World’s Most Wanted Bank Whistleblower Was Just Arrested, for the Worst Possible Reason

For a prisoner exchange between Switzerland and Spain? 

By Don Quijones, Spain, UK, & Mexico, editor at WOLF STREET.

Hervé Falciani, the French-Italian former HSBC employee who blew the whistle on HSBC and 130,000 global tax evaders in 2008, has been arrested in Madrid on Tuesday in response to an arrest warrant issued by Switzerland for breaking the country’s bank secrecy laws.

He lives in France, which rarely extradites its own citizens. But when Spanish authorities learned that he was in town to speak at a conference ominously titled, “When Telling the Truth is Heroic,” they made their move. If he is extradited to Switzerland he could face up to five years in prison.

Falciani worked as a computer technician for HSBC’s Swiss subsidiary. One day in 2008, he left the office with five computer disks containing what would eventually become one of the largest leaks of banking data in history.

According to Swiss authorities, Falciani stole and then attempted to sell a trove of confidential data. Falciani says he was a whistleblower who wanted to expose a “broken” banking system, “which encouraged tax evasion.”

When much of the stolen data was leaked to the press in 2015, it revealed, among other sordid things, that HSBC’s Swiss subsidiary routinely allowed clients to withdraw “bricks of cash,” often in foreign currencies of little use in Switzerland. It also colluded with clients to conceal undeclared “black” accounts from their domestic tax authorities and provided services to international criminals, corrupt businessmen, shady dictators and murky arms dealers.

As Falciani would soon find out, snitching on one of the world’s biggest banks and 130,000 of its richest clients does not make you a popular person in a country famed for its banking secrecy. In 2014 he was indicted in absentia by the Swiss federal government for violating the country’s bank secrecy laws and for industrial espionage. A year later he was sentenced by Switzerland’s federal court to five years in prison – the “longest sentence ever demanded by the confederation’s public ministry in a case of banking data theft.”

France, Spain, Austria, Belgium, and Argentina began investigations based on the data. But when France reached out to Switzerland for help in a tax evasion case, the Swiss supreme court rejected the request on the grounds that the data was stolen and therefore inadmissible.

Over the last nine years, Falciani has helped Spain’s Ministry of Finance identify Spanish tax evaders on the so-called Falciani List, which enabled the government to recoup some €500 million in unpaid taxes. The tax evaders included members of the Botín family, Spain’s most powerful banking dynasty which allegedly had at least €2 billion stashed in HSBC’s Swiss bank accounts.

In a 2013, hearing Spain’s National High Court rejected a request from the Swiss authorities for Falciani’s extradition arguing that the data Falciana has provided to authorities in France, Spain, Germany, Italy and the United States had uncovered “activities of dubious legality, even constituting criminal offences, which are in no way deserving of legitimate protection.”

Whatever reasons Spanish authorities might have this time around, they had one big one, or rather two: Two pro-independence mid-ranked politicians from Catalonia, Marta Rovira and Anna Gabriel, recently fled to Switzerland to seek refuge from political persecution in Spain. When Spain requested their extradition, Swiss authorities politely declined on grounds that extraditing people for political crimes was against national and international law.

By arresting Falciani, Spain hopes to offer up the biggest bank whistleblower in history in a two-for-one prisoner exchange. It’s a high-stakes gambit where, once again, the Spanish government risks drawing international attention — and opprobrium — for its willingness to do whatever it takes to crush the separatist movement in Catalonia.

Taking hostage a man who is regarded in many quarters as a hero is unlikely to curry favor in other European capitals or bolster the Spanish government’s already tarnished image in the international press. The Rajoy government’s timing could also have been better, coming just months after the European Parliament called for greater protection for whistleblowers like Falciani in its conclusions on the Panama Papers scandal:

EU rules are needed to better protect and support whistle-blowers and their role in revealing serious breaches of the public interest, such as corruption, miscarriages of justice, tax avoidance, lack of protection for food safety or the environment and attacks on social, human or workers’ rights.

In the United States, regulators even pay financial whistleblowers for the compromising information they leak. In March the SEC announced that it had awarded $83 million to three whistleblowers – the largest payout to date under provisions authorized under the 2010 Dodd-Frank legislation. According to the  lawyer for the whistleblowers, cited by the Financial Times, the information provided by these whistleblowers had helped the SEC achieve a $415 million settlement with Bank of America. By Don Quijones.

A relentless Spanish government, angry demonstrations, and profoundly worried businesses. Read…  Playing With Fire in Catalonia 
 

Would you like to be notified via email when WOLF STREET publishes a new article? Sign up here.

 

  34 comments for “World’s Most Wanted Bank Whistleblower Was Just Arrested, for the Worst Possible Reason

  1. nik
    Apr 4, 2018 at 7:55 pm

    As the Old adage goes…”No good deed goes Unpunished”…..Gosh Politics,Money and Power,who would have guessed….? lololol

  2. Javert Chip
    Apr 4, 2018 at 8:02 pm

    Slightly off topic…

    Booked an April 7, 2018 transatlantic Florida to Barcelona cruise last summer (I’ve been there before and loved it).

    Not looking forward to it so much now.

  3. worldblee
    Apr 4, 2018 at 8:23 pm

    There are many who deserve to face justice–yet it seems only whistleblowers are likely to do so.

    • Javert Chip
      Apr 4, 2018 at 8:53 pm

      This is laughably simple. If you’re a politician, who ya gonna throw in prison:

      a) A whistle-blower who either gave you a small, or no campaign contribution”, or

      b) A seriously big-time crook who gave you a HUUUGE “campaign contribution”?

      See how simple this is?

  4. gorbachov
    Apr 4, 2018 at 9:39 pm

    A man has the courage to do the right thing and is arrested.

    Shameful.

    • Eric
      Apr 5, 2018 at 6:02 am

      Sorry, but this guy just wanted to cash in. He turned himself into a whistle blower just to avoid procecution . As quite a few did , Birkenfeld jumps to mind.

      • Brad
        Apr 17, 2018 at 7:06 pm

        Unfortunately, Eric is spouting off and fails to know the facts. What do you expect from a guy that makes comments that are totally without merit. I suggest he educates himself and then responses accordingly. The facts are at: http://WWW.LUCIFERSBANKER.COM

    • Smith
      Apr 5, 2018 at 6:49 am

      The guy wanted to sell all the info, so he’s not saint.

      • Michael Fiorillo
        Apr 5, 2018 at 7:46 pm

        The government uses unsavory people as witnesses in criminal or civil cases all the time, in the name of the public good. It’s standard practice, and unavoidable, given human frailties.

        The release of the information was a good thing, and a public service, whatever Falciani’s motives.

  5. Auld Kodjer
    Apr 4, 2018 at 10:51 pm

    There was a Spaniard called Rahoy
    Whom Catalonia did annoy
    So he paid off the Supreme Court
    And the innocent he did extort
    Whoever knew Franco had a boy?

    [No need to publish Don or Wolf. The pleasure is cathartic]

  6. raxadian
    Apr 4, 2018 at 11:15 pm

    I guess is bettter to just make the data not segure, then is just hackers stealing it and you getting fired from being an idiot.

  7. R Davis
    Apr 5, 2018 at 12:47 am

    I thought him dead.
    Why have ‘they’ pulled him out of the closet again?

  8. R Davis
    Apr 5, 2018 at 1:12 am

    He knows he is vulnerable for arrest, with a prison term attached & he puts himself out there?
    Is this guy okay / right in the head?
    Or did he put himself out in the open to menace – for money – blackmail?
    Money – & the desire of it makes people take stupid risks.

    Herves Falcioni is said to have walked out of the HSBC, Geneva with 5 discs of downloaded – TOP SECRET INFORMATION – really?

    Then he attempted to sell that information.

    Then he – gave – some of that information to Christine Lagarde – who – is said to have given it to the Greek government – FOR FREE? – I believe you, only that Lagarde has history reg., attaching herself to other people’s money.

    How did Falciani – no – did Falciani actually download anything on those 5 discs?
    Or was that information given to him?
    So as to LOOT the accounts of depositors of the HSBC?
    OR
    Maybe the information is fake – maybe a competing bank gave Falciani the 5 discs – with supposed information on it – so as to cause depositors of the HSBC to abandon the HSBC?

    So – it is possible that Herves Falciani has been arrested – because there are some in high authority – who fear that he will expose the plot & their role in it?

    In a bank with depositors as delicately positioned as theirs – it is inconceivable that a mere computer technician – but especially a computer technician was able to download 5 discs of data from the HSBC Geneva.

    So – this episode is titled – The Plot Thickens.

    • Petunia
      Apr 5, 2018 at 11:44 am

      As a former techie at HSBC, I have little sympathy for this guy. He stole a list of depositor names who were as entitled to privacy, as any other bank depositors, in any other country.

      Yes, it is likely that anyone with a Swiss account is hiding money, but it is not absolutely a fact. There may be many on the list who just wanted to keep money in a safe haven. There is no certainty that everyone on the list is doing something criminal, and those people deserve to be protected.

      It is very likely that the tax evaders, found on the list, were profiled by ethnic names, a practice which is considered discriminatory in developed countries. They could have been targeted by residency, which in certain parts of the world, would expose them not just to tax officials but criminal elements.

      Overall, I don’t like this anymore than hacks of banks anywhere else in the world. If exposing innocent people caused them to be harmed, he should be prosecuted for those crimes as well.

    • Frank
      Apr 5, 2018 at 9:44 pm

      “In a bank with depositors as delicately positioned as theirs – it is inconceivable that a mere computer technician – but especially a computer technician was able to download 5 discs of data from the HSBC Geneva”.
      Yes it is conceivable – see Edward Snowden.
      Your whole convoluted hypothesis is nothing but a bunch of conjecture.

  9. R Davis
    Apr 5, 2018 at 1:15 am

    “i’m gonna tell.” is great incentive for all manner of creative solutions.

  10. caradoc
    Apr 5, 2018 at 1:46 am

    The whole EU is starting to look complicit (I know Switzerland is not in the EU) by them turning a blind eye.

    It is corrupt, have no doubt about that.
    There’s a dark fascist heart to it all.

  11. R Davis
    Apr 5, 2018 at 1:53 am

    Keep Talking Greece – Greek tax offices seize more than 1.27 million bank accounts in 2017.

    In particular, from a total of 4.058857 taxpayers with overdue tax liabilities in 2017.
    * 525758 owes up to 10 euros.
    * 337.729 taxpayers owe 10 – 50 euros.
    The largest part of debtors to the greek tax office is 1.336.423 people owing 50 – 500 euros.

    The Greek government does not muck around – the Lagarde list was most welcome.
    Though I don’t know how legal it is to utilize STOLEN INFORMATION (a proceed of a crime) to any end.

    • d
      Apr 5, 2018 at 5:42 pm

      “Though I don’t know how legal it is to utilize STOLEN INFORMATION (a proceed of a crime) to any end.”

      Depending on how it is used, you can end up with a watertight case, that is impossible to prosecute.

      “The Greek government does not muck around – the Lagarde list was most welcome”

      The greek government is a bent, as a 3 $ note, and even more corrupt.

      Just like the Xi clan in CCP china, only political enemies, and the small peopel, are perused for any crime. Particularly tax evasion.

  12. d
    Apr 5, 2018 at 3:16 am

    Mirror mirror on the wall, who is the evilest of them all.

    Beijing, Brussels, Madrid, Or tehran.

    As a Descendant of a Holocaust survivor. I always shuddered when israel collected the bargaining chips it needed to deal with its aggressive neighbors, who do thing like this on a daily basis.

    For Rajoy this is simply an act of state sponsored kidnapping for ransom.

    It puts him firmly in the same class, as the Kim’s and Ayatollahs of the world. Who are TERRORISTS.

    If Rajoy is willing to stoop to this, what else is he willing to do, to deflect attention from the crimes of the scandal ridden administration and party, that is his.

  13. Sara
    Apr 5, 2018 at 6:47 am

    Spain hasn’t requested Anna Gabriel’s extradition, her exile was self-imposed.
    She’s only sought in Spain for disobedience, and she’s not to be put in jail if she ever returns.

  14. Steve clayton
    Apr 5, 2018 at 1:41 pm

    Hi DQ, he’s just been released.

    • Don Quijones
      Apr 5, 2018 at 2:34 pm

      Yeah, I just saw that, Steve. Apparently he’s been instructed not to leave Madrid while his case is under review. More importantly, Swiss authorities appear to have stated they would not be interested in any hypothetical prisoner exchange with Spain. They’ve also denied that they demanded Falciani’s arrest by Spanish police on May 19, the date Spanish authorities claim they received the arrest order. There’s a very strong fishy smell to the whole affair.

      Even more important than that, German courts just released Puigdemont on bail and have refused to extradite him on the more serious charges of sedition and rebellion. And that was definitely not part of Madrid’s poorly devised and even more shabbily executed plan to crush Catalonia’s independence movement.

  15. Apr 5, 2018 at 2:31 pm

    Update, from Reuters:

    “Spain’s High Court released Swiss bank whistleblower Herve Falciani from custody on Thursday, though told him to remain in the country as he awaits a ruling on his extradition to Switzerland, El Pais reported without citing sources.

    “Swiss Justice Ministry said on Thursday it had made a formal extradition request for Falciani.”

    https://www.reuters.com/article/hsbc-tax-spain-arrest/spains-high-court-releases-bank-whistleblower-falciani-from-custody-el-pais-idUSE8N1QJ010

  16. sierra7
    Apr 5, 2018 at 3:06 pm

    “Herve Falciani’s path to government informant was a tortured one.” “….he worked as a croupier at the Casino de Monte Carlo while studying computer engineering. HSBC hired him in 2000. (He was hired to redo the banks compliance system) (He was also recruited to reorganize HSBC’s client database and reinforce its security) Instead working on weekends over a five month period, he downloaded the data for himself. HSBC failed to notice.”
    From: “Secrecy World” Jake Bernstein. Henry Holt and Company New York 2017.
    Although the writer tends to the sensationalist it is a fairly good sourced book and does also explain how many countries actively seek this kind of information on their own citizens often paying some goodly sums.
    There is no doubt that many, many monied individuals across the world try to “hide” their wealth. In too many cases it is perfectly legal but, ultimately in the whole scheme of things, shady and downright outrageous because it is to avoid paying their fair (who’s fair anymore?) share of taxes.
    In my opinion it will continue to be so. Whistleblowers are always needed; we shouldn’t try to assassinate the messengers.

    • d
      Apr 5, 2018 at 5:59 pm

      Whistleblowers are always needed; we shouldn’t try to assassinate the messengers.

      GET IT SATRAIGHT

      Falciani

      Is not a whistle blower.

      HE IS A THEIF.

      Who turned Informant, when he had problems selling his stolen goods, and the authorities started to pay serious attention to him.
      \
      You are saying Sammy Gravano https://en.wikipedia.org/wiki/Sammy_Gravano a multiple contract murder is a good guy, as he gave evidence against his boss.

      We have problems with the police/Stae paying people to commit crimes, and supply them information obtained in those crimes.

      Then building prosecutions based on evidence they obtained in the crime they orchestrated.

      You also say this process is good.

      What you are advocating very quickly leads to http://www.baltimoresun.com/news/maryland/crime/bs-md-ci-gttf-trial-opener-20180112-story.html And worse.

      The gray needs to be removed, not have more added

  17. c1ue
    Apr 5, 2018 at 3:10 pm

    Interesting that no mention was made in the article about how much he was paid for his “whistleblowing” by the tax authorities.

    • Don Quijones
      Apr 5, 2018 at 3:18 pm

      I don’t know about other jurisdictions but in Spain he apparently wasn’t paid a penny for his whistleblowing. Here’s an article (in Spanish) on the matter:

      http://cadenaser.com/ser/2018/04/05/tribunales/1522954963_506425.html

      • c1ue
        Apr 6, 2018 at 6:31 am

        The article you refer to specifically notes he was paid in other countries:

        “A diferencia de otros países como Alemania, donde el Estado ha pagado a filtradores para que les faciliten listados de evasores fiscales, en el caso de Falciani nunca había pedido dinero ni ningún tipo de remuneración para llevar a cabo su colaboración con las autoridades españolas. “No ha pedido nada a cambio y se muestra siempre dispuesto a una colaboración activa con la Fiscalía, Policía y Hacienda” precisan.”

        A cynical (or realistic) person might think that this pro bono work for the poorer nations in the EU is an attempt to deflect the prosecutions coming out of Switzerland, particularly since he was most definitely paid (and a lot) by Germany as well as the United States, among many.

        • Steve clayton
          Apr 6, 2018 at 10:39 am

          If for example the UK tax authorities made 100 million pounds out of his information I would be more than happy to him 1%. Bring on more whistleblowers.

  18. Gary
    Apr 5, 2018 at 10:15 pm

    Well, he should look at the bright side.

    Only five years. If he was American, he’d be looking at 50 to 500 years! (maybe even in isolation)

  19. Apr 6, 2018 at 11:28 am

    > revealed, among other sordid things, that HSBC’s Swiss subsidiary routinely allowed clients to withdraw “bricks of cash,”

    Oh my god, a bank that lets its customers withdraw their own money?

    The horrors!

    Seriously, how can anybody read a sentence like this without vomiting?

  20. Steven B Smith
    Apr 9, 2018 at 11:24 am

    I wonder how many bitcoin purchases come from Switzerland?

  21. Brad
    Apr 17, 2018 at 10:03 pm

    Yes, I am the author of Lucifer’s Banker

Comments are closed.