Media take sides in Credit Suisse tax case

Swiss newspapers can’t agree on how to rate the performance of Credit Suisse (NYSE:CS) at US Senate hearings held in Washington, DC. The bank, accused of helping clients evade American taxes, maintains that just a few private bankers are to blame.

The Neue Zürcher Zeitung piped up in defence of Credit Suisse.

“Senator Levin showered Credit Suisse with blind criticism,” wrote the newspaper in an editorial entitled “Disconcerting spectacle”. According to the NZZ, Senator Carl Levin – the chairman of the US senate’s permanent subcommittee on investigations – sees tax evasion as the “core business of Swiss banks”.

“This one-sided view of the investigating committee, which ignores the Swiss legal system and the double taxation agreements between the two countries, leads to a strongly divergent perception of reality,” wrote the Zurich-based newspaper.

It went on to say that “it was no wonder that Credit Suisse CEO Brady Dougan and his colleagues couldn’t shine before such a ‘tribunal’”.

Eye-rolling

In contrast, Swiss tabloid Blick went for the eyes – Dougan’s eyes – featuring an enlarged photo of his peepers on the front page.

“No humility in these eyes,” read the headline. Inside, the editorial said that Dougan’s testimony before US senators was “not a convincing performance”.

“The facial expression of the top banker signalled his unwillingness, even defensiveness. Sometimes he rolled his eyes,” pointed out Blick’s chief editor. He also criticised Dougan’s failure to take responsibility for the bank’s actions by blaming a few criminal employees.

“Either he hasn’t got a grip on his business – in which case shareholders had better watch out. Or more likely, he knew what was going on and is now doing damage-control,” said the paper. If the latter is the case, continued the newspaper, bank employees now know that they’ll be in the hot seat when the going gets tough.

“Both cases are poison for Credit Suisse,” said Blick.

‘Lesson for the banks’

Though less scathing than Blick, the Tages-Anzeiger also frowned upon the conduct of the Swiss bank leaders now in the spotlight of the American justice system.

“Who can really believe these bankers who solemnly swear that they’ve taken every measure to ensure that nothing like this could ever happen again?” asked the paper in its commentary, pointing out that Levin was clearly sceptical.

Yet the Tages-Anzeiger also noted that Levin was more interested in getting the details of tax offenders than in the contrition of top bank managers. Nonplussed by the bank’s argument that Swiss law would prevent them from naming names, Levin said they’d have to adhere to American law if they wanted to do business in the US.

It’s a “lesson for the banks” as the Tages-Anzeiger put it, adding that the court proceedings were a chance for the 106 banks signed up for the US tax authority’s settlement programme to see how Swiss banks are perceived in the US.

More severe than UBS?

Similarly, Geneva’s Tribune de Genève says the report by the senate subcommittee indicates that Switzerland and its financial centre will once more have to face “painful scrutiny”.

The Geneva newspaper recalls that Mark Branson, former head of UBS’ asset management business, testified to the same commission in July 2008. The Tribune de Genève said the Credit Suisse case appears even “more severe” because its numbers are worse than those of UBS.
 
Tribune de Genève also expressed fear that the overwhelming report of the US senators would not allow optimism in view of the investigations that 14 Swiss banks are facing in the US.

Outside of Switerland, the Financial Times didn’t offer any opinion, but it did serve up nearly a full page of coverage related to the case – including four infographics to do with Swiss banking, US tax revenue and global wealth.