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Alleged HSBC Data Thief in Extradition Hearing in Spain

Anthony Bradshaw

A former HSBC employee wanted in Switzerland on allegations of stealing data on tens of thousands of bank accounts came before a Spanish court on Monday for extradition proceedings, arguing he was a whistleblower fighting corruption.

The data caused a furore in 2010 when it ended up in the hands of tax authorities in France, Italy, Spain and other European countries, which have used it to seek to recover billions of euros in lost taxes.

Switzerland's $2 trillion offshore banking sector, built on strict secrecy laws, has come under pressure as governments around the world try to clamp down on tax avoidance in the aftermath of the 2008 financial crisis.

On Friday the European Union's six biggest countries agreed to cooperate in the fight against tax havens, piling pressure on Austria to follow Luxembourg in ending bank secrecy. Tax evasion deprives EU governments of roughly 1 trillion euros ($1.3 trillion) annually.

Switzerland has asked for Herve Falciani, who has Italian and French citizenship, to be extradited to face charges there including unauthorized obtaining of data, breach of trade secrecy, industrial espionage and violation of banking secrecy.

Three High Court judges heard testimony from Falciani as well as from a French prosecutor, Spanish tax authorities and a government lawyer. The judges could take days or weeks to deliberate before ruling on the extradition.

The lawyer for the Spanish state argued against extraditing Falciani.

"We can't punish people who, when they observe criminal conduct where they work, denounce it to the authorities," Dolores Delgado, state lawyer, told the court.

Whistleblower Claim

Falciani told the judges he had leaked the information to fight against a non-transparent system at the bank that made it easy for crime to be committed.

"I want to reiterate my disposition to fully cooperate with all my experience, not only with the European judicial authorities but especially with the first people who should be interested - the Swiss authorities and the Luxembourg authorities who are even more opaque," he said, speaking in French through a Spanish interpreter.

A representative of Switzerland attended the hearing as an observer. As is normal in such proceedings, Swiss authorities did not present arguments supporting the extradition.

A spokesman for HSBC <HSBA.L> declined to comment on the case. In the past, HSBC has said that despite Falciani's claims that he was a whistleblower, the company had no record that he had reported or suggested anything to his supervisor.

Falciani told the judges in a courtroom in San Fernando de Henares, outside Madrid, he had received no remuneration for providing the data to France and other governments.

Falciani, who worked in HSBC's information technology department, collected the data on account-holders from 2006 to 2008, when HSBC discovered the data leak. In 2009 Falciani fled to France while he was under investigation by the bank.

Falciani told the judges on Monday that he had fully collaborated with French authorities so that they could use the encrypted data to pursue tax evaders.

HSBC has said that information on 24,000 client accounts was involved, including some 15,000 accounts that were still open at the time of the discovery, while the rest were closed.

French officials have said, however, that some 130,000 clients were named.

Former Spanish tax authorities told the judges that they had used Falciani's data, which they received from France, to pursue hundreds of tax evaders and collect 250,000 euros ($327,100) in past-due levies.

Falciani travelled to Spain in July 2012 and was arrested in Barcelona on an international warrant seeking his extradition to Switzerland.

He was held in custody until December, when he was given conditional release pending the extradition proceedings.


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