data directly. This will expose me to more and more trials in Switzerland, which is part of Interpol. I will have more and more warrants against me. But with my cooperation with other governments, we can ask them to help get more data for investigators because I know where more data is available and how it can be obtained.

NT: Some believe there is no point in chasing the HSBC investigation, nor in going after one bank. Your reaction?

HF: In one sense it’s absolutely correct. One bank exists only because it is relying on other banks. The thing to do is to focus on one bank that can serve as the weakest access point to the offshore banking system, and from this weak point obtain more information. This is exactly what the US is doing. They got the BSI bank to communicate on the banks it was working with abroad. So from one you can extend to others. And indeed, with HSBC, India has a case where they can get more cooperation from them and then go after local banks.

NT: Some feel that there is a disproportionate focus on Switzerland, and that attention should also turn to other tax havens. What would you say?

HF: If you look at what the US is doing in their fight against Switzerland, you’ll see they obtained information not only on clients and other collaborating banks but also employees. And what is the interest in knowing the employees? It’s the know-how of the employees which is the most important in this infrastructure and industry of tax evasion, which is related not only to persons but also to companies. The most important is to focus on employees. Most of the know-how is located in Switzerland, even if people are keen to move to other countries. Most of them will remain in Switzerland because the know-how will remain there. It used to be there for historical reasons, the same way that diamond dealers tend to be in Belgium. So that’s why you’d focus on Switzerland, because they still have the know-how on tax evasion and, because of communication technology, they are able to manage accounts that could be located elsewhere.

NT: More weight is given to exchange and collaboration via treaties. Whistle-blowers are often regarded with some amount of suspicion. What, according to you, can they bring of value?

HF: We are confident the Indian PM will agree that whistle-blowers help law enforcement. It’s those who are breaking laws who question our role and intention. As black-money investigators are well aware, understanding the modus operandi of fraudsters with inside information is key to any probe.


Hervé Falciani’s open letter to Prime Minister Narendra Modi

Dear Prime Minister, Mr Narendra Modi,

I am writing to you to seek your support on behalf of those who support India in its fight against black money. Your determination to fight this problem, we believe, is strong, and we therefore request you, sir, to meet us during your Paris visit and allow us the opportunity to show you how we can be of assistance.

As a group of insiders, we have a broad range of experience as client officers, compliance officers, head analysts and expert dealers. On the eve of your departure to Europe, we urge you to consider that the exchange at the government level between ministries of finance and tax authorities remains limited in nature, and urgently needs to be expanded to include departments of justice in order to accelerate the black-money probe. In addition, we urgently need channels to open up to allow room for the flow of complementary expertise, such as that from insiders or whistle-blowers.

We welcome the news that India is considering a new set of anti-black-money laws. In this regard, with all due respect, we are taking the liberty to spell out what we believe should be the guiding principles not only for India, but also for countries around the world, including those we ourselves are citizens of:

a/ Increase transparency to fight opacity; create room for the active participation of independent bodies and civil society in audits; build active collaboration and information-sharing between governments to allow investigators to share information across borders; enable investigators to adapt to constantly evolving tricks deployed by wrongdoers.

b/ Target mechanisms, and hold banks accountable rather than focus solely on individuals; envisage the state presenting itself as plaintiff in proceedings against banks charged with money laundering and tax fraud (as in Belgium vs HSBC); steer investigators to work with clients from different banks and different countries who have admitted to keeping accounts abroad, to have them work as witnesses in order to widen the probe to multiple banks;

c/ Focus on big corporations that exploit these mechanisms to stash their wealth abroad. Corporate tax is essential for a nation’s development. If the wealthy do not pay for the infrastructure and services that they benefit from, it leads to inequality and unfair burdens on poorer citizens.

d/ Strengthen whistle-blower protection laws for not just public servants but also insiders in public/private sectors. Financial compensation for those who reveal wrongdoing should not be seen as rewarding mercenaries but as essential support for the survival of individuals who find themselves unemployable, isolated, harassed, and even face death. This money doesn’t come from taxpayers or governments but from recoveries made from the crackdown against large-scale fraud.

Isaac Newton once said, “We build too many walls and not enough bridges.” But we wish to build bridges with India, and will therefore also be joining hands with more Indian citizens who support our views.

We earnestly hope that you will be willing to lend us your support and give us an opportunity to meet you.


Hervé Falciani

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