The story is not particularly interesting as such, but it offers an insight what goes on between authorities and banks at the moment.
The background is that the tax authorities from the German state Nordrhein-Westphalen had bought at least 3 CD’s with client information from Credit Suisse, the Swiss bank Julius Bär and Liechtensteiner Banken. One thing is that the banks were fined 200 mio. EUR (at least) for aiding and abetting tax evasion.
This led to (besides temporary detention of German tax official on a spying charge in Switzerland) to a negotiated settlement between Germany and Switzerland where the Swiss banks would pay 1.7 bio. EUR and the tax fraudsters between 21% and 41% of the non-declared sum in return for anonymity AND promise the Swiss that Germany would never again buy such stuff. This agreement has not yet been signed by Germany and it remains doubtful if it will be.
Now another slightly embarrassing case has broken as a further 4000 Credit Suisse Group AG (NYSE:CS) clients data has dropped into the German tax authorities lap – the most probable explanation is a revengeful employee brought them with him when transferred from the main seat in Switzerland to the German branch. Not surprising it concerns “life insurance” deposits in Bermuda. Thus Credit Suisse can hardly be said to have made a clean breast, as should be supposed when negotiating a settlement on a government level.
Now tax evasion is like adultery: There is a marked discrepancy between the official distancing from it and actual participation. So it is a tricky point if tax control should forsake the use of an efficient investigative tool. That was what got Al Capone in the end – tax evasion.
Now these cases reported points to an effort much larger. The mentioned methods are not out of the ordinary (if human beings weren’t bitter, envious and feeling jilted life for tax evaders would be so much more comfortable – and safe). Do you think that if you mail (in an unmarked envelope) photocopies of pertinent papers to the tax authorities that they don’t investigate? Of course they do!
This could very well be a cover for a much larger operation of prying the open the vaults of banks:
1) We are probably at times talking crimes against the currency – that is not a felony – it is treason.
2) The LIBOR/CIBOR scandal has to have its information from somewhere. To think that we are only dealing with a little interest fiddling would be naive, but it is information that can be brought out in the open without showing the hand too much.
3) Everybody that has watched popular television is familiar with the rudiments of criminal interrogation techniques – on of which is lenient treatment of a misdemeanour in return for information on a felony. The next step is separate interrogation playing the perpetrators against each other. The actions of suspects in the LIBOR/CIBOR scandal are very reminiscent of an ongoing investigation. Mr. Diamond gave up his golden handshake of his own free will and goodness of his heart – after a brief discussion with the authorities. In Denmark the bankers association first
indignantly denied the physical possibility of swindling with the CIBOR, but a day later came out with an official statement of focussing on restoring the public confidence in the CIBOR.
The LIBOR case has definite connections to the United States in so far as Barclays was fined jointly by the UK and the USA.
Discarding pretences: This has all the characteristics of a war on banks from the EU!
There is a massive opening of cases after careful gathering of intelligence over several years simultaneously in several countries. It is very hard not to imagine something following through this breach. There most certainly is a plan behind this.
Considering the involvement of the IMF in the troika with the ECB and the European Commission the perspective is that the European banking system will not be allowed to drag the world further into the mire – let alone Europe.
The question is which one is in trot? (A troika is a Russian team of three horses where the centre horse trots and the outer two gallops).
How it will develop is very hard to see. As Clausewitz said: “No plan survives first enemy contact!”