Bung us 40million francs and we’ll say no more about it

The hopes of millions of people across Europe, that Switzerland would join the tiny number of countries taking legal action against HSBC (Swiss) for money laundering were dashed today when Geneva’s chief prosecutor Olivier Jornot announced that a financial settlement of 40million Swiss francs (£28million) had been reached and that the Swiss authorities would be taking no further action against the bank.  The bank was under investigation for money laundering, following when UK channel 4’s dispatches program made public information that the Swiss arm of British bank HSBC had been assisting individuals to hide money from their national tax authorities. The information originally came to light when IT specialist Herve Falciani who was working at the bank in Switzerland turned whistleblower and leaked details of some 106,000 private accounts at the bank.

In the UK, HMRC received the leaked files in 2010. Following the dispatches program in February, it was revealed by HMRC they had identified three thousand six hundred British nationals from the Falciani files, when they appeared before the Public Accounts Committee. Of those, two thousand five hundred were found to have done nothing wrong, as it is not illegal to hold a private bank account in a foreign country. All but one of the remaining one thousand one hundred British citizens, were allowed to pay the outstanding tax plus a small financial penalty of 10% and that was the end of the matter. That means one thousand and ninety nine British individuals were caught red handed evading tax, which by the way is illegal in Britain and not one of them were prosecuted. HMRC claim to have collected £135million in unpaid taxes and penalties. The one individual HMRC did prosecute was found guilty of tax evasion in the amount of £387,103 and was ordered to pay an additional £469,444 in fines and legal costs. Tens of millions in tax evaded and not a single person spent even one day in jail.

It was through a tax amnesty agreement between the British tax authority and tax authority in Lichtenstein that the one thousand and ninety nine individuals were allowed to make financial settlements. The Lichtenstein agreement was set up in 2009 so that British nationals who held financial assets there could declare them to HMRC without facing prosecution. However the agreement had some strict conditions in order for the amnesty to be offered. Firstly, the assets had to be held in Lichtenstein. Secondly, the amnesty could not be used where a criminal prosecution was likely. Thirdly, the claim could only  involve assets about which HMRC were not already aware and the disclosure had to be made voluntarily, without intervention from HMRC. But none of the assets were held in Lichtenstein. All of the individuals had committee tax evasion and therefore criminal prosecution should have been likely. HMRC had found out about the assets through the Falciani files and therefore already knew about all of the assets when the individuals were approached and therefore none of the disclosures had been made voluntarily. The favourable treatment available under this tax amnesty, should never have been given to any of the one thousand and ninety nine individuals concerned.

When giving evidence before the Public Accounts Committee, HMRC chief executive Lyn Homer said that half of these individuals had asked to be given amnesty from prosecution under the Lichtenstein agreement and were advised by HMRC to move their assets to Lichtenstein in order to qualify for the amnesty. The other half knew nothing about the Lichtenstein agreement, but were advised of it by HMRC staff and told to move their assets. This is not just giving out amnesties to tax evaders, it is advising breaking the rules by advising them of the amnesty and how to qualify. It was never the intention of parliament that those caught red handed evading taxes should be given an amnesty, so clearly HMRC are ignoring the will of parliament and applying the rules how and when they see fit. HMRC do not, nor should they ever be given the power to decide if and when the laws of the land are to be applied and when they can be ignored. Their sole remit is to collect the taxes that are due as determined by parliament.

Online campaign group Avaaz who have more than 40million members worldwide, have initiated judicial review proceedings against HMRC in relation to it’s decision to offer the amnesty.  Avaaz’s campaign director, Alex Wilks, said in a statement when the legal action was launched: “If the police extended the terms of knife amnesties to criminals caught carrying weapons, the public would be outraged. Tax officials must urgently explain why they gave get out of jail free cards to so many wealthy tax dodgers.” The difficulty with financial penalties is individuals who are caught evading taxes on this scale can well afford to pay the tax owed plus a small financial penalty, in the highly unlikely event of them being caught. Therefore financial penalties provide no incentive to change behaviours or to think about the consequences of what they are doing, aside from the fact it is illegal. As with the case of HSBC bank in Switzerland and the multiple fines imposed on UK banks in the past five years, financial penalties send out completely the wrong message to those actively and anyone considering participating in illegal behaviour. It says do as you please because even in the unlikely event you get caught, the worst that will happen is you will receive a fine.

Put these individuals or businesses on trial in a court of law and if found guilty, send them to jail for a substantial period of time. Then use the proceeds of crime act to seize all of their assets and reimburse the public purse. Prosecute a few cases in this way and word will spread like wildfire that there are serious consequences for breaking the law in Britain. Such actions will have the effect of focusing the minds of anyone considering illegal activity and it will be an effective punishment for those found guilty. They will think twice before carrying on with business as usual once released. Treating wealthy tax dodgers and banks who help them exactly the same as we treat an individual who over claims benefits they are not entitled to is exactly how things work in a truly democratic society.

It is also noteworthy here that because the Swiss authorities have decided to agree a financial settlement with the Swiss arm of HSBC, information they gained on exactly what the bank had been up to will never be made public. Also, despite authorities in France, Belgium and Argentina having brought charges of money laundering and fraud against HSBC bank, no such charges have ever been lodged against the bank in Britain. Finally, HMRC had powers at the time of the Falciani files case to impose financial penalties of up to 200% of the tax evaded, but it chose not to use them. What kind of democracy is this?

What ever happened to the great British value of we look after our own?

After the atrocities of the second world war, Britain wrote and became a signatory of the European Convention on Human Rights (ECHR). In the same period the then labour government set up the welfare state. The ECHR was agreed and signed by the countries of Europe and is a declaration to the world that the horrendous atrocities that had been seen during the war, must never be allowed to happen again. The welfare state was set up in response to the Beveridge report of 1942 to end rampant poverty in Britain and to look after everybody “from the womb to the tomb.” Both acts were an unequivocal statement of declaration that whether rich or poor, Britain looks after it’s own and such atrocities have no place in a modern society.

Fast forward seventy odd years and of course a lot has happened. We have had numerous wars including the Falklands in 1982, the Gulf in 1991, Afghanistan in 2001, Iraq in 2003 and Libya in 2011. Cars are now seen on our roads everyday, the television was invented, we now have machines to wash and dry our clothes, it is now possible to communicate with people on the other side of the world with just the touch of a few buttons and we have made huge advancements in the development of weapons of mass destruction.

But most damning of all in my opinion is that in one of the most powerful nations of the world, with a population of 60million people we have 4,100,000 children living in poverty. Almost a third, or 32% of British children are living in poverty.       Britain is the 6^th richest nation in the world, with a GDP of more than £1.6trillion and in 2014 we had one of the fastest growing economies in the world, yet in some areas between 50%-70% of children are growing up in poverty, figures from the Child Poverty Action Group show. The figures also show that 66% of children growing up in poverty live in a household where at least one parent works, proving beyond doubt that work does not provide a guaranteed route out of poverty in Britain, despite the tories to the contrary. How did we end up here? What happened to the great British value that we look after our own?

Well despite our best intentions way back in 1945, we never did manage to eradicate child poverty and in 2005/06 there were 3.8million children living in poverty according to the Department of Work and Pensions. This was a rise of 200,000 children since the year before and was described as “a moral disgrace” by children’s’ charity Barnardo’s. Despite numbers falling over the next three years, they had risen again to 3.8million by 2010. In March 2010 the Child Poverty Act was passed, legally binding the government to a commitment to eradicate child poverty in Britain by 2020. For the first time ever, government and local authorities have been set targets to end childhood poverty for good. However almost have way to that target, the figures from the Child Poverty Action Group show that our government is moving backwards instead of forwards.

Given the previous coalition governments’ ruthless commitment to austerity measures, a consequence of the UK banks irresponsible lending and by 2014 had lead to a cost to the British taxpayer of £1.3trillion, it’s no wonder child poverty numbers are rising. The cuts to welfare benefits have seen a cap of £26,000 for any working age adult across all benefits, the introduction of the bedroom tax, a reduction in the child element of working tax credit, cuts to child benefit, cuts in the number of children receiving free school meals, it is no wonder the number of children living in poverty is rising. There is no doubt that by the end of the coalition governments’ reign there were more people in work, the figures speak for themselves. However at least a portion of those new jobs were either low paid, zero hours contracts or self employment. None of which provide any security for Britain’s hard working families that the conservative like to talk about.

Considering their track record in coalition with the liberal democrats, does not speak well for our new conservative majority government, with their plan to cut £30billion from public spending, £12billion of which will come from the welfare budget. Although the government have not yet laid out exactly which benefits will be effected, I fear greatly for our children and those who through no fault of their own, are least able to defend themselves and can least afford further cuts.

People are poor for a great many reasons. But explanations that put poverty down to drug and alcohol dependency, family breakdown, poor parenting, or a culture of worklessness are simply not supported by the facts. Child poverty blights childhoods. Growing up in poverty means being cold, going hungry, not being able to join in activities with friends and it has long lasting effects. By age sixteen, children who receive free school meal achieve 1.7 grades lower than their wealthier peers. Leaving school with lower grades translates into lower earnings, with little prospect of improvement over the course of a working life.

Children have no choice about whether they are born into a rich or a poor family and very few people, if anyone in the history of mankind has ever made a conscious decision to be poor. We have forgotten the commitment we made in 1945 to eradicate child poverty and are well on our way to failing second time around as well. By it’s very definition, in a democratic society there is no such thing as poverty, it simply does not exist. In a democratic society there would not be a scenario where a handful of RBS bankers would receive £484million in bonuses, while 4.1million children did not have their most basic needs met, including enough food, warm clothes and a safe home.

Therefore I submit that Britain clearly is not a democracy.