Court documents reveal that HSBC India has been accused of helping American citizens of Indian origin avoid tax, the report said. The American Justice Department issued a summons against the bank in April 2011 seeking details of some clients. It was claimed that the bank promoted its services by offering to keep information secret from U.S. tax authorities.”Prospective clients were told that, as a foreign bank, HSBC India would not disclose the accounts to the IRS (Inland Revenue Service),” the government said in court filings. “The IRS has learnt that thousands of United States taxpayers with accounts at HSBC India may have failed to disclose those accounts, and report income on them, as required by law,” it said. The bank is said to have 9,000 American residents of Indian origin but fewer than 1,400 disclosed the existence of these accounts.In a case, HSBC India representatives are alleged to have advised New Jersey businessman Vaibhav Dahake to transfer money in batches of 6,500 pounds to “stay below the radar.” The bank officials are alleged to have “advised and assisted” in tax evasion.Dahake admitted concealing undeclared bank accounts in 2011, but said bank representatives had solicited him to open accounts that paid high interest rates and would not be declared to tax officials.
HSBC has been at the center of a major storm after files were exposed by Herve Falciani, who started working for the HSBC private bank in Geneva in 2006. The whistleblower has said the U.K. government should have known about the scandal in 2010. The U.K.’s Treasury Committee will conduct an inquiry into the claims.Last weekend, the British bank placed advertisements in several newspapers apologizing for past compliance failures and assuring customers that the bank had “no appetite to do business with clients who are evading their taxes.” The ad reproduces an open letter signed by Chief Executive Stuart Gulliver saying recent coverage had been “a painful experience.”(PTI)