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Swiss Banks (Possibly Illegally) Rat out Clients to DOJ

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Swiss banks and tax evasion……

Handelsblatt has an interesting article regarding tax evasion of Swiss Banks:

Swiss Banks (Possibly Illegally) Rat out Clients to DOJ
Source: Pixabay

Totally predictably – and predicted – the Swiss banks now squeal on their customers:


Several large Swiss banks are involved in tax evasion litigation in the USA. Now the banks give thousands of employee names to the US-authorities. They want to sweeten the investigators.

Douglas Hornung, the legal representative of 40 of present and former employees in Credit Suisse Group AG (NYSE:AG), Julius Bär and the Swiss branch of HSBC Holdings plc (LON:HSBA) (NYSE:HBC) estimates that phone records of up to 10.000 employees have been handed over to the Attorney General in the USA.

The former president of the Geneva lawyers (representing two Credit Suisse Group AG (NYSE:AG) employees) is outraged: “This handing over of date is ILLEGAL!”

The banks are throwing their own employees to lions in an attempt to make deals with the Department of Justice. Douglas Hornung: “This violation of the personal rights is without parallel in Swiss Banking!”


Normally it is illegal for Swiss companies to hand over evidence in investigations abroad. But the federal parliament passed an exception to this law in April requested by a not precisely number of banks.

In this context the Handelsblatt interview Friday with Axel. A Weber UBS AG (NYSE:UBS) CEO is quite revealing.

First of all UBS AG (NYSE:UBS) is one of the world’s absolute largest banks – precisely where on the list depends on who is counting; but safe to say: If the CEO of ECB is an important position it is liable to be second to the CEO of UBS AG (NYSE:UBS. Perhaps the most important job in banking at all.

Weber was seen as the ECB CEO (Draghi got that job) when he stepped down a year early as CEO of Bundesbank; but apparently there was a more important assignment: In the middle of 2011 Weber was announced the next CEO of UBS – a curt dismissal of Kaspar Villinger, that was to retire in 2013.

Now Bundesbank produces brassknuckled CEO as fast as they print guild edged securities; but putting one as head of the world’s largest commercial bank – in a different country – takes some chutzpah not to mention clout. If anybody has the ambition of messing with the EUR, they aim for excruciating pain.

The relatively high detail of the LIBOR investigation does – in my estimate – show that the LIBOR-scandal is a minor detail that can be ironed out: It will cost the banks some money (a LOT of money), but that can be dealt with.

The emphasis is however on tax evasion (and to quote the German tax authorities: “A teenager´s vacation job is uninteresting”). There is little doubt that Weber was called to the position to implement the German-Swiss tax reporting agreement.  What was new to me was that said agreement also included Austria and Britain! I had an inkling something was in the works as the Danish banks have abandoned their foreign branches; but nothing on the scale of this. This is huge.

The limitation seem to be that the Swiss banks will not be a part of tax evasion; but will not exchange data with local authorities: That puts the buys of CD´s by Northrhein-Westphalen into perspective: These are old transgressions. How unwelcome they are to the German Finance Minister is an open question, as he would like to keep an eye on the extend of Swiss bad faith – wouldn’t You in his position?

Taken in the context with the Swiss turning over their bankers (more or less down to cashier level) to the IRS in the USA the assumption that direct transfer of data to foreign tax authorities seems likely to be more than frail.

My honest and earnest advice to anybody – in the US and Europe – that if:

Coming to think of it just might have in the past had the odd million slip your mind when you forwarded your tax form – in your place I would ask for a meeting with the IRS as to how possible misinterpretations (by your accountant – naturally) can be corrected administratively as they occurred in good faith and originally made by your senile grandfather – now deceased …

I’m not saying this out of moral constipation, but to minimise pain. The Germans are turning themselves in – in droves, as I write – encouraged by their accountants and lawyers. They will lose all their undeclared gains – not only the tax portion; but all of it. They will however stay out of jail if they turn themselves in before July 1st 2013.

In case of the USA I think the emphasis has been on terrorist money laundering, but good old fashioned tax evasion is liable to occupy the lion’s share of the time and effort used. We are talking a whole new world out there. Just listen to the whine of the Swiss lawyer – “it is unparalleled” – yes, up to now.

Look we are not just talking Europe and a little German speaking fracas – the US is getting there too. You could not that Weber makes an elaborate if oblique reference to Singapore.

But if terrorist money laundering is the beginning? LIBOR the continuation? Is tax evasion then the end of it? I very much doubt it. Governments do not take too kindly to being blackmailed – not by banks nor anybody else for that matter. A little mentioned subject was Greece buying oil from Iran – they were presumably the only ones willing to extend credit – that was stopped. How Russia’s ttempt on Cyprusas pans out remains to be seen. Who cares about a Syrian punk like President Bashar Al-Assad? Well if he makes weird things with money and Iran – some very unpleasant people just might.

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