HSBC India unit hit by fresh tax evasion allegations

HSBC's Indian banking unit is at the heart of fresh revelations around tax evasion days after a global expos showed tax dodging through accounts in the British major's Swiss banking unit, according to The Sunday Times. It is alleged that representatives of HSBC India, which has employees based in the United States, assured customers that details of their accounts would not be reported to tax officials.

The latest revelations came even as the bank issued full-page advertisements in British newspapers as a public apology after reports that its Swiss banking arm had helped some wealthy clients avoid tax.

According to court documents seen by The Sunday Times, employees in one case allegedly advised a New Jersey Indianorigin businessman to transfer funds in tranches of under 6,500 to stay below the radar. Court documents reveal that HSBC India has been accused of helping American citizens of Indian-origin to avoid tax, the report added.

The US justice department issued a summons against the bank in April 2011 to reveal details of clients. It was claimed that the bank promoted its services on the basis of keeping information secret from the tax authorities. Prospective clients were told that, as a foreign bank, HSBC India would not disclose the accounts to the IRS (Inland Revenue Service), the government said in court filings.

The IRS has learnt that thousands of US taxpayers with accounts at HSBC India may have failed to disclose those accounts, and report income on them, as required by law, it said.

The bank was said to have had 9,000 American residents of Indian-origin but fewer than 1,400 had disclosed the existence of their accounts.

HSBC India representatives are alleged to have advised New Jersey businessman Vaibhav Dahake to transfer money in batches of 6,500 to stay below the radar.

The bank officials are alleged to have advised and assisted in tax evasion. Dahake admitted concealing undeclared bank accounts in 2011, but said that bank representatives had solicited him to open accounts that paid high interest rates and would not be declared to tax officials.

CONSPIRACY

>> Unnamed HSBC India banking officials were alleged co-conspirators in the case of one Arvind Ahuja, a neurosurgeon from Wisconsin

>> Ahuja allegedly hid 5.5 million in secret offshore HSBC accounts and filed false tax returns

>> Ahuja and HSBC officials 'used' undeclared accounts in Jersey, India and other countries for the purpose of concealing income from the IRS

>> Ahuja was fined 222,000 and ordered to serve three years probation