Rs 5.4b held in Swiss bank in ’07

18 Feb 2015, Kathmandu - Eight Nepalis are found to have stashed away money in HSBC’s Swiss private banking arm in the year 2006-07. The revelation from the International Consortium of Investigative Journalists (ICIJ) shows Rs5.38 billion ($54 million) was parked in the HSBC bank.

According to the ICIJ report titled ‘The Swiss Leaks’, Nepali nationals had used 36 bank accounts to deposit the black money . The maximum amount a Nepali deposited is $45 million. The report, however, does not name the Nepali account holders in the bank.

Based on the deposit volume, Nepal ranks 116th among 203 source countries of black money . Nepal has the fourth largest amount deposited from South Asia after India, Pakistan and Sri Lanka. In terms of the number of clients, the country has been ranked 159th.

The HSBC’s private banking arm handled $100 billion from 106,000 clients in the year 2006-07. The report says 12 Nepali clients’ accounts were opened between 1994 and 2006. The banks catering private banking usually target high net-worth clients and manage their funds secretly.

The ICIJ report is based on the data secreted away by Hervé Falciani, a former HSBC employee-turned-whistleblower. According to the ICIJ, the secret bank accounts were maintained by the HSBC’s Swiss unit for criminals, traffickers, tax dodgers, politicians and celebrities.

A knowledgeable government official said those earning illegally usually park their cash in private banking systems. “There is a tradition of politicians, bureaucrats and middlemen in big contracts depositing their illegal money in such banking system,” said the official.

The ICIJ’s latest report confirms that money is being siphoned off Nepal to safe havens abroad. Everyone in the domestic financial sector knows that millions of dollars fly out of Nepal every year but no one admits it on record.

There is no authentic data on the size of capital flight from Nepal. The only source that shows the amount of Nepali money deposited in foreign banks is Swiss National Bank’s annual publication “Banks in Switzerland”.

As per the latest report of the Swiss National Bank, the deposits of Nepalis in Swiss banks stood at 84.85 million Swiss francs (Rs 9.15 billion) in 2013.

At a time black money is becoming a big political issue in India and the southern neighbour pressing the Swiss government to provide the details of black money deposited in Swiss banks, there has not been any effort in Nepal to bring back the illegal wealth.

“Nothing has been done to bring back black money although several Acts on anti- moneylaundering enable the authority to seek details about black money ,” said an official. He pointed to the tendency of protecting those holding black money with the argument that capital has no physical boundary.

With the Swiss government facing intense pressure from the United States, European countries and India, Switzerland has been relaxing its banking secrecy laws.

The US government has passed an Act requiring foreign banks and financial institutions to provide details of bank accounts maintained by its taxpayers. India has also formed a special taskforce to ascertain the amount of black money held by its citizens.

“We don’t have an agreement with Swiss authorities to share information about Nepalis holding bank accounts in the country,” said a senior Nepal Rastra Bank official. “We can ask them but it’s up to them whether to cooperate with us.”