Panama Papers scandal grows for HSBC over Syria links

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HSBC faced new revelations from the leaked Panamanian tax documents today which appear to show it lobbying on behalf of Syrian president Bashar al-Assad’s cousin Rami Makhlouf, long after he was sanctioned by the US  in 2008.

The documents show Panamanian law firm Mossack Fonseca continued to work for Makhlouf until September 2011, although the EU imposed sanctions on him in May of that year. 

HSBC, said the documents, appeared to reassure Mossack Fonseca not only that it was “comfortable” with him as a client but also suggested there could be a rapprochement with the family of Assad by the US. 

Mossack’s Geneva office emailed its Panama HQ in February 2011: “Mr [X] told me that HSBC compliance department of the bank not only in Geneva but also in their headquarters in London know about Mr Makhlouf and that they are comfortable with him.”

Makhlouf has already been revealed to be a long-standing client of HSBC’s Swiss private bank, holding at least  $15 million (£10.5 million) with it in multiple accounts in 2006. HSBC was fined £28 million by Swiss regulators last year for poor money-laundering controls in its private bank. 

Makhlouf’s accounts appear to have remained open at the start of the Syrian civil war and were not frozen until Swiss regulators did so in May 2011. HSBC said accounts only remained open “where authorities ask us to maintain an account for the purposes of monitoring activity, or where an account has been frozen based on sanctions obligations”. 

That is understood to refer specifically to situations like Makhlouf’s, where accounts have not been closed but frozen at the request of the authorities.

At the height of his powers before the war, Makhlouf’s family was reportedly worth $5 billion and controlled some 60% of the Syrian economy including the largest mobile phones network, retailers and banks. 

The Panamanian files also show HSBC provided financial services to a Makhlouf company called Drex Technologies. Two years after the US sanctions were imposed in 2008, HSBC wrote to Mossack Fonseca stating Drex was a company of “good standing”.

HSBC and Credit Suisse dismissed suggestions they were using offshore structures to help clients cheat on their taxes. Credit Suisse chief executive Tidjane Thiam said his bank was only interested in managing legitimate assets. “We as a company, as a bank, only encourage the use of structures when there is a legitimate economic purpose.”

HSBC said the documents pre-dated a thorough reform of its business model. “The allegations are historical, in some cases dating back 20 years, pre-dating our significant, well-publicised reforms implemented over the last few years,” said Gareth Hewett, a Hong Kong-based spokesman.

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April 6, 2016 |
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