On 11 May 2016, Societe Generale was heard by the French Senate Finance Committee in the context of its fight against tax evasion and international tax fraud. The hearing of Frédéric Oudéa, Chief Executive Officer, provided an opportunity to show that the perception conveyed by the media through the “Panama Papers” coverage is not an accurate reflection of either the current situation or the policy held by Societe Generale with regards to preventing fraud and fighting against tax evasion.
Ten Key Points:
• Since 2009, efforts by the governments of the G20 countries to combat fraud and tax evasion have extensively changed the regulatory landscape and international cooperation in this area. These efforts will ultimately lead to a major step towards tax transparency with the implementation this year of automatic information exchange for an initial wave of 55 countries, followed by a second wave of 43 countries starting in 2017.
• Societe Generale group made a number ofcommitments and initiatives to move forward with the government’s anti-fraud and tax evasion efforts.
• Societe Generale has taken firm steps and closed all branches in Non-Cooperative Countries and Territories (NCCTs), including Panama. Group CEO Frédéric Oudéa reiterated this commitment before the French Senate Investigative Committee in 2012.
• The Group adopted a Tax Code of Conduct in 2010, which applies to all of its activities and employees around the world. This code governs not only the principles concerning the Bank's branches and actions, but also our relations with customers.
• The companies referred to in the Panama Papers investigation are not part of the Societe Generale group, but are companies created on behalf of our customers. They are perfectly legal and managed as transparent entities. The creation and management of these companies fall under the remit of Societe Generale Private Banking's Fiduciary Services department.
• Fiduciary Services is a marginal business for Societe Generale Private Banking and is conducted in an extremely vigilant manner. It is strictly supervised by a series of procedures that fully implement the Group's tax code of conduct and anti-money laundering directives. Any company created on behalf of a customer by Fiduciary Services is subject to a review by independent parties in each of our establishments. These independent parties hold a right of veto. Societe Generale Private Banking identifies the final beneficial owners of these offshore companies and verifies that they meet their tax obligations. If their tax compliance cannot be verified, the Bank closes or blocks the accounts in question.
• The accounts of such companies are kept by each office of the Private Banking division, which are all established in countries that have committed to the automatic information exchange policy currently being rolled out. There are no bank accounts opened in Panama, even for wealth management companies under Panamanian law, and all accounts belonging to wealth management companies will be subject to automatic information exchange when their beneficial owners have their tax residence in one of the 98 countries adopting this policy.
• To date, Societe Generale's General Inspection Department has identified, within the Private Banking division, 66 still active wealth management companies created via Mossack Fonseca,
six of which are registered in Panama for nine French tax residents, who have been found to be in full compliance with their tax obligations. No offshore companies have been opened in Panama via Mossack Fonseca since 2012 (with the exception of one company that was closed three months after being opened and was, in fact, never used).
• The figures and strict procedures established over the past years demonstrate the reality of the efforts and commitments undertaken by Societe Generale to fight against fraud and tax evasion.
• Governments and the general public have legitimate expectations in this matter. Societe Generale group is clearly determined to continue actively contributing to these efforts.