HSBC – the banksters’ bank


Intro and HSBC record

February 2015 saw the emergence of the latest in a stream of scandals from the ranks of the imperialist bourgeoisie and its political stooges:

the Guardian, the BBC, Le Monde and 50 other media outlets revealed that HSBC’s Swiss banking arm helped wealthy customers dodge taxes and conceal millions of dollars of assets, doling out bundles of untraceable cash and advising clients on how to circumvent domestic tax authorities. The HSBC files consist of thousands of pages made available via the International Consortium of Investigative Journalists. Covering the period 2005-07, they amount to the biggest banking leak in history, shedding light on some 30,000 accounts holding almost $120bn (£78bn) of assets. Many of the accounts belonged to prominent figures in business, film, music and sport and the heads of royal families. ” (Mark Tran, ‘The HSBC files: What we know so far’, The Guardian)

Among these accounts around 7,000 belong to British residents and back in 2008, long before they were made public, HM Revenue and Customs (HMRC) obtained the files. 1,100 of the British residents named have been found to have evaded tax. HMRC claims that, from these, £135m in tax, interest and penalties have been collected; but this seems more like an empty gesture than one section of the bourgeoisie declaring war on another. The offices of HSBC’s Swiss branch has since been raided by the authorities of the alpine state, but what will come from that remains to be seen. As per the usual procedure, the corporation has vigorously apologised and insisted that all revelations relate to improprieties that lie in the past and have been dealt with. New evidence provided by whistleblowers, however, paints a different picture.

The so-called revolving door of bourgeois class solidarity has also once more been laid bare: in 2011 Lord Green, chairman of HSBC during the years covered by the leak, became minister of state for trade and investment in the British government and current chief executive Stuart Gulliver, who has appeared most apologetic in the media, has been revealed himself to have had significant savings at the Swiss subsidiary.

Such scandals have become such a commonplace and regular occurrence that they have long been accepted as the new normality by a population that would perhaps be more suspicious were the world of politics not presented to them like an over-dramatised television series. While any outrage may for the moment remain merely verbal and unfocussed, these latest revelations cannot but fuel the disconnect between the working people and the imperialist state in the ideological sphere.

If one only takes a looks at the tax and banking related ‘scandals’ that have repeatedly gripped the public’s attention over the past few years there is no shortage of examples. From corporations like Google and Amazon (in many cases legally) paying hardly any tax in jurisdictions where their profit is accrued, to global City-based Banks such as Barclays doing the same, while engaging in tax evasion and money laundering for others – all this is indeed the norm under the global system of imperialism where finance capital is ubiquitous and moves freely across the globe.

Indeed the bank at the centre of the current revelations has no rosy track record itself: from its earliest days it has been an arm of British imperialism in the East Asia, where among other things it profited significantly from the opium trade. And this taste for drug money has not gone away: only a few years ago it was revealed that HSBC had been laundering money for Mexican and Colombian drug cartels. It all came to light when a Mexican “drug lord referred to the bank as the ‘place to launder money'” to US prosecutors who were quick to agree a record $1.92 billion settlement.

In fact settlements and secret deals seem to be the favoured methods of imperialist judiciaries for sweeping these affairs under the carpet without too much financial damage to its financial bourgeoisie, as the recent example of Vodafone illustrates. Back in 2011, Vodafone simply flat out refused to pay the £6bn in tax that it owed and was promptly taken to court. However, ” at the last minute, the leading UK tax official did a secret deal with Vodafone for the company to pay just £1.2bn, with £800m now and the rest over five years. The reason given for the deal when it was exposed was that it was a ‘good cash settlement’. But that’s only because Vodafone was fighting every inch of the way through the courts to avoid a settlement (although it was about to lose) .” (Michael Roberts, Taxing Capitalists’,

Economic Pressures

So why do companies go through such pains to minimise the tax they pay?

After all it cannot be reduced to mere greed: companies are not individuals, and the tax avoided does not go directly into the pockets of the accountants and legal departments responsible, nor even to the bosses. There are of course inherent economic pressures that compel corporations to avoid paying tax which do not exist as such for rich individuals alone. One of the simplest, but perhaps one of the most short-sighted, ways of counteracting the tendency of the rate of profit to fall is by reducing taxes, thereby raising after-tax profits.

Our current historical situation is the product of this tendency and struggle against it in a number of ways. First of all, the imperialist stage of capitalism in general is its direct result, and more specifically our current climate of so-called neoliberalism with its resurgence of finance and ever-increasing parasitism. Since the post-war boom came to an end, imperialist governments acting on behalf of capitalism as a whole (or at least the chunks of it which they preside over), have engaged in a virtual race to the bottom with each other in terms of corporate tax rates.

For example, ” whereas in the 1950s, US corporations paid an effective tax rate of around 40-45% of profits (without damaging profitability or economic growth then by the way) by the 1990s, that rate had fallen to 30-35%. In the last decade it dropped further to under 25% and reached an all-time low in 2009 at the depth of the Great Recession. The trend is clear: corporations are being taxed less and less to preserve their profitability. In contrast, the effective personal income tax on employees has remained pretty steady at about 35%. Less tax for capitalists and more tax for workers. ” (Michael Roberts, Taxing Capitalists’, In Britain effective corporate tax rates have dropped from around 50% in 1979 to 30% in 2005 and 25% in 2012, and the picture is similar elsewhere.

But even this rapidly increasing tax relief seems to be too little for many corporations! The increased downward pressure on the profitability of capitalist enterprises will not only make it increasingly harder for the imperialists to maintain a section of workers that is loyal to them but is also likely to sharpen the contradictions between various sections of the bourgeoisie, both at home and abroad. Imperialism has reached a level of parasitism and decay where it is once again close to turning on itself and tearing itself apart.

The Daily Telegraph: A Living Example of the Correctness of Historical Materialism

Marx and Engels wrote in the German Ideology that: ” The ideas of the ruling class are in every epoch the ruling ideas, i.e. the class which is the ruling material force of society, is at the same time its ruling intellectual force. The class which has the means of material production at its disposal, has control at the same time over the means of mental production, so that thereby, generally speaking, the ideas of those who lack the means of mental production are subject to it.

What does this have to do with tax evasion? Not much, but one important part of the HSBC scandal has everything to do with this general law. More specifically, it illustrates quite well one important way in which this comes to be:

“Insofar, therefore, as they rule as a class and determine the extent and compass of an epoch, it is self-evident that they do this in its whole range, hence among other things rule also as thinkers, as producers of ideas, and regulate the production and distribution of the ideas of their age.”

The Daily Telegraph in its reporting (or lack thereof) of the HSBC affair illustrates one very specific low-level way in which the bourgeoisie has direct control over what is distributed. Its readers may have noticed that the story registered hardly more than a mere footnote in that paper, which will come as no surprise to those that know that HSBC is a major advertising partner of the Telegraph.

This was the last straw for the former chief political commentator of the Telegraph, Peter Osborne, who resigned from his post following the latest revelations and went on to write a scathing criticism of the paper’s conduct over the years. Among other things he noted how their online presence moved towards focusing on sensationalist headlines that would attract clicks and thereby advertising revenue. But crucially, he also revealed how the coverage of this latest scandal was not the first to be altogether affected and suppressed at the behest of major advertisers, especially HSBC.

Criticising not only his paper Osborne wrote: ” The past few years have seen the rise of shadowy executives who determine what truths can and what truths can’t be conveyed across the mainstream media. ” While this specific manifestation may be somewhat new, it is nothing but one crystallisation of that fundamental truth that Marx and Engels revealed over 150 years ago.

The dominant ideas today, at least in imperialist countries, remain capitalist through and through. While the ‘neoliberal consensus’ has become discredited by the ongoing crisis, the main alternative put forward is in essence nothing but old-school Keynesian demand management, regulation and social democracy.

But the clock cannot be turned back, and it is hardly any more realistic to dream of a return to the glory days of social demo-cracy in 2015 than to envisage a return to feudalism! In our world where the concentration of capital produces monopolies that more and more transcend national boundaries, dwarf most national economies and finance capital is moved around in vast quantities at the push of a button, any talk of trying to control this beast for the benefit of the majority of people is ludicrous.

Today imperialism even more starkly confronts us with the two alternatives articulated by Rosa Luxemburg over a century ago: socialism or barbarism!

Imperialism: Revolution or share in blood money?

Even if it were possible to regulate capital, enforce taxes and slightly boost every Briton’s wages and living standards, while everything else is just business as usual; is this a scenario communists should support? Let us hear what Stalin has to say on the matter:

“Some think that Leninism is opposed to reforms, opposed to compromises and agreements in general. This is absolutely wrong. Bolsheviks know as well as anybody else that in a certain sense ‘every little helps,’ that under certain conditions reforms in general, and compromises and agreements in particular, are necessary and useful.” (J.V. Stalin, Foundations of Leninism)

But he also stressed the need to evaluate each situation, each reform in its own context in order to determine whether it aids or hinders the move towards revolution. And not only is this doubtful in our case, but it would be tantamount to the actions of the Second International if we merely demanded a larger share of the blood money that British imperialism sucks into the City of London from every corner of the globe.

And equally importantly, tax havens and shady banking are not just an issue for developed countries, as much of the media coverage would have one believe. They are in fact also a major problem for the oppressed countries – where much of the wealth amassed at the centres of imperialism comes from in the first place – as they provide the comprador bourgeoisie with an easy way to stash their loot out of reach of the populations they sell out.

As the Economic Justice Advisor to Christian Aid wrote in a letter to the Financial Times: ” the files also demonstrate that their equivalents in developing countries also had billions stashed away from prying eyes. And this is increasingly a source of anger for the citizens of those countries.

“There was some $700m from Eritrea with HSBC in Switzerland, while the figure for Kenya is $560m. These figures may be smaller than the deposits from richer countries, but as a percentage of GDP they are directly comparable. Poor countries, with already weak infrastructure and public services, can least afford the potential tax losses that these numbers represent. What is more, they have far fewer resources and opportunities to chase and prosecute tax cheats.

Today more than ever it is of the utmost importance that Marxist-Leninists maintain a revolutionary and internationalist outlook and not get drawn into narrow-minded social-chauvinist and reformist ways of thinking if we are to be successful in our task of mobilising for revolution.

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