Sunday, January 06, 2013

US Tax Evasion & Swiss Banks: Oldest Bank dies

Wegelin bank - tax criminal
Swiss financial circles are reeling from the closing of Switzerland's oldest bank (founded 1741), after it pleaded guilty to assisting wealthy Americans evade US taxes.

Wegelin paid a fine, disposed of assets, and shut down last week after pleading guilty in a New York court.

The bank maintained in its statement in court that it was commonplace for Swiss banks to help Americans evade US taxes:

US Attorney Preet Bharara said: "The bank wilfully and aggressively jumped in to fill a void that was left when other Swiss banks abandoned the practice due to pressure from US law enforcement."

He added that it was a "watershed moment in our efforts to hold to account both the individuals and the banks - wherever they may be in the world - who are engaging in unlawful conduct that deprives the US Treasury of billions of dollars of tax revenue".

Otto Bruderer, a managing partner at the bank, admitted that Wegelin had sheltered US clients from tax between 2002 and 2010, and said it was aware that its conduct had been "wrong".

Mr Burderer's further admission that assisting tax evasion was common practice in Switzerland has caused huge concern among the Swiss banking community, according to the BBC's Switzerland correspondent, Imogen Foulkes.

"Some Swiss financial analysts are already speculating that Wegelin's $58m fine, which many had expected to be higher, was kept low by the US authorities in return for Wegelin clearly implicating the rest of the Swiss banking community in tax evasion," she said.

Ironically, the managing director was one those in the forefront of efforts to prevent disclosure by the Swiss banks of foreign accounts information:

The decision to throw in the towel also marks a turnaround for Konrad Hummler, Wegelin's managing director since 1991, and one of the partners whose own personal finances were potentially at stake.

Mr Hummler, who is also chairman of the Swiss daily newspaper Neuer Zuercher Zeitung, has previously been unusually outspoken among Swiss bankers in calling for the country's authorities to block any disclosure of banking client details to the US authorities.

Fourteen Swiss banks are under investigation for similar tax evasion schemes for foreign clients. It's taken a long time for the Swiss chickens to come clucking home, but right now the henhouse is in an uproar.

About time, too.

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