HSBC - where does responsibility lie?

Today we may get a little closer to understanding where responsibility lies for HSBC's ownership of a Swiss private banking business that helped customers evade taxes between 2005 and 2007.

At 3.15pm, the chief executive of the bank, Stuart Gulliver, will appear before members of the Public Accounts Committee in Parliament which is investigating tax avoidance and evasion.

Alongside him will be Chris Meares, the former chief executive of HSBC Global Private Bank and Rona Fairhead, a member of HSBC's board since 2004 and a member of the bank's audit committee until 2010 and its risk committee following that.

Ms Fairhead is now also chairman of the BBC Trust, the governing body of the organisation for which I work.

Overhaul

Their evidence comes after last month's appearance before the Treasury Select Committee of Mr Gulliver and Douglas Flint, the present chairman of HSBC who has been a member of the bank's board since 1999.

Both apologised for HSBC's wrongdoing.

Mr Flint said he was not individually responsible for the Swiss bank as decisions were taken by the whole of the board.

Further, HSBC's federated structure - since overhauled - meant it was not possible for board members to be aware of the internal details of how the separate businesses in the bank were operating.

'Buck stops'

John Longworth, the director general of the British Chambers of Commerce (which represents thousands of businesses across the UK), is clear about how all organisations should approach the knotty question of responsibility.

In an interview with me, he says that he is not speaking about any specific business, but is making a more general point about how businesses embroiled in a scandal can regain the trust of the public - that the leaders of the organisation "get it".

"At the top of business, that's where the buck stops," he said.

"Non-executive directors [board members] have to hold CEOs and senior management to account.

"The non-executives are the representatives of shareholders, which of course for big corporates are you and I, our pension funds and investments.

"They need to have mechanisms to seek out wrong doing and bring it to book.

"It is not good enough to have wilful ignorance. We need to have all due diligence and all reasonable precautions applied in these businesses."

Short shrift

I make the point to him - made by leaders of many companies - that boards that oversee large global organisations cannot be expected to know how every individual in the business is behaving.

Mr Longworth gives that argument short shrift.

"There are lots of complex businesses that are international and have sub-divisions," he said.

"I think no organisation is too big to manage provided they have the mechanisms in place to manage.

"If they don't then you have to ask the question, are they capable of operating properly?

"We pay boards a lot of money to run the companies we invest in. So it is very important that they take their accountability seriously.

"They don't have to be everywhere all the time themselves. It is very important that boards step up to the plate and take their responsibilities seriously.

"It is always said that a fish rots from its head and rotten businesses are not what we need."

Secrecy

Speaking to those close to the HSBC, they are robust in their defence of the board.

During the 2000s, those sources argue, board members had little visibility of how the Swiss bank operated and couldn't have been expected to.

They say there were strict rules in place protecting confidentiality of Swiss accounts.

Which rather raises the question - if the business the bank bought and then operated was so shrouded in secrecy what was HSBC doing owning it in the first place?

I am told that is a line of questioning the Public Accounts Committee will follow.

Lord Green

There is one other big question still bothering some MPs.

Two key players in the HSBC issue are yet to give public evidence on the matter.

One is Peter Braunwalder, the chief executive of HSBC's Swiss private bank between 2002 and 2008 - the years when the controversial behaviour by HSBC staff is alleged to have taken place.

The second is Lord Green, the former trade minister who was chairman and chief executive of HSBC.

He joined the board of the bank in 1998 and at that stage was given responsibility for private banking.

Until we have heard from them, many MPs believe, we may not understand where the buck for HSBC's problems actually stops.