Tuesday, September 6, 2011

The Swiss Hogs Get Slaughtered, Perhaps (9/6/11)

The Swiss defense now is to have the pot (the Swiss) call the kettle black (more on the metaphor, here). The Swiss Bankers Association "chairman, Patrick Odier, urged the Swiss people and the government to 'put up a united front' and work out a solution that applies to all countries." See Swiss Banks Urge ‘United Front’ Against U.S. Pressure on Tax Evasion (NYT via AP 9/5/11), hereThe problem, of course, is that no other country is like Switzerland. In the past, Switzerland distinguished itself by out-cheating all other countries.  If there is any truth, in the adage that "Pigs Get Fat. Hogs get Slaughtered," the Swiss should just suck up and take their medicine.


  1. “The U.S. should take the tax agreements with Germany and the United Kingdom as an example. Bilateral problems between friendly nations should be solved by mutual agreement,” Mr. Odier said.

    The agreements with Germany and Britain were both reached in August. Swiss banks will pay an up-front guarantee of 2 billion francs, or nearly $2.7 billion, to Germany and 500 million Swiss francs, or $630 million, to Britain.

    German residents who haven’t previously declared existing assets in Switzerland will have the chance to make a one-time tax payment totaling between 19 and 34 percent of those assets, or to declare them to German authorities. Similarly, British clients will have the option of making an anonymous one-off payment for taxes owed in the past, or declaring their assets to British authorities.
    These percents seem a lot like the OVDI FBAR penalties.

    And AG Cole's request for 8 years of information is also straight out of the OVDI.

    As far as making a united stand, if the US banks did so more often, they'd be in better shape now.

  2. Basically, M would have us trust the Swiss all over again, and not move accounts ahead of this nonsensical solution.

    Time to indict Credit Suisse and stop all this rhetoric, methinks.

    The UK and German Tax Authorities are under heavy criticism for their settlements. The UK response, per George Osborne (who himself has some shady friends it seems): we need the money and dont have the resources to investigate and prosecute.

    That is not our position--the US has the resources and should prosecute. Otherwise, the DOJ will seem like a paper tiger, which Switzerland will take advantage of when the heat is turned down.

    At some point, we need to slaughter the hog who taunts us, to get the other little piggies in line.

  3. Bring on the bacon. These low life backstabbers deserve whatever the DOJ can dish out to them. If you are an undisclosed client that held assets between 2002 - 2010 you need to be concerned. These Swiss pigs will turn you in to lessen the hurt on themselves. History validates this point. I hope they have to pay a very heavy cost to get out of this mess.

  4. "The Swiss Bankers Association lashed out Monday at the possibility of another tax treaty with the United States aimed at handing over details of Americans suspected of using Swiss banks to cheat on their taxes."

    The Swiss bankers are concerned about another prospective treaty; however, they have serious issues with respect to pre-existing avenues whereby the US can obtain the banking information, i.e., the revised Tax Information Exchange (TIE) Agreement and a John Doe Summons, which worked against UBS (and by various accounts will also work against HSBC for accounts in India). The Swiss bankers are fighting back, of course, but I don't believe that ultimately, their fight will be successful.

  5. The "treaty" they are referring to was the 4500 names released. Swiss law (as I understand it) does not allow for disclosure of info except by Swiss Court order, and Swiss Court orders require significant documentation to begin with. Ie. a crime must already be proved for secrecy to be lifted.

    It cannot ask for information, so as to possibly prove a crime (tax evasion). This is called a "fishing expedition" offshore or a "John Doe" summons in the US.

    Therefore, the 4500 names was a massive release of information akin to a John Doe summons, but 1) it required that a crime be proved. The crime was UBS' solicitation of accounts in the US. The crime was not the depositors'.
    2) It required that the law of Switzerland be lifted temporarily to allow this release of info, because the depositors' crimes were not yet proven, or even known. This partial lifting of Swiss law required a parliamentary motion as part of a "treaty".

    Now that UBS's plight was publicized, the other banks learned their lessons and stopped similar behavior (on US soil).

    The Swiss acknowledged that if something similar happens again, the US would have a recourse to pursue similar prosecutions. Thus they left an opening for future enforcement of the "treaty".

    There may be a misunderstanding here between the Swiss and the US. The Swiss took the UBS "treaty" as a starting point for future conduct, but the US is looking at all time in the past.

    The US is saying that other banks did the same thing therefore should pay fines and release names. The Swiss say that the UBS "treaty" was the starting point and guidance for future conduct. Prosecutions for prior conduct would be to apply the "treaty" retroactively.

    (Significantly, the Swiss claimed they broke no Swiss laws in opening secret accounts for Americans, did not know it bothered American authorities, it was up to the depositors to report, not them, etc...)

    In any case, they think it unfair to still be prosecuted, for actions before the "treaty".

    If the US does not see the "treaty" as the Swiss do, the Swiss could accuse the US of breaking the "treaty", a "treaty" which they themselves initiated and signed. And if the US breaks its own laws, what hope is there for future negotiation.

    I am trying to analyze this as a Swiss banker or parliamentarian.

  6. I think one of the big issues is that DOJ has evidence that during the UBS debacle, Swiss bankers assisted undisclosed U.S. account holders to transfer funds into smaller Cantonal banks with no U.S. footprint instead of closing the accounts or pushing them into OVDP. If in fact this is true and DOJ has evidence of such, then the Swiss bankers have a serious issue. One would think that post UBS, no Swiss banks would want anything to do with undisclosed U.S. funds. I think once the dust settles on this current dispute, the Swiss will have a different attitude towards untaxed accounts for Americans. They say that repetition teaches even a Jackass.

  7. The US is not demanding of Switzerland anything that it will not give to Switzerland--perfect consistency on both sides. US banks will be required to provide the names of Swiss people and their nominee entities that maintain US bank accounts? So what's the problem? Switzerland can indict any US bank with a Swiss license and presence that disregards the law.

    What's good for one little piggie, is good for the other little piggie, or should we continue to operate a double standard?

  8. Regarding "double standard" and "perfect consistency". This cannot apply internationally due to sovereignty. This is an even bigger issue with freedom of speech/censorship between the US and China.

    When Google goes to China it has to censor its websites (by Chinese law), despite the intervention by the US Secretary of State Clinton. Obviously Google does not have to censor websites in the US, and would get in big trouble if it tried to.

    Symmetrically, when Chinese dissidents or banned groups (Falun Dafa) speak out in the US against Chinese politicians and embassies, the Chinese govt demands of the US that they be silenced and censored. Obviously the US govt cannot do that.

    Bank Secrecy/Bank Disclosure is similar. What happens in banks in Switzerland must be kept secret, no matter who it is, just like in the US everyone has freedom of speech/religion, no matter what citizenship he holds, or like in China everyone is subject to censorship no matter his citizenship.

    What the Swiss banks did in the US falls in a grey area because although not illegal in Switzerland (indeed required by Swiss law to keep Swiss accounts secret), this was considered suspect in the US, the "enabling" of tax evasion.

    It is not an easy matter to reconcile two systems which are in direct contradiction.

    Second, HSBC is a British bank. I am sure Obama has heard from Cameron by now, to leave his bank alone, that they have enough problems with their own tax cheats, etc. The British Parliament also intervenes when their companies are in trouble (like with BP).

    Third, I don't understand US writers insistence that information about US depositors be provided to the US govt. Why not also insist that information about Zimbabwe depositors in Swiss banks be provided to the Zimbabwe govt?

    There is a similar anger on the US govt part and an insistence that tax havens increase their tax rates from 0%. I doubt the US govt would listen to requests regarding US tax rates from other countries.

    Since when should the US be allowed to dictate tax policy and disclosure requirements internationally. I would think the US should first put its own house in order before making demands of other countries.

  9. One more comment regarding "double standard". Whereas in the US, depositor information is available to the US govt, it is only available to the US govt. The IRS can subpoena my bank records, but I cannot subpoena the IRS' bank records.

    In Switzerland neither governments nor individuals can find out this information. In this regard I think it is a more unified standard.


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