Hetq.am: Which Armenians Held Money in HSBC’s Private Swiss Bank?
A financial scandal of international proportions erupted after Hervé Falciani, then an employee of HSBC’s Swiss Private Bank, smuggled out the names of over 100,000 individual and corporate bank customers with secret accounts set up for tax evasion and more nefarious purposes. Falciani turned over the documents to French tax authorities who then launched an investigation into the concealment of hundreds of millions of dollars from tax authorities. The smuggled documents were later obtained by the International Consortium of Investigative Journalists (ICIJ) via the French Le Monde newspaper. In addition to tax evasion, the documents offered a glimpse into the murky and inner world of the HSBC’s Swiss private banking arm, an institution that seemingly profited from doing business with a host of unsavory characters worldwide. The ICIJ then created a 45-person team to study the documents. The findings were summarized in a February 8, 2015 article entitled “Swiss Leaks: Murky Cash Sheltered by Bank Secrecy”. The entire ICIJ study, “Swiss Leaks”, is a detailed account of the more than US$100 billion held by the HSBC’s private banking system, broken down by countries and clients. While the ICIJ prefaces the “Swiss Leaks” study by stating that “There are legitimate uses for Swiss bank accounts and trusts”, the media organization also points out in the article cited above that “These disclosures shine a light on the intersection of international crime and legitimate business.” The international crimes include arms trafficking, the trafficking of blood diamonds, in addition to tax evasion and outright money laundering.In its study findings the ICIJ admits that not all account holders were breaking the law. At first, HSBC demanded that the ICIJ destroy all the data it had obtained. In January 2015, after being informed of the full extent of the reporting team’s findings, HSBC made the following confession. “We acknowledge that the compliance culture and standards of due diligence in HSBC’s Swiss private bank, as well as the industry in general, were significantly lower than they are today.” HSBC added that it had tightened controls and implemented reforms, and that its Swiss private bank had reduced its client base by almost 70% since 2007. The “Swiss Leaks” study revealed that 106,000 clients from 203 countries had accounts totaling more than US$100 billion at the private HSBC bank. The data was broken down into three categories: the accounts opened at the Swiss bank and account holders from 1988-2007; operating accounts and their maximum amounts in 2006-2007; notations by made bank employees regarding clients and conversations with them. When compiling its list of top countries by #clients/by $money, the ICIJ decided not to display detailed information for countries with $0 and with 3 clients or less. Of note is that one client could be linked to more than one country, given that citizenship, place of birth and residence is taken into account. The Top Countries by Client Number (2006-2007) Switzerland – 11,235 France – 9,187 United Kingdom – 8,844 Brazil – 8,667 Italy – 7,499 The Top Countries by $Money (2006-2007) Switzerland – US$ 31.2 billion United Kingdom – US$ 21.7 billion Venezuela – US$ 14.8 billion USA – US$ 13.4 billion France – US$ 12.5 billion So where did Armenia rank in the listings? The country ranked #146 among the 203 countries with the largest dollar amounts in the leaked Swiss files. (As for Armenia’s regional neighbors, Turkey was 23rd on the list with 3,105 clients and total accounts of $3.5 billion at HSBC’s Swiss bank. Russia was 35th on the list – 740 clients and $$1.8 billion. Iran was 38th – 573 clients and $1.5 billion, Georgia was 132nd - 25 clients and $29.4 million. Azerbaijan was 167th - 14 clients and $3.8 million.) 10 Clients Associated with Armenia and Other Armenians with Swiss Bank Accounts According to “Swiss Leaks” findings, there were 10 clients associated with Armenia (4 had an Armenian passport/nationality) who opened 21 client accounts between 1989 and 2006 that were linked to 23 bank accounts. The maximum amount of money associated with a client connected to Armenia was $5.8M. 17 of the 21 client accounts were opened by private individuals, 2 by offshore companies and two were “numbered” accounts. The ICIJ states that these ten clients held a total of $15.4 million in the bank between 2006 and 2007. While Swiss Leaks stated that four of the ten clients were either citizens of Armenia or had Armenian nationality (not ethnic), Hetq obtained data from the ICIJ regarding the ten clients and it turns out that all are ethnic Armenians or companies registered in Armenia. Furthermore, there are other ethnic Armenians, citizens of other countries, who held accounts in the Swiss bank. As such, they are not included in the list of clients ‘associated with Armenia’. (We will have something to say about these other Armenians later on). For now, let’s see who these ten clients were. Karekin II - Supreme Patriarch and Catholicos of All Armenians HSBC internal files first listed Karekin II among its clients in 2000. He was connected to an account named “His Holiness Karekin II Nersis” that listed one bank account and held as much as $1,074,926 in 2006/2007. The leaked files do not specify the exact role that Karekin II had in relation to the account. In response to an ICIJ query, the Mother See at Etchmiadzin claimed that the account in question was opened by His Holiness Karekin II's predecessor "for the benefit of the Church and its charities, and that the account was transferred to His Holiness Karekin II Nersissian upon the death of his predecessor to be used for the same purposes. The Catholicosate –the area of responsibility of the Catholicos- of the Armenian church is a national religious institution and is not subject to any taxes" and that His Holiness "has immunity from any taxes." Radik Martirosyan Martirosyan, who has served as the president of the National Academy of Sciences of Armenia since 2006, also had an account in the Swiss bank. Born in 1936 in the NKR village of Mataghiz, Martirosyan opened a client account in the bank on December 4, 1997 when serving as rector of Yerevan State University (1993-2006). From 2006-2007 Martirosyan had $14,684 in the Swiss bank. His client account was numbered – 3310FT. Only Martirosyan can explain why his account was numbered. For more details visit Hetq.am
