Is the gig up or do they just have to be smarter?. The most recent U.S. initiative against UBS (including a deferred prosecution agreement and agreement, under compulsion, to disclose U.S. account holders) and the related offshore account voluntary disclosure initiative have put great pressure on this Swiss franchise. The best the Swiss can hope for is to mitigate the damage.
The most recent attempt to mitigate the damage discussed in several on-line web articles today. I link to some below. As noted in my previous blogs, the Swiss Government is requesting a legislative solution consistent with the agreement with the U.S. to disclose names (and ex-post facto, legalizing the disclosures already made or promised to be made). The reports are that the Swiss Parliament was balking. New reports indicate that UBS is lobbying the Parliament to approve the Government's proposal, for other Swiss banks and the whole Swiss system could be at risk if they do not.
One prong of UBS' attempt to mitigate the damage is in the form of a letter that is quite telling. I quote from the reports about the letter from the NY Times article:
In a letter sent to several Swiss lawmakers, a copy of which was obtained Friday by The International Herald Tribune, UBS said that failure to approve the treaty could encourage United States authorities to go after other Swiss banks, further undermining the country’s all-important financial sector. “In the end, the effects of not approving the deal are multiple and will not just affect a single entity like UBS,” the bank argued.Does any reader believe that passage of the proposal would in fact cause the IRS not to pursue other Swiss banks? If the Swiss Parliament approves an amendment to the treaty, why would the U.S. not use the UBS template, then approved by the treaty amendment, to go after the other identified banks (or even the others yet to be identified)?
In its letter, UBS said the Internal Revenue Service had already collected information on the cross-border activities of about 20 Swiss banks. It added that it was “very possible” that the I.R.S. was seeking information about additional American clients of the banks.
“The refusal by the Swiss to fulfill its obligations under international law could send an escalating signal for these cases,” it said.
Switzerland also risked ending up on a blacklist of uncooperative tax havens if lawmakers refused to bless the deal, the bank said.
I suspect the UBS and the Swiss believe that this current brouhaha, while a setback and a permanent setback, it does not take away all the tricks of the hide the money gave. They will just have to hide smarter, but better than than a permanent lost of the whole franchise.
New York Times article