HSBC: will the sword of Damocles fall?

Abstract

HSBC has come under sustained assault from a coordinated media campaign developed by the French newspaper Le Monde, in conjunction with the International Consortium of Investigative Journalists (ICIJ). The consortium involves contributions from and dissemination mechanisms in major media marketplaces, including Ireland, France, the United Kingdom and the United States. The investigation focuses on allegedly systemic attempts by HSBC Private Bank in Switzerland to drive business through the contracting around of bank secrecy laws. The revelations are problematic from both ethical and legal standpoints. First, the whistleblower was animated by greed rather than the public interest. Second, there is nothing either illegal or immoral in having a Swiss bank account. No ulterior motive can or should be asserted unless evidence to that effect is proffered. Relatedly, the disclosure of names without evidence of wrongdoing is an invasion of privacy. The practice also reverses the burden of proof, thus undermining the credibility of the ICIJ and its contributing partners. Thirdly, however, the nature of the HSBC response and the muted reaction of both the UK and US governments, highlight significant problems with the use and application of civil and criminal codes to financial institutions. The value of the HSBC dossier, therefore, rests less on its evidential power but rather on its capacity to influence the dynamics of regulatory reform. This article explores the multifaceted legal, ethical and regulatory issues, the manner in which accountability and due process can be undermined by careless reporting, and the implications for financial regulatory redesign.