Press Release: MTJN and ECCR ask question on tax havens at HSBC AGM

HSBC Chairman Douglas Flint was quizzed on the bank's use of tax havens at their AGM on Friday 23rd May 2014 by a representative of the Ecumenical Council for Corporate Responsibility and Methodist Tax Justice Network. MTJN Coordinator Matthew Jones was in attendance at The Barbican Centre, London, acting as proxy for both the ECCR and MTJN Convenor the Revd David Haslam.

The question, which had been submitted to Mr Flint in advance, was asked in response to the company's annual report and accounts. At the 2013 AGM, Mr Flint had promised that HSBC would review their use of tax havens after it had been revealed in research by the charity ActionAid that 496 of their 1526 subsidiaries (32.46%) were based in tax havens. Mr Jones put the question to the HSBC Chairman, "In light of last year's statement, could you say if this number has changed, and if any review has taken place? If not, how many subsidiaries does HSBC now have and what steps is it taking to reduce this very large number of subsidiaries, a situation which many feel undermines the integrity of the global financial system?"

After thanking the Revd Haslam and his associates for their continuing dialogue on the matter of tax, Mr Flint responded with the positive news that the number of HSBC subsidiaries in tax havens has been reduced to 350 - a reduction of 30%. However, he continued to question the legitimacy of ActionAid's data, particularly in their definition of tax havens, which he called 'a complicated area'. He objected to the identification of Delaware and Hong Kong as tax havens, noting that many of the bank's operations are based in the latter due to the origins of the business there, and not for tax purposes. He further noted that 133 subsidiaries are in British Overseas Territories that are now subject to new transparency regulations, and stressed that most of their overseas operations are used for genuine banking operations and not as shell companies for tax purposes. Mr Flint concluded by claiming that they had 'a good story to tell' with regard to tax justice.

In response to Mr Flint's answer, Mr Jones said "We are thankful to HSBC for their engagement with Revd Haslam and others on this topic, and we are very glad to see that their number of tax havens has been reduced - a 30% decrease is surely to be applauded. However, while this is a good start, it should be emphasised that HSBC cannot rest on their laurels. 350 subsidiaries in tax havens are still 350 that need reviewing, and to dismiss Delaware as a tax haven shows a worryingly narrow definition of the term. Delaware is highly secretive, requires no US bank account or employees to form a shell company, and allows corporations to avoid paying tax on a wide variety of intangible assets, including stocks, patents and royalties.  If that isn't a tax haven, I don't know what is."

The question was the only one asked in relation to tax avoidance at the AGM, and follows up on ECCR’s recent report – ‘The Banks and Society: Trust Rebuilt’ – which included findings on tax havens and secrecy jurisdictions. Many of the questions asked were in relation to the bank's new remuneration policy, which further increased the salaries and bonuses of the bank's directors despite the underperformance of HSBC stock in the FTSE 100 in the last five years. 21% of the shareholders in attendance voted against the new policy.

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Methodist Tax Justice Network
The Methodist Tax Justice Network aims to put tax justice issues at the heart of the Methodist Church's mission, through campaigning, working with partners in the UK and overseas and educating and communicating within the Methodist Connexion.