US Senate panel says Credit Suisse actively sought US tax dodgers
Credit Suisse Group , Switzerland’s second biggest bank, went to great lengths to assist US customers trying to open Swiss bank accounts and evade taxes, entertaining them at a Swiss-themed ball in New York and golf tournaments in Florida and opening a branch in the Zurich airport to serve Americans heading for ski holidays, a Senate report said Tuesday.
In 2009, revelations in the US that UBS, Switzerland’s biggest bank, had actively facilitated US citizens to break US laws, resulted in the biggest breach in Swiss banking secrecy since it was protected by legislation in 1934. UBS later entered into a Deferred Prosecution Agreement with the US Department of Justice, paid a $780m fine, and turned over about 4,700 accounts with US client names that had not been disclosed to the Internal Revenue Service (IRS).
The US Senate Permanent Committee on Investigations, says in a report today that in the United States, over 43,000 taxpayers joined a voluntary IRS disclosure program, “came clean about their hidden offshore accounts, and paid over $6 billion in back taxes, interest, and penalties. In addition, Congress enacted the Foreign Account Tax Compliance Act (FATCA), which requires foreign banks to either disclose their US customer accounts on an automatic, annual basis or pay a 30% tax on their US investment income. Just this month, at the request of G8 and G20 leaders, the Organisation for Economic Co-operation and Development (OECD) issued a model agreement that, like FATCA, will enable countries to automatically exchange account information to fight cross border tax evasion.”
In 2006, Credit Suisse held 22,000 accounts from US customers valued at 12bn Swiss francs ($13.5bn at current exchange rates) the report said.
“It’s time to ramp up the collection of taxes due from tax evaders on the billions of dollars hidden offshore,” Senator Carl Levin, a Michigan Democrat and the subcommittee’s chairman, said in a statement.
At a press briefing, Senator John McCain, the Republican ranking member of the subcommittee, said offshore tax practices operated by Credit Suisse and other institutions had cost US taxpayers $337.3bn in potential revenue, which he termed “the largest amount of tax revenue lost due to evasion in the world.” He said Credit Suisse had “greatly profited from this infamous business model”.
The report says the bank had more than 1,800 bankers working on American business and it stressed discretion and advised wealthy clients to travel to Switzerland to avoid creating a paper trail that would undermine their accounts’ secrecy.
One former customer told Senate investigators that a Credit Suisse banker handed over bank statements concealed in a copy of Sports Illustrated and ushered the client to a meeting in Switzerland in a remote-controlled elevator.
The Justice Department indicted several Credit Suisse bankers on charges of aiding tax evasion in 2011. The bank has also said it is being investigated by the Justice Department. It is expected to settle that inquiry.
Brady W. Dougan, the American chief executive of Credit Suisse, and other top bank officials are due to appear along with two Justice Department officials at a hearing on the report on Wednesday.
Credit: FinFacts
