Tuesday, July 12, 2016

Chutzpah - Swiss Banker Moans that Switzerland Is Not Protecting Swiss Banks From Their Raids for Foreign Governments (7/12/16; 7/13/16)

I don't know what more I can say about reports such as this one:  Tom Miles, UBS chief says Swiss government is leaving banks exposed (Reuters 7/10/16), here.  Just a few excerpts, though:
Switzerland's politicians have done too little to protect the country's banks from demands for data from foreign governments, UBS (UBSG.S) Chief Executive Sergio Ermotti said in an interview published by the SonntagsZeitung newspaper on Sunday. 
Since the financial crisis, cash-strapped governments around the world have clamped down on tax evasion, with authorities investigating Swiss banks in Germany, France and the United States. 
But Switzerland's attempts to negotiate with other governments have not provided legal certainty or closed the book on issues of the past, Ermotti said. 
"This is unacceptable and opens the door for a new offensive against Swiss banks," he told the paper, adding that the government had been too ready to hand over customer data and that it is perhaps too late to get a better deal after years of negotiations. 
* * * * 
Last week UBS said it had been ordered by Switzerland's tax agency to provide France with tax information and it expected other countries to file similar requests. 
The request related to current and former French-domiciled clients and was based on data from 2006 and 2008, the bank said. 
Switzerland's tradition of banking secrecy has helped to make it the world's biggest offshore financial center, with more than $2 trillion in foreign wealth kept with the country's banks. 
In 2014 French authorities placed UBS under formal examination over whether it had helped clients to avoid tax and investigating judges ordered the bank to provide bail of 1.1 billion euros ($1.22 billion).
JAT Further Comment:  The Swiss Government was an enabler of this genre of Swiss banking activity.  Simply put, the Swiss banks could not have behaved as they did without the wall of secrecy established by the Swiss Government which certainly, over the years, knew (or was willfully blind to such knowledge) that the Swiss banks were enabling U.S. taxpayers and other countries' taxpayers evade tax.  In many ways its actions over the years could be viewed as a actions of a co-conspirator.  But, there is the old saying that there is no honor among thieves.  So, the Swiss bankers could not have reasonably expected that the Swiss Government would protect them when the Swiss Government determined that it was not in its interest to further protect them.

If indeed actions of the Swiss Government and individuals acting under the penumbra of the Swiss Government could be viewed as co-conspirators of U.S. tax evasion (just as the banks and the bank enablers were), could the Swiss Government and its enablers be indicted just as others have?  In this regard, presumably, a conspiracy indictment for Title 26 crimes would have a long, long statute of limitations.  See § 6531, here, flush language, which provides:
The time during which the person committing any of the various offenses arising under the internal revenue laws is outside the United States or is a fugitive from justice within the meaning of section 3290 of Title 18 of the United States Code, shall not be taken as any part of the time limited by law for the commencement of such proceedings.
Section 6531(8) provides that the Section includes:
offenses arising under section 371 of Title 18 of the United States Code, where the object of the conspiracy is to attempt in any manner to evade or defeat any tax or the payment thereof.
Note that the wording of the section seems to cover only offense conspiracies to evade tax (the language is clearly incorporated from § 7201, here, so defraud/Klein conspiracies would not be included within the scope of the extended statute of limitations while outside the U.S.  As I recall, the conspiracies usually charged are defraud/Klein conspiracies for bank enablers.  And, the Credit Suisse charge, here, was "for conspiracy to aid and assist U.S. taxpayers in filing false income tax returns and other documents with the Internal Revenue Service (IRS). "  The conspiracy was thus to violated § 7206(1) rather than § 7201.  Of course, the charge could have easily been the offense conspiracy to commit tax evasion (just different words in the word processor), since the underlying object of the conspiracy was certainly tax evasion.

I have not tracked down whether a foreign government is a person under this provision.  Perhaps not, because § 7701(a)(1), here,
The term “person” shall be construed to mean and include an individual, a trust, estate, partnership, association, company or corporation.
So, perhaps it would not apply to the Swiss Government unless it were treated as a corporation.  But, presumably, to the extent that Swiss Government officials over the years have enabled (or conspired in that terminology), why couldn't they be prosecuted?  Perhaps that is one incentive -- in addition to all the financial incentives -- for the Swiss Government being less protective of Swiss banks than it has in the past.

Addendum 7/13/16:

As one anecdote related to the above, Reuters reports that a former UBS pled in a French "nvestigation into tax fraud and wrongfully soliciting for clients."  See Richard Lough, UBS France says former employee admits guilt in tax fraud probe (Reuters 7/8/16), here.  Other excerpts:
Last month, a financial prosecutor said UBS AG, UBS France and half a dozen former executives should face trial over allegations that they had helped clients to hide their money in Switzerland and for illegally soliciting for clients in France. 
"A former employee, who left the bank in 2009, decided to plead guilty," UBS said in a statement in French. "Neither the prosecutor's recommendation nor the decision of the former employee changes the bank's position in any way." 
A source close to the investigation said the prosecutor had sought a plea-bargaining deal with the former employee. 
A second source said a judge has determined that the maximum fine the bank could face is 4.88 billion euros if the case goes to trial and the bank is found guilty.

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