GEORGE OSBORNE’S studied silence over the HSBC tax avoidance scandal speaks volumes. If the issue were anything else but tax evasion and avoidance, he would be seeking to find an angle to turn it against Labour for all he’s worth. But on tax avoidance he’s skewered.

It was on his watch that no action was taken when news first leaked out in 2010 about massive tax evasion by the British super-rich at the British HSBC bank in Geneva.

Indeed it was deliberately kept secret in government circles for five years, and only surfaced when a whistleblower blew it.

On his watch the same HSBC bank, the “highly suspect British company,” as the US authorities nicknamed it for its polluted culture, was heavily fined in 2012 in the US for money-laundering for drug cartels and pariah states, but no action was taken in Britain.

This is not an isolated case. It fits a pattern of studied inaction.

In the last five years HMRC tax inspection staff have been cut back by nearly 40 per cent, even though the evidence indicates that for every £1 spent in 2013-4 by the unit dealing with the UK’s largest and most complex cases, an additional £97 was recovered.

The Serious Fraud Office has seen its budget cut to a mere £35 million, which can only be explained as a deliberate, and successful, effort to make it incapable of taking on banks and their big legal and accountancy accomplices.

Even now, despite HMRC trumpeting in 2011 that all 6,000 British-held accounts in the HSBC files were “ripe for investigation,” it has collected just £135m in tax, interest and penalties — less than 1 per cent of the estimated total in the accounts, and far less than France, Belgium and Spain have collected from a smaller number of their citizens’ accounts.

With the Tories it’s all mouth and wind. Osborne boasted in 2012 that he had negotiated a deal with the Swiss which would unlock huge receipts for Britain from tax evaders, but in the event it has produced only a fraction of what he promised, and only with the crass loophole that the identity of the lawbreakers would be kept secret.

Then in April 2013 the government introduced rules to ban companies and individuals who took part in failed tax avoidance schemes from being awarded government contracts, but in practice no such business has been barred.

It is perfectly clear that the Tories aren’t seriously opposed to tax avoidance at all — in fact they’re all for it, provided they’re not found out.

Nearly all their top donors are at it, and in this election it may turn out to be their Achilles heel.

The differential treatment between those low-paid workers who fraudulently claim benefits and those top bank executives who launder hundreds of millions of pounds tells you all you need to know about the class basis of justice in Britain.

A person claiming benefits while working can get up to a year in prison, yet the bank director responsible for HSBC Mexico, which handled a colossal $376 billion of suspect money for the US bank Wachovia, gets off scot-free and is even, in flagrant disregard for the law, promoted to become head of HSBC global retail on a multimillion-dollar salary.

There could not be a more blatant example of one law for the poor and quite another one for the rich.

What has been happening behind the scenes at HSBC?

The misstatements and blatant evasions over the HSBC Swiss bank are beginning to build up.

We were initially told that no minister had any knowledge of wrongdoing at HSBC Suisse until last week.

This has now been contradicted by several different sources.

The previous HMRC chief Dave Hartnett told the Treasury select committee in September 2011 that “I think the whole nation probably knows that our department has a disc from the Swiss, from the Geneva branch of a major British bank, with 6,000 names, all ripe for investigation.”

So the statement that ministers knew nothing about this enormous scandal, put out by Downing Street aides unquestionably with ministerial approval, was untrue.

It is inconceivable that David Cameron didn’t know about the rampant tax evasion going on at the HSBC bank when he appointed Lord Green, the head of HSBC at the time, as his trade minister in January 2011, nine months after HMRC had received the HSBC files.

Cameron was asked point-blank four times in the Commons what discussions he had had with Green at the time about tax avoidance at HSBC, and he ostentatiously refused to answer each time by talking about something else.

No minister should be allowed to blank out the truth about a matter of acute public concern.

Then there’s the scandal that the British government made clear on several occasions that it never wanted to touch this incriminating data in the first place.

In early 2010 the French tax authorities started telling other tax authorities around the world, including Britain, about the existence of these HSBC files.

In February that year Hartnett, head of tax at HMRC, met representatives from HSBC, but refused to admit what was discussed — obviously the existence of these files and its implications.

Then in July 2010 HSBC, tipped off by Hartnett, tried to use the French courts to stop the French tax authority handing the files to HMRC.

Finally, in January 2013, six months after retiring from HMRC, Hartnett joined HSBC as a consultant. What does all that tell you about British connivance in criminal tax evasion and avoidance?

HSBC and its terrible track record in Mexico

THE lesson of the HSBC debacle is not merely that tax evaders must be hunted down much more relentlessly, but that banking in its present form is ungovernable.

It’s no good saying HSBC was run in a “federated way,” but now management has been tightened up. Is anybody really taken in by that anyway?

We were told that in 2012 when the HSBC Mexican bank was found guilty of money laundering for pariah states, drug cartels and big mafia crime syndicates, but three years later the same charges have erupted elsewhere.

The truth is that HSBC, once a cautious and conservative organisation, was derailed in the late 1990s by its chairman Sir John Bond’s decision to enter a huge overseas buying spree to satisfy the board’s ambition to turn it into a global empire.

Under the influence of the ideology of unalloyed market power exalted by neoliberal capitalism over the last three decades, the banks have taken on the role of corporate expansion and profit maximisation in their own right.

Overwhelmingly bank lending has shifted towards overseas speculation, devising and promoting of artificial tax evasion and avoidance schemes, buying and selling of prime property, particularly in central London, and the invention and marketing of exotic financial derivatives.

This perversion of the proper role of banks was aimed to satisfy the desires of the super-rich, euphemistically described as “high net worth individuals,” because that is where it was perceived that the biggest profits lay — and, though this was played down, the biggest risks.

HSBC discovered this when it purchased, for £9bn in 2003, Household, a US sub-prime lender that went bust in 2006, the purchase in 2002 of the Mexican bank that allowed Mexican and Colombian drug cartels to launder nearly $1 billion through HSBC, and then HSBC’s Swiss bank providing a no-questions-asked cash machine for super-rich tax evaders and avoiders.

So what should be done? The neoliberal business model for banks has irretrievably failed. It is clear that HSBC should be broken up.

We need smaller banks targeted on the real needs of the British economy, and if the private sector cannot deliver this, the big banks should be taken into public ownership.

Michael Meacher is Labour MP for Oldham West and Royton. For more of his writing visit www.michaelmeacher.info/weblog.