* Bank currently under investigation over tax allegations
* Report attacks "weaknesses" in French fraud fight
By Lionel Laurent and Emile Picy
PARIS, July 10 France needs to beef up its
methods for fighting tax evasion, according to a parliamentary
report on a tax probe into HSBC that revealed $5
billion of undeclared assets across thousands of accounts.
The report, published on Wednesday, looked at why it took
French authorities more than four years to begin an
investigation into HSBC after receiving leaked data on clients
at HSBC's Swiss arm.
It said there had been good progress on tracking down funds
but called on the French authorities to tackle "weaknesses" in
the fight against tax evasion.
"The case of the HSBC list has shed light on the weaknesses
in our legal arsenal in the fight against systematic tax fraud,"
lawmaker Christian Eckert wrote in the report on behalf of the
National Assembly's finance committee.
France, like countries across the world, is cracking down on
tax after the financial crisis, which has put government budgets
under strain and increased the need to maximise tax receipts.
The country began a formal investigation into HSBC in April
over whether it sold products designed to avoid French tax.
An HSBC spokesman was not immediately available for comment.
The parliamentary report described a variety of legal,
technical, diplomatic and procedural issues that began almost as
soon as former HSBC employee Herve Falciani leaked five DVDs of
data to the French tax authorities in Dec. 2008.
There were internal obstacles over the different remits of
the tax authorities and the prosecutor's office, which in 2010
transferred responsibility for the case from the Mediterranean
city of Nice to Paris.
The sheer size of the client list, which ran to 65 gigabytes
over several formats, meant it took a year to extract the names
behind each client account, according to the report, in a
project dubbed "Operation Chocolate."
After the client names were extracted it was found that
there were $5 billion in undeclared assets.
Diplomatic setbacks also put investigators at a
disadvantage. The report said Switzerland could not be counted
on to give assistance because the Swiss had made Falciani a
Eckert, a leading figure on the parliamentary finance
committee, said in the report there was no evidence of any
tampering with evidence or pressure to scrub any names off the
The report made no comment on the probe into HSBC. It said
that since 2010, the tax authorities had begun to chase down the
largest accounts and had sufficient time to track down and tax
all funds where applicable without a need for urgency.
Falciani was questioned by French lawmakers, including
Eckert, on July 2 to help tighten proposed rules against tax
Falciani, a Franco-Italian, was in France after taking
refuge in Spain from Swiss authorities seeking his extradition.