Friday, March 27, 2009



Swiss bankers see sinister motives behind the mounting international pressure on the country to loosen its strict bank-secrecy laws.

The bankers said the United States and Britain - backed by France, Germany and other Group of 20 powers - are waging an “economic war” to force the staunchly neutral nation to bring its tax disclosure norms for offshore accounts into conformity with global transparency standards. Switzerland risks being blacklisted if it fails to comply, they said.

“We have been very successful, and we are making many of our competitors jealous. So this is an angle to attack, an economic war to gain market share. That´s what we are talking about,” Pierre Mirabaud, chairman of the Swiss Bankers Association, said in an interview with The Washington Times.

Swiss banks manage an estimated $2.42 trillion in offshore accounts. About two-thirds of that belongs to foreign private investors, according to an internal study by the association.

That makes the landlocked nation the biggest “offshore” banking-services center in the world, with about 27 percent of the global market.

Thousands of wealthy Americans have numbered accounts in Swiss banks. Although the banks know the identities of these customers, their names do not appear on statements or in the banks’ computer records.

Mr. Mirabaud was critical over the U.S. government’s recent prosecution of UBS, the Swiss banking giant, for trying to help its U.S. customers evade taxes by placing their funds in secret accounts.

UBS agreed in February to pay $780 million to the U.S. Justice Department, and Swiss authorities agreed to provide the names of about 300 people accused of evading taxes to the Internal Revenue Service. UBS refused, however, to honor a request for information on an additional 50,000 accounts.

The IRS is giving Americans six months to provide evidence against their advisers or bankers, the Associated Press reported Thursday.

Mr. Mirabaud acknowledged that UBS had engaged in criminal conduct in the United States and agreed that the case must be pursued.

But he questioned the pursuit of the 50,000 U.S. banking customers in Switzerland, insisting that the U.S. actions violate international law and the terms of a bilateral tax treaty.

“The Swiss are 100 percent right in this situation. They have a sovereign right to control the law inside their own border,” said Daniel Mitchell, a Cato Institute analyst in Washington.

“It is not the job of Switzerland or Swiss banks to enforce U.S. tax laws,” Mr. Mitchell said. “Countries can agree to enforce each other’s laws, but they are not required to do so.”

To avoid being placed on the G-20’s list of uncooperative states, the Swiss government agreed March 13 to adopt international standards concerning tax-evasion issues pertaining to foreign bank accounts. That agreement will allow the exchange of information with other nations in individual cases.

Other tax havens recently agreed to adopt similar measures - including Austria, Liechtenstein, Luxembourg and Singapore - in order not to be included in the Organization for Economic Cooperation and Development’s list of uncooperative nations.

But Mr. Mirabaud said the Swiss have been unfairly targeted.

“If you look at some Anglo-Saxon countries, it’s a big hypocrisy because some countries like Jersey and Guernsey stated, ‘We are willing to give you all information.’ But they have no information to give because they do not know who their client is. In Switzerland, we have the obligation to know who the client is. So when we give information, we give valid, useful information.”

The Swiss Ministry of Finance underscored this month that Switzerland “has no intention of relinquishing bank secrecy” - a policy favored by more than three-quarters of Switzerland’s population, according to a recent poll.

“Some Swiss are quite bitter and see U.K. and U.S. ‘offshore’ financial centers - such as Bermuda, Isle of Man, Cayman Islands, Bahamas - trying to take business away,” said Jan Amrit Poser, chief economist and head of research at Bank Sarasin & Co. Ltd. in Zurich.

“It was the U.S. and U.K. that put pressure [on Switzerland] to sign this,” said Jean-Pierre Diserens, vice chairman of the Convention of Independent Financial Advisors, a nonprofit Swiss foundation. “It’s odd the three countries - the U.K., the U.S. and Switzerland - are the main offshore banking-services providers.”

“This is just a trick to improve their capital” and to bring disrepute onto Switzerland as an offshore banking center, Mr. Diserens said.

Daniel Warner, director of the Centre for International Governance in Geneva, isn’t so sure that Switzerland is the actual target in this dust-up.

“There´s a great deal of anger and vengeance against those who have made their money illegally, or not paid taxes in the U.S. and hid money in Swiss banks. The anger is not specifically against Switzerland,” Mr. Warner said. “There’s anger in the streets.”

Until now, Swiss authorities have cooperated with foreign governments on tax-fraud matters, but not on cases related to tax evasion.

“In Switzerland, we do not believe when a taxpayer commits a small, not very meaningful fraud, he should go to jail for that,” Mr. Mirabaud said. “He should pay a heavy fine, he should be prosecuted, but he should not go to prison.”

However, in the future, under the model accord by which the Swiss have agreed to abide, “we will need to renegotiate all our bilateral taxation agreements, including the one with the United States,” he said.

The new standard, he noted, draws “no difference between tax fraud and tax evasion. But the legal request must be done on the basis of facts.”

Swiss President Hans-Rudolf Merz set some limits Wednesday on how far Switzerland will go in helping the United States pursue tax evaders.

Unless other countries first present compelling evidence of tax evasion by specific individuals, Mr. Merz said, Switzerland will refuse to provide banking information.

The Treasury Department and the IRS did not respond to requests for comment on Mr. Merz’s position.

• David M. Dickson contributed to this report.

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