LONDON — Already forced to apologize for helping clients hide their income from tax authorities, HSBC had to explain on Monday why its chief executive went to lengths for years to hide his bonus, at least from his co-workers.
“This has an everyday explanation to it,” Stuart Gulliver, the 55-year-old chief executive of HSBC, said in a conference call to discuss a decline in the bank’s profit.
The Guardian newspaper reported late Sunday that Mr. Gulliver held at least 5 million pounds, or $7.7 million, in a Swiss account through a Panamanian company until 2003.
Mr. Gulliver said on Monday that the account was legal and that he had paid all the required taxes, but the disclosure created an additional headache for HSBC that it would most certainly have preferred to avoid.
Mr. Gulliver explained that in the 1990s, when he lived in Hong Kong and worked as a banker at HSBC, employees received lump-sum bonuses whose amounts could be viewed by other employees through a computer system. In an effort to protect his privacy — he was the bank’s top earner — he put the money in Switzerland to hide it from the prying eyes of his Hong Kong colleagues. But he then had to hide it from his curious Swiss colleagues, so he created an anonymous Panamanian company.
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Mr. Gulliver said he remained a Hong Kong resident, paid taxes both in Britain and Hong Kong and intended to return there after he retired.
“Since being posted to the U.K. from Hong Kong in 2003, Mr. Gulliver has paid full U.K. tax on the entirety of his worldwide earnings,” his spokesman said.
Not everyone thinks Mr. Gulliver’s explanation — that the structures were necessary to keep his pay private — qualify as routine.
“It’s high-grade tosh,” said John Christensen, director of the Tax Justice Network, a research group in London. “What kind of protection does he need from the Swiss bank?”
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