Falciani’s Tax Bomb: The Man Behind The Swiss Leaks

Ben Lewis

Germany/Spain 2015, 1h 30min.

«Am I a thief? Yes, I did break the law – but it was a law that hurt everyone. (…) If you work for the system, you understand the system. And that is what became unbearable.» (Hervé Falciani)

Ten years ago, Julian Assange founded the online site Wikileaks, an open digital library of sensitive information related to military operations and other controversial revelations. Whilst the term whistle blower is far from new, the phenomenon has been subject to extensive media attention over the past decade, which has added to the impact of a whistle blower’s agenda.

Whistle blowers such as Assange, Chelsey Manning and Edward Snowden are hailed as heroes and celebrities, but they pay the price in terms of lengthy exiles and loss of past livelihoods.

The role of a whistle blower constitutes a refreshing change from more traditional heroic personas, and are increasingly often portrayed in fictional films and documentaries. Examples include Bill Condon’s thriller The Fifth Estate (2013) about Julian Assange, Laura Poitras’ documentary Citizenfour (2014) on Edward Snowden, and Oliver Stones’ current release Snowden (2016).

Catchy and impersonal. The story about IT-engineer Hervé Falciani illustrates how an invisible civil servant helped pulverise an institution which has been central to the world’s financial elite, with roots dating back to the French Revolution; Das Bankgeheimnis, or banking secrecy.

Director Ben Lewis is better known for the documentaries Hammer & Tickle (2006), Google and the World Brain (2013), and Poor Us: An American History of Poverty (2012). In Falciani’s Tax Bomb, Lewis untangles Falcani’s whistle blowing adventure in a harsh, catchy and detailed documentary featuring well-informed interviewees. The graphic and musical elements conjure up financial thrillers such as James Bond and Jason Bourne. The film is not a deeply personal portrait of the main character, and the director offers nothing more than a superficial attempt at understanding Falciani’s motivation and relationship with his employer HSBC.

Whitewash. According to Assistant Professor Gabriel Zucman, London School of Economics, Switzerland is the world’s foremost centre for cross-border wealth management: some eight percent of the world’s wealth is kept in tax havens, with around a third of this managed by Swiss banks. Former Swiss Finance Minister Hans-Rudolf Merz explains that banking secrecy has always been Switzerland’s premier competitive advantage as part of its role as the hub of the financial world. Merz’s defends banking secrecy with the argument that it protects the private sphere, an important principle dating back to the era of enlightenment.

Hervé Falciani grew up in Monaco and worked as an accountant at a casino whilst studying to be an IT engineer. In 2001, he was hired by the world’s second largest bank, HSBC Private Bank, in Zürich. Through his work on databases, he realised that the strict code of secrecy in Swiss banks allowed for international tax evasion and money laundering.

When Falciani downloaded a complete register of HSBC’s clients and transactions in 2008, he was left with data in excess of 100GB on dazzling international fortunes belonging to 15,000 financial elites around the world. These included diamond traders, politicians, nobility and royals, entertainers, sporting celebrities, lawyers, business magnates and bankers. All their funds in secret accounts were stored away from their native tax authorities.

New transparency. Falciani is an attractive, elegant man who seems comfortable in front of the camera, and who deems himself an idealist. However, the first thing he did after he stole a copy of his employer’s client database, was to set up an anonymous company with HSBC colleague and mistress Georgina Mikhael. Together, they attempted to sell client data to Audi Bank in Lebanon for 1,000 dollars a client. The couple did not succeed, but their enquiry prompted Lebanon to alert HSBC. Shortly afterwards, Switzerland issued an international arrest warrant for Falciani.

After unsuccessfully courting the German intelligence service, Falciani entrusted the data set to the then French Finance Minister, Christine Lagarde. At that point in time, Falciani was exiled in France with his family.

Although France shared Falciani’s client list with a number of European countries, and Falciani himself spoke out in the press, several years passed before anything substantial occurred. Great Britain, Germany, Greece and France managed to recoup a small share of the evaded tax, whilst Spain proved somewhat more successful with 90 indictments and a recovery of 264 million Euros worth of taxes and penalties. One problem was that stolen data could not be used as proof in court, but more aggravating was the authorities’ indecision and internal disagreements on how to handle the information.

Falciani is an attractive, elegant man who seems comfortable in front of the camera, and who deems himself an idealist.

Only when the USA became involved did Falciani’s data theft have dramatic consequences. In 2010, US tax authorities, which suffered from tax evasions worth 100 billion dollars annually, pushed through a bill (FATCA, Foreign Account Tax Compliance Act) requiring every bank in the world to declare US clients’ account numbers and deposits to the US tax authorities. As a result, the banking secrecy collapsed instantly, and large Swiss banks such as HSBC, UBS and Credit Suisse were forced to pay astronomical fees to the USA. In 2014, a similar global standard for transparency and exchange of bank account information was created by the OECD, namely the Standard for Automatic Exchange of Financial Account Information in Tax Matters. Thus far, some 51 countries have ratified this standard.

Money is like water. The international arrest order was triggered when Falciani travelled by boat from France to Spain in 2012, leading to a five-month incarceration. Later on, he lived for several years in Spain under armed protection while collaborating with Spanish authorities on tax investigation. Here, he tried (unsuccessfully) to get elected into the European Parliament as a representative for the anti-tax fraud party Partido X.

In 2015, he was sentenced in absentia to five years’ imprisonment in Switzerland for aggravated financial espionage, data theft and breaking the banking secrecy code. He is currently living in Paris.

Falciani’s story is all about two central, albeit conflicting values of the information society: the right to privacy, and the duty to contribute to the maintenance of a democratic society. Former Minister President of North Rhine-Westphalia, Peer Steinbrück, points out that HSBC’s clients belong to society’s «upper echelons», but they are sawing off the branch they’re sitting on by evading tax, and thus destabilising the very system they depend on. Former Swiss Finance Minister Merz concludes that «money is like water – it seeps into every crack». Tax fraud will continue as long as it remains lucrative and possible. Authorities and law-abiding proletarians will remain dependent on the knights of transparency, such as Falciani, to be kept informed about thefts committed by the elite few.



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