LABOUR demanded answers from Chancellor George Osborne yesterday after the revelation that hundreds of super-rich HSBC customers had struck out-of-court settlements rather than face prosecution for tax avoidance.

Treasury spokeswoman Shabana Mahmood issued the challenge over sensational leaks that revealed how a Swiss subsidiary of the bank actively encouraged thousands of multimillionaires to hide cash from the taxman.

The fine detail of a dossier including 130,000 potential illegal tax evaders compiled by French-Italian whistleblower Herve Falciani eight years ago was only revealed publicly this week following a leak.

But the facts are thought to have been known in government circles since May 2010, when documents were handed over by the French.

Months later group chair Lord Green left HSBC to become trade minister — reportedly after being headhunted personally by Prime Minister David Cameron.

Yet a Downing Street spokeswoman issued an astonishing denial yesterday, claiming: “No government minister had any knowledge that HSBC may have been involved in wrongdoing in regard to its Swiss banking arm prior to the reports of the last couple of days.”

Ms Mahmood said: “As chairman of the bank, Mr Green would either have been aware of malpractice or, if not, surely questions would arise as to why not and his fitness for such a senior government post of trade minister.”

The international scandal has sparked high-profile criminal probes in other countries.

Belgium has threatened to issue arrest warrants for executives at the firm, which it has accused of hindering investigations into its own raft of tax dodgers.

Despite the depth of the scandal HM Revenue and Customs only prosecuted in one of 1,100 confirmed British fraud cases.

No banker has been put in the frame.

Ms Mahmood demanded to know whether HMRC had operated a “deliberate strategy to minimise rather than pursue prosecutions” when dealing with the wealthy criminals.

And she said it should be known how much senior government figures were aware and intervened in the handling of the affair.

GMB union general secretary Paul Kenny said the scandal was “another example of tax evasion on a massive scale that is endemic, systemic and deep rooted in the City.”