French Prosecutor Seeks Trial for HSBC’s Swiss Operation
nytimes.com
Mar. 13, 2015
Mar. 13, 2015
Coded Expectation
MC4.02- evaluate the ethical issues that arise for companies competing internationally in relation to the following groups: consumers, stockholder, employees, host country and society
Summary
France’s financial prosecutors have recommended that HSBC’s Swiss operation be criminally charged with encouraging tax evasion. This is just one of a significant number of criminal investigations involving the bank, including similar charges in Belgium. Additionally, the bank has had run-ins with the law in the US, being forced to pay $1.9 billion in 2013 for helping to launder drug cartel money, and $618 million in December for failing to prevent the manipulation of foreign-exchange markets. The Swiss are usually laid back regarding tax evasion, but even they have opened an investigation into HSBC. The accusations for the French case date back to 2007, when a whistleblower brought files on HSBC's accounts to police. In November 2014, HSBC was placed under formal investigation, which resulted in the charges in this article.
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HSBC has run into a number of legal issues,
including new charges from French authorities for encouraging tax evasion (11). |
Connection
The major ethical issue brought up here is tax evasion. In all countries, tax evasion is a crime, as the government needs the money to pay for social services and other necessities. The connection refers to consumers, stockholders, employees, the host country and society, and so each will be examined to understand the effects and ethical issues that arise when a company breaks the law.
Consumers are the least affected group due to HSBC’s actions. They end up not having to pay as much tax, and likely were unaware of HSBC’s policies. Stockholders are affected by the actions. The large fines that amounted to $2 billion in 2013 alone drastically affects the company’s financials, and likely caused stock prices to plummet. Employees at the low to mid level are likely not affected, but the people who encouraged the tax evasion could face prison time, eliminating a small but not insignificant number of the company's employees. Finally, this affects the host country and society as a whole. The host country is not able to acquire the needed tax revenue, and as such cannot pay for necessities that affect the society, such as emergency services and infrastructure. Overall, HSBC’s attempt to gain more customers by engaging in illegal practices hurt everyone, from the stockholders to the host country.
Consumers are the least affected group due to HSBC’s actions. They end up not having to pay as much tax, and likely were unaware of HSBC’s policies. Stockholders are affected by the actions. The large fines that amounted to $2 billion in 2013 alone drastically affects the company’s financials, and likely caused stock prices to plummet. Employees at the low to mid level are likely not affected, but the people who encouraged the tax evasion could face prison time, eliminating a small but not insignificant number of the company's employees. Finally, this affects the host country and society as a whole. The host country is not able to acquire the needed tax revenue, and as such cannot pay for necessities that affect the society, such as emergency services and infrastructure. Overall, HSBC’s attempt to gain more customers by engaging in illegal practices hurt everyone, from the stockholders to the host country.