HSBC Calls Banker's $2.4 Million Bonus Suit a Waste of TimeBy and
Rajesh Parmar accuses bank of ‘capricious conduct’ over bonus
Bank says he can’t have bonus as he helped clients evade tax
A former HSBC Holdings Plc banker filed a lawsuit after being told he couldn’t have his bonus because he helped clients cheat on their taxes. The bank responded by counter-suing him for wasting its time.
Rajesh Parmar is suing HSBC Private Bank U.K. for more than 1.8 million pounds ($2.4 million) in unpaid bonuses and damages, accusing it of “arbitrary, perverse and capricious conduct” when it told him in 2016 that it would not pay his bonus, according to his lawsuit, which was filed in September and released this week. Parmar was laid off in 2012.
The bank says Parmar, who headed an HSBC Private Bank business unit for south Asia, helped Sanjay Sethi -- a former client -- evade taxes. In 2013, Sethi pleaded guilty to hiding as much as $4.7 million from the U.S. Internal Revenue Service.
HSBC has been caught up in tax-evasion probes around the world and earlier this week agreed to pay 300 million euros ($352 million) to settle a French criminal investigation related to allegations the bank helped clients hide assets in its Swiss private bank. The London-based bank sought to repair its image after being embroiled in a 2015 scandal over allegations the Swiss unit helped drug cartels and arms dealers launder money, while advising customers on how to evade tax.
A spokesman for HSBC declined to comment. Parmar’s lawyer didn’t immediately respond to calls and an email requesting comment.
HSBC says in court filings that Parmar “was aware of Mr. Sethi’s interest in establishing a sham trust to conceal his ownership of certain funds so as to evade tax in the U.S.” and assisted him with this. He also helped other U.S. clients open undeclared accounts in Switzerland to dodge U.S. taxes, the bank says.
The bank is counter-suing him, saying he “wasted management time.”
Parmar says in his filings that the bank didn’t take any action against him as a result of its tax probe and neither has anyone else.
“No regulatory authority has brought any charges against the claimant regarding the subject matter of the investigation, and no criminal prosecution has been brought,” Parmar’s lawyers said. “No court or tribunal has made a finding of fact that the claimant was involved in any wrongdoing.”
Parmar accuses the bank of having a “closed mind” when it decided not to give him a bonus, according to his court filing.
The banker says he “cooperated fully with the investigation at all times, attending approximately 10 hours of interviews with representatives” of HSBC and was labeled a “good leaver” in a settlement agreement when he left the bank in 2012. He says the bank had previously told him he’d get the bonus.
In 2013, Sethi admitted conspiring with U.S. Banker A, a senior vice president in New York of a cross-border banking group within the private banking division; U.K. Banker A, a “high-ranking executive” in London and head of a cross-border banking group focusing on clients with ties to south Asia; and Swiss Banker A, a financial adviser based in Geneva.
The London case is Rajesh Parmar v HSBC Private Bank (U.K.) Ltd., High Court of Justice Queen’s Bench Division, Case No. HQ17X03269
— With assistance by Gavin Finch