The leak of the Panama Papers, exposing the names of those who hold accounts in tax havens brings back memories of the Swiss Leaks. Hervé Falciani, a Franco-Italian software engineer had leaked data from HSBC in Switzerland, and the 1,30,000 names in the data had helped several countries trace millions of Euros.
In an in absentia trial held in November, 2015, Falciani was given a 5-year prison sentence by a Swiss court that asked HSBC to pay 40 million CHF (Swiss currency) as a fine to escape criminal prosecution despite revelations of industrial scale money laundering and tax evasion. HSBC is facing criminal charges in France, Belgium and Argentina. HSBC has also been named in the Panama papers of law firm, Mossack Fonseca as one of the leading banks that helped set up complex structures for tax evasion and money laundering. HSBC have denied these allegations.
Falciani has an Interpol warrant against him issued by Switzerland. Spain has refused to extradite him and various Spanish authorities, political parties and activists collaborate with him. As a holder of French and Italian nationalities, Falciani cannot be extradited from these countries.
France had shared a part of Falciani’s data with India in 2011. In 2014 Falciani had agreed to work with Indian investigators. However, in August last year, he had written to Justice M B Shah claiming that things were not moving as they should. In an exclusive interview to The Wire, the whistleblower says that the Panama Papers show that its about either escaping tax or laundering illicit money.
Q. Most prominent Indians named in Panama Papers have denied their involvement. They have either questioned the authenticity of the information or have said what they’ve done is legal. Does this mean they could be innocent?
Falciani: Remember that the fact is that it’s about hiding money. This is absolute evidence and no one can deny that. The question is-why did they need to hide it? What were their motives? They needed to hide, but from what? It’s evident that most of the time it is for tax evasion at least, or worse, to launder illicit money. What is a good reason to not do things directly and pass through this system of intermediaries?
Q. Earlier in relation to the HSBC black money probe you had said that people who had accounts were lying and that the guilt of clients had been proven not only in courts but also by clients who turned witnesses. Would you say that again?
Falciani: Umberto Eco said it’s harder to prove the truth than to prove lies. With Panama Papers, those named can pretend in many ways but it’s evident that the proof is there, the information is correct and we don’t have to struggle any further. What we should be able to observe is how easy it is for any Indian citizen to do this and how they didn’t hesitate.
Q. In simple words, what the Swiss Leaks (based on your data) revealed and what Panama Papers now show, is huge theft of public money and/or criminality. But people still find it too abstract. What is the key thing to understand?
Falciani: What Panama Papers should show people is that it’s about intermediaries. They prevent people from direct producers-to -consumers access. Because whenever you have intermediaries you are paying a higher price than what you deserve to pay. In the same way, with this kind of activity, governments lose the power to provide infrastructure and services because of tremendous loss of resources, as huge amounts of national wealth are lost through these intermediaries. And it’s the citizens who pay the price. Intermediaries make room for theft. And citizens end up paying for that. It holds truer for poor countries. Everything becomes more unaffordable because of this loss of wealth.
Q. Last year you wrote to the SIT judges regarding the HSBC probe. Did you ever get a reply from them?
Falciani: Absolutely not. This isn’t the first time nor will it be the last where this kind of thing is happening. It all depends on the political ambience.
Q. The Chairman of Special Investigation Team (SIT) on black money, Justice Shah had said that it in a press conference via Skype you had given “wrong information” to journalists in India when you said that Indian authorities are not cooperating with you. The Judge had said you could give the information to the SIT or to the government or even to a journalist, but you must share it. How would you respond?
Falciani: I can share details of the last exchange we had (since they are saying I can share it with a journalist). I had offered Indian investigators to come to Barcelona. Earlier it was planned that Argentina would also be part of this plan but with the change in government there, things have changed. But I had offered. I don’t have an answer from India.
Q. What did you want Indian investigators to come to Barcelona for?
Falciani: There are many clear methods that are already being used by different investigators that could help India proceed further. I have provided the same methods to other investigators. What I propose to them (Indian investigators) now is to organize this and it can be done under the testimony of a journalist- you, for instance?
Q. Indian Finance Minister Arun Jaitely was not happy with your statements to journalists. You had requested for protection but he had said, “Whoever has whatever details, he or she should give it to us instead of putting any pre-conditions.” What are these conditions?
Falciani: The conditions are nothing but for me to come to India under protection because of the pending Interpol warrant against me at Switzerland’s behest. I will not go to India to get arrested. It won’t be a very intelligent way to proceed.
The so-called “conditions” are only related to travel procedures. I am in the best position to know what kind of skills are required to get the most from the banking information. I must remind them that this is the first time in private banking history that we have such a leak from inside the bank (HSBC). In my experience, if they don’t proceed in the right way, things will eventualy lead to nothing. And I won’t participate in something that’s designed to fail. It’s my duty to prevent waste of time and energy both theirs and mine.
Q. Who will benefit from these Panama Papers revelations and how?
Falciani: Today, whoever manages information and manages data efficiently, controls the economy (including those providing these “innovative” solutions). Most of the top ranked companies today are tech companies that know how to manage information. Banks are only data centres that specialize in one kind of information- financial information. It’s important to observe that there is increased centralization of sensitive economic and financial information. And the US is becoming this point of convergence of this information. Why? Because, for instance, when it’s about financial activity, like in private banking industry, clients are seeking places where they will be well hidden and protected. That place today is the US. They seek information, but they refuse to share it. They haven’t even signed the OECD’s new information exchange treaty.
Q. You mean while the US is putting pressure on other secrecy jurisdictions, they themselves are not forthcoming when it comes to their own tax havens such as Delaware. How is that related to India?
Falciani: If India was to manage its own economic and financial information efficiently and locally, they would not have to rely on third parties to protect their information.
Q. What kind of local action will prevent what?
Falciani: Common sense is that when you are sick you have to do what’s best for you not rely on others, in this case other countries to do what’s best for India. Which concretely means that if you are handing over your information to a third party rather than keep it in India, you are exposing yourself to leaks. It’s better to have your own local tax havens that to have citizens go elsewhere (I mean that ironically of course). Take China for example. It’s easy to replicate services like Facebook, e-bay etc. locally. Indian has no dearth of technological expertise to do this kind of thing. That way you help your local economy and prevent your adversaries from taking hold of your economic intelligence.