Leaked files from Swiss HSBC accounts reveal that funds kept hidden by Egyptian citizens and legal entities in Swiss HSBC accounts amount to $3.5 billion dollars, reported the International Consortium of Investigative Journalists (ICIJ) on Monday.
The ICIJ based its reports off of files leaked by former HSBC employee and whistleblower Hervé Falciani. He leaked the data to the French government in 2008, and its tax authority launched an investigation.
The French Newspaper Le Monde then obtained some of the tax authority’s data, which included information on more than 100,000 clients with accounts at the Swiss branch of HSBC. The files mostly cover the time period between 1998 and 2007, and include information on clients from over 200 countries.
Egypt was ranked number 20 in the list of countries with the largest dollar amounts in the leaked Swiss files. The highest three countries were Switzerland, the United Kingdom and Venezuela, with the latter holding $14.8 billion in Swiss HSBC accounts.
Switzerland is known as a tax haven where finances can be hidden from client’s national tax officials. However, recent information-sharing deals with the United States, United Kingdom and France are reportedly making it less desirable to tax-evaders.
One of the key Egyptian account holders that the ICIJ highlighted in its report was Mubarak-era Industry and Trade Minister Rachid Mohamed Rachid, who joined the bank in 2003. According to the ICIJ, Rachid kept as much as $31 million in his accounts in 2006 and 2007. He was the beneficial owner of a client account under the name “Lexington Investments Limited,” under which his 10 bank accounts were listed.
Rachid and his daughter Alia were implicated in an “illicit gains” case following the January 25 revolution and accused of taking part in financial crimes. Rachid was accused of using his position and influence to generate illicit gains amounting to LE522 million. His daughter assisted him in transferring the funds to secret accounts in Cyprus.
He also used confidential insider information of initial public offerings (IPOs), as well as information about bank loans and financial interest rates, to generate personal profits from the EFG-Hermes Holding Company and increase his personal wealth. He was sentenced to 15 years in prison in two separate cases and sentenced in absentia. He and his daughter are rumored to be residing in Dubai, although the Egyptian government has requested their extradition.
According to a report from the non-profit research organization Global Financial Integrity, Egypt lost US$37.69 billion due to illicit financial outflows between 2003 and 2012. Of the financial flows tracked by the report, the vast majority — 77.8 percent in the 10-year period covered in the report — were due to trade misinvoicing, in which businesses deliberately misstate the value of imports and exports in order to avoid taxation or siphon off unreported profits to offshore accounts.