Swiss accounts 'may be the tip of the iceberg'

Swiss banks employ 136,000 people compared with 6,500 in the whole of Guernsey's finance industry. Guernsey has 31 licensed banks while HSBC's Swiss bank is one of hundreds. £1.3bn of Guernsey-linked money in a single Swiss bank may be just the tip of the iceberg. No one knows how big the iceberg is because, as Deputy Le Tocq points out, unlike Guernsey, Swiss banking is secret.

According to Guernsey Finance, Guernsey's 150 trust companies control £350bn, a large proportion of which is no doubt 'offshore' money.

If any Guernsey-linked money in Swiss secret bank accounts turns out to be controlled by Guernsey trust companies, it would do serious damage to Guernsey's claim to be transparent.

The GFSC has responded by paying the usual lip service to anti-money laundering and combatting financing of terrorism. There was no mention of tax evasion, which was Ed Milliband's recent concern. If Guernsey trust companies do have 'Guernsey-linked' money in jurisdictions that have banking secrecy laws it would suggest that the GSFC can't know very much about it.

That would not be too surprising. Struggling to justify the GFSC's refusal to act over blatant wrongdoing by a trust company that it supposedly regulates, the commission's director of fiduciary supervision and policy division admitted recently that 'Our regulation and supervision of the fiduciary sector is necessarily limited'.

A firm of advocates had previously informed the GFSC 'it has become very clear that company X has itself, and through the actions of its officers and employees, from 1998 onwards to the present day, committed acts or omissions falling seriously below the standard of care expected of a professional regulated trust company or professional regulated trust administrator'.

The GFSC is the cornerstone of Guernsey's case for not being seen as a tax haven. Yet the GFSC admits that its regulation of trust companies is limited. It shows no appetite for policing its own codes and principles, or to ensure that a major Guernsey licence holder obeys the Fiduciary Law of Guernsey, which both have the duty to uphold.

Both the main political parties in the UK have expressed concern over lack of transparency of beneficial ownership in Guernsey. Although we do not have banking secrecy, there is nothing to stop trust companies here from 'hiding' money in banks subject to Swiss secrecy law. If they are responsible for some of the 'Guernsey-linked' money in HSBC Switzerland, the effect is the same as if we have bank secrecy here after all. That money would be hidden from any enquiring authority, which is presumably why it is put there.

It is only from these leaked Swiss bank documents and your recent report that we now know that there was £1.3bn of Guernsey-linked money in one Swiss bank.

I am reminded of the famous Monty Python sketch, 'A nod is as good as a wink to a blind bat'.

R. A. D. BROADHEAD,

Les Fontaines,

Rue du Presbytere,

Castel,

GY5 7NE.

Editor's footnote: A spokesman for the Guernsey Financial Services Commission replies:

'As the writer well knows from direct contact with the commission, we are unable to comment on specific cases other than to reiterate that we are an evidence-based regulator and have demonstrated on a number of occasions that we will take robust action against firms and individuals where the evidence warrants this.

'Tax evasion is a criminal offence and would be "caught" under the Bailiwick's anti-money laundering and combatting the financing of terrorism regulatory regime, which the commission applies rigorously.'