Margaret Hodge urged the head of the BBC Trust to resign on Monday, accusing her of being either “incredibly naive or totally incompetent” in her role at HSBC, the bank at the centre of a Swiss tax evasion scandal.
But Rona Fairhead vigorously defended her record during a heated two-hour hearing that saw MPs on the Public Accounts Committee make little progress in pinning the blame for alleged tax evasion at the Swiss bank on those in charge of the parent company.
Ms Hodge, chair of the committee, said HSBC was “rich in bureaucracy and very short in common sense” in the third parliamentary hearing since the publication of details about alleged tax evasion by wealthy clients of its Swiss private bank.
She said Ms Fairhead’s account of her actions at HSBC gave her no confidence in her ability to oversee the BBC. She told Ms Fairhead she should think about resigning from her position as chair of the corporation’s governing body or the government should think about sacking her if she did not go.
But MPs were not unanimous in their condemnation of Ms Fairhead and Stephen Hammond, a Conservative, said he wanted to disassociate himself from Ms Hodge’s assessment.
Ms Fairhead, who is a former chief executive of the Financial Times Group, said: “I absolutely refute what you have said,” in answer to Ms Hodge’s criticisms.
Ms Fairhead, who has been on HSBC’s board since 2004 and chaired its audit committee until 2010, said she had been “absolutely unyielding” in probing the executive team about the private bank.
“As a committee, we even challenged why we were in private banking at all,” she said, adding that the main areas it looked at were the security of client information in the Swiss private bank and regulatory concerns about the quality of its documentation.
But when asked why she had not detected the events that have come to light, she said the committee relied on outside experts. “If you can’t rely on experts, then what can you do?” she asked.
“First and foremost the people who are most culpable are those people who evade taxes,” said Ms Fairhead.
Stuart Gulliver, chief executive of HSBC since the start of 2011, told MPs he had carried out “root-and-branch reform” of the bank to transform a federal structure where “the country head [was] king” to a much more centralised system of governance.
Asked if he should resign over his personal financial affairs — including a Panamanian holding company he once used for his Swiss private bank account — he said: “I would like the chance to finish what I have started.”
Chris Meares, who ran HSBC’s private banking operation from 2006 until 2011, was asked repeatedly if he was responsible for the wrongdoing that happened on his watch. While he said he was responsible for “control failings” in that time, he said he was not in “day-to-day” charge of the Swiss arm of the private bank.
“None of this activity was picked up by our systems and flagged to me sitting in London,” he said.
Separately on Monday, Argentina’s tax authority called on HSBC to repatriate $3.5bn of funds held in undeclared Swiss bank accounts.
Ricardo Echegaray, head of Argentina’s tax authority, held a press briefing in London to set out allegations that HSBC’s Argentine operations facilitated capital flight and tax evasion.
He said: “We would like to know, firstly, if HSBC Holdings supported the behaviour of the authorities of the Argentine branch and, secondly, we expect the repatriation of funds by HSBC Holdings that to our knowledge amounts to $3.5bn.”
In a statement, the bank said: “HSBC has been co-operating fully with Argentine regulators, including AFIP [the tax authority] and the judiciary, since allegations were first made public last year, and we will continue to do so.”
Letter in response to this report:
Get alerts on HSBC Holdings PLC when a new story is published