Swiss Settlement May Be Near (5/28/13)

Lynnley Browning, Switzerland Weighs Deal in Tax Cases (NYT DealBook 5/28/13), here, reports that a deal between the U.S. and Swiss may be near that might cover most of the outstanding issues.  Excerpts are:

The Swiss government is considering a proposal to disclose bank client names and pay a multibillion-dollar fine to the United States to help resolve a long-running dispute between the two countries over the handling of tax-evasion cases, American and Swiss sources briefed on the matter said on Tuesday. 

The fine, which could reach at least $7 billion to $10 billion according to these people, could be paid in part by the Swiss government, which would then seek reimbursement from the banks. 

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The Swiss banks that have been the targets of investigations include Credit Suisse, which disclosed in July 2011 that it had received a letter saying it was under a grand jury investigation; the Zurich-based Julius Bär; two cantonal, or regional, banks; the Swiss operations of HSBC Holdings; and three Israeli banks, Hapoalim, Mizrahi-Tefahot Bank and Bank Leumi. 

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Members of the top echelon of the Swiss government known as the Federal Council are expected to discuss the matter as early as Wednesday, according to people briefed on the talks. These people asked to be unidentified because the discussions were continuing.
Hans Kaufmann, a Swiss parliamentarian and member of the conservative Swiss People’s Party, said that various levels of Parliament would be informed of the Federal Council’s decision in stages over the next 10 days or so.

“The Federal Council has already discussed the topic a few times in the last weeks, but has reached no conclusions so far,” said Anne Césard, a spokeswoman for the State Secretariat for International Financial Matters, a part of Switzerland’s finance ministry. 

Eveline Widmer-Schlumpf, the head of the finance ministry, told Swiss radio on May 18 that “We are on the verge of presenting a solution,” adding that “it is clear that it will not be a pleasant solution.” 

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Whistle-blowers have been a crucial part of the investigations and could continue to be so. Last year, the Internal Revenue Service said it would pay Bradley Birkenfeld, a former UBS banker, more than $104 million for his cooperation in revealing the secrets of the Swiss banking system and in that way helping to collect millions in unpaid taxes from wealthy Americans. 

At least one other banker is said to be in discussions with American authorities. Swiss officials have been interested in a settlement since the United States threatened to press charges against cantonal banks. Most cantonal banks are wholly or largely owned by the cantons, or regions, in which they operate, making them state institutions backed by Swiss taxpayers. 

Two cantonal banks, Basler Kantonalbank and Zürcher Kantonalbank, are under scrutiny by prosecutors in the Southern District of New York. 

“Every bank under investigation negotiates on its own,” said Igor Moser, a spokesman for Zürcher Kantonalbank, in Zurich. He declined to elaborate but indicated that the bank would not be part of any global resolution that is reached. 

Michael Buess, a spokesman for Basler Kantonalbank, said that the “negotiations with U.S. authorities has been defined as strictly confidential.”