It’s hardly a secret that the banking sector encourages nefarious behavior, but generally after it’s recognized that you’ve helped somebody evade taxes to the tune of over $4 million, we can probably agree its time to stop pushing your luck. A first priority might be trying to remedy the wrongdoing or pursue restitution for unlawful behavior. It definitely should not be suing the employer that fired you for your unpaid bonus.
That, however, is exactly what Rajesh Parmar, who headed up a HSBC Private Bank business unit in South Asia did. After it was revealed in the midst of a regulatory investigation that he helped his clients evade millions of dollars in taxes, he turned around and sued HSBC for $2.4 million in unpaid bonuses and damages. But justice was swiftly served Monday, when Parmar not only lost his lawsuit against HSBC, but was also required to pay 150,000 pounds in court costs related to the case.
On Monday, the Judge presiding over his case, Nicholas Cooke, stated that Parmar had “no realistic prospect of succeeding with his claims,” and promptly awarded a summary-style judgement in favor of HSBC.
Parmar’s client, Sanjay Sethi, pled guilty in 2013 to hiding as much as $4.7 million from the Internal Revenue Service, and it was uncovered during the investigation and through court filings that he had conspired with somebody called “U.K. Banker A” who was then only identified as the head of a cross border banking group tied to South Asia.
This turned out to be Parmar.
As for HSBC, the bank is still being subject to ongoing criminal and regulatory investigations. The DOJ and the IRS are reportedly still looking into the company‘s business unit and how they had advised their clients on their tax reporting obligations.
After being fired, Parmar didn’t show remorse. He instead turned around and accused the bank of “arbitrary, perverse and capricious” conduct after he found out he wasn’t going to be paid his bonus, according to his lawsuit. Although generally, we’re guessing it is “termination with cause” when the bank itself comes out and admits that its banker had “actively assisted one or more US clients with tax evasion”.
HSBC stated in court filings that Parmar was aware of his client’s interest to establish a sham trust in order to conceal ownership of funds as part of the scheme to avoid taxes. He also reportedly helped other clients of his open accounts in Switzerland to try and dodge taxes.
Considering how rarely appropriate punishment is doled out when it comes to financial crimes, it was almost surprising that this “layup” of a case reached a just outcome. However, after observing a generation of US bankers receive bonuses for engineering the housing crisis and putting the global economy on the brink of disaster in 2008, it’s hard to blame Parmar for thinking to himself that “anything is possible” before filing his embarrassing lawsuit.
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