On August 28, Bloomberg reported that on January 4, 2019, French investigative judges in Paris dismissed tax evasion and money-laundering-related charges against Judah Elmaleh, a former executive in HSBC Holdings’ Private Bank (Suisse). A spokesman for the French financial prosecutor, the Parquet National Financier (PNF), stated that “after looking at all the evidence, the charges against Elmaleh were dropped.”
Since 2008, when they received documents stolen from the Swiss private bank by a former employee, French prosecutors had conducted an intensive investigation of the bank’s involvement in facilitating tax evasion. Thereafter, a variety of public reports linked Elmaleh to money laundering issues. In 2012, Elmaleh, who had been on the private bank’s supervisory executive committee, reportedly left the bank “by mutual agreement,” “after his brothers were arrested in a high-profile international money laundering and drug-smuggling ring.” In 2015, the Geneva Public Prosecutor’s Office referenced Elmaleh while announcing its imposition of a £28 million fine against HSBC for anti-money laundering “organisational deficiencies” in the HSBC Swiss private bank.
Eventually, in 2016, the PNF recommended that HSBC, as well as the private bank’s former Chief Executive Officer, Peter Braunwalder, and Elmaleh stand trial for enabling French clients to hide more than €1.6 billion from French tax authorities. At the time of his charging, Elmaleh was alleged to have “approached French residents to encourage them to move funds to Switzerland and helped clients evade taxes.”
Subsequently, the PNF negotiated a €300 million penalty with HSBC and a guilty plea from Braunwalder “to illegally approaching French residents to encourage them to shift funds to Switzerland” in 2006 and 2007,” which resulted in hiding of assets worth at least $1.8 billion. In Elmaleh’s case, however, the investigating judges reportedly concluded that there was no clear evidence of his involvement in 2006 and 2007, and noted “that Elmaleh’s testimony was useful in building the larger case” against HSBC.
Note: The dismissal of the charges against Elmaleh appears to be the final chapter of the PNF’s long-running HSBC investigation. One curious footnote in that chapter is the failure to explain why the Elmaleh dismissal, as well as Braunwalder’s guilty plea and suspended sentence, occurred in January 2019 but were not publicly reported for the next seven months. To improve transparency and public confidence in its handling of corporate criminal investigations, the PNF should work to make more timely public disclosures of individual defendants’ resolutions.