Thursday, January 16, 2014

Switzerland's Quixotic Efforts to Close the Barn Door After the Horse Has Left the Barn (1/16/14)

Switzerland is reportedly investigating at least one Swiss banker -- Renzo Gadola -- ensnared in the U.S. criminal initiative who is cooperating with the U.S.  See Rachel Bade, Switzerland probing banker who is helping U.S. tax investigations (Politico 1/14/14), here.  Excerpts:
Switzerland is taking a new tack to protect its prized banking secrecy — one that could undermine the efforts of U.S. tax authorities to snag tax evaders stashing funds offshore. 
The country, which bars citizens from dishing banking secrets to foreign governments, is probing former Swiss banker Renzo Gadola for spilling the beans on wealthy Americans with hidden bank accounts, according to the Office of the Attorney General of Switzerland. 
It marks the first public admission by Switzerland that it is probing one of its own for helping U.S. offshore tax efforts. The Swiss contend they’re merely upholding their privacy laws, but some say the investigation sends a message to bankers: Keep quiet or else. 
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Still, the Gadola probe comes at a critical time, with the U.S. prosecuting another former Swiss banker, Raoul Weil, Gadola’s former boss at UBS. 
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Although some lawyers expect Weil to eventually make a deal with U.S. authorities, the Gadola investigation could complicate such a decision. 
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Disclosure of client data and business secrets is a crime in Switzerland punishable by up to three years in prison. At the same time, U.S. prosecutors almost demand such information if bankers want to avoid jail time. 
After being captured in 2010, Gadola provided a trove of secrets to the Justice Department, including details on former colleagues and schemes UBS used to avoid U.S. detection. He even participated in secretly recorded phone calls with American clients, according to court records.
Several whistleblowers are now wanted in Switzerland, mostly on charges of stealing documents, including HSBC Geneva tech employee Hervé Falciani, passed data to France, and Heinrich Kieber, a former LGT Bank of Liechtenstein employee, who received millions of euros from the Germans for similar activity.
Experts say Gadola’s case is unique because it represents the first time Swiss authorities have investigated someone who disclosed information after capture — rather than voluntarily going to a foreign government to expose secrets.\ 
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Swiss banks have been able to sidestep Swiss privacy laws by getting waivers from the Swiss to release account data to the Justice Department. 
But bankers are a different story. Lawyers are not sure whether a waiver for industrial espionage — the charge Swiss media say prosecutors are considering for Gadola — even exists. 
Former U.S. federal prosecutor Jeff Neiman, who helped prosecute Gadola, thinks the conflict over Swiss and U.S. legal standards will eventually be resolved in a new bilateral agreement that would protect Swiss whistleblowers from prosecution when they return home. 
“If the bankers are making a decision to cooperate while being held here in the United States, you would think it would be in the United States’ interest to ensure they’re not punished for cooperating in Switzerland,” he said. 
But for now, whistleblowers are worried. An official with the National Whistleblowers Center said the Gadola probe has driven some Swiss who cooperated with U.S. tax authorities to seek their legal advice.

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