Swiss bank secrecy in toughest test since Nazi gold
Arizona Coin Collector
http://www.thestar.com/Business/article/552111
Swiss bank secrecy in toughest test since Nazi gold
Dec 11, 2008 08:36 AM
Reuters
ZURICH-More than a decade after holocaust survivors
won compensation from Swiss banks for emptying
Jewish accounts that had lain dormant since the war,
the pressure is on again to dismantle Swiss
banking secrecy.
This time, the tax collector is leading the charge.
(Story Photo Image)
A Swiss national flag waves in front of the
headquarters of Swiss bank Credit Suisse at
the Paradeplatz square in Zurich,
Oct. 23, 2008.
http://media.thestar.topscms.com/images/fb/51/c8ac96eb429eb16f9788d0a4a988.jpeg
With Washington joining Germany to press for an end
to a code they believe helps tax dodgers, many see
it as only a matter of time before the Swiss lift
the cloak guarding the secrets of the world's wealthy.
"The challenge to bank secrecy is a thunderstorm which
has been brewing since the holocaust money," said
Sebastian Dovey of consultancy Scorpio Partnership.
"It is a hot potato and I don't think the heat is
going to be turned down."
Nearly one-third of wealth kept abroad globally is in
Swiss banks: the Swiss Bankers Association and
consultants estimate this at $2.2 trillion, making
the Alpine state the globe's biggest offshore centre
ahead of Britain and Luxembourg.
But its code of secrecy - which local myth
inaccurately claims was introduced to protect fleeing
Jews - is as controversial as it is protective.
Laid down in a 1934 law, it has spawned plots for
bestselling thrillers, but also real-life intrigues
such as that of Gizella Weisshaus.
Shortly before her father was murdered by the Nazis
during the war, he told his children about gold
coins and jewellery he had stowed away as Germany's
army marched towards their home in Romania.
"I found the money and his gold watch hidden in the
roof of my house," she told Reuters by telephone
from New York. "And there were some pieces of paper.
It didn't mean anything to me."
Decades later, the Auschwitz survivor was still
trying to unravel the riddle of those long-discarded
papers which likely contained the numbers of Swiss
bank accounts.
But like many others who travelled to Zurich to
trace her father's money, she was turned away
repeatedly.
She later became central to a series of legal
actions taken against the banks and in the
mid-1990s under pressure from Washington and Jewish
community group the World Jewish Congress, they
finally paid $1.2 billion for accounts they had
sucked dry.
Now Switzerland faces its toughest assault since.
In an escalation of a U.S. investigation into its
biggest bank, Raoul Weil, head of UBS's wealth
management business, was recently charged with
helping Americans hide billions.
"With the UBS case, Switzerland is under huge
international pressure and pretty much back in
the situation it was then," said Swiss Social
Democrat party official and historian Peter Hug.
"Holding onto bank secrecy is not going to work
in the long term. Switzerland is small and it
cannot afford to help tax evasion in its
neighbouring countries."
POLITICAL PRIORITY
Germany, which at the start of the year paid
an informant for the names of tax dodgers who
parked money at LGT bank in smaller hideout
Liechtenstein, is also pushing for change.
"In the end, Switzerland will have no way
around declaring who its foreign bank account
holders are," said Hans Eichel, who as German
Finance Minister between 1999 and 2005 tried
to tackle offshore havens.
"This is a business based on a criminal
activity - dodging tax in a neighbouring
country."
The Swiss have already made some
concessions: introducing, for example, a tax
on income earned by European Union citizens
in Swiss accounts.
Stuart Eizenstat, U.S. Deputy Secretary of the
Treasury under Bill Clinton, said the dormant
accounts case he helped negotiate prompted
the Swiss to cooperate on other fronts.
"I do think it had a catalytic effect of
making the banks more open," he said. "They
became strong supporters, for example, of
the anti-terrorist financing measures. It
did spur them to become more open on
money-laundering."
But with demands from Germany that Switzerland
be blacklisted by the Organisation for Economic
Cooperation and Development, pressure is
rising for more.
"The Americans said that if you do not
cooperate, then we will make sure you cannot
do business here," said Eichel. "European
neighbours of Switzerland such as Germany have
to consider similar measures."
Many believe an agreement between Liechtenstein
and the United States this week to drop bank
secrecy in cases of tax evasion could force
Switzerland into similar concessions.
Prince Nikolaus, the brother of Liechtenstein's
ruling monarch and the country's ambassador
to Brussels, said UBS's problems and Germany's
probe of his family's bank, LGT, sent a clear
message to offshore havens.
"It was these two banks - the biggest in their
respective countries - which were turned into
a big case," he told Reuters by telephone from
Brussels. "It has symbolic value. It shows the
political priority."
AIR THINNING FOR ELITE
The pressure from Washington is unlikely to let
up. As a senator, U.S. president-elect Barack
Obama introduced legislation early last year to
make it easier to probe and prosecute tax
dodging in offshore locations.
As president, he will need to fund an economic
stimulus plan that analysts estimate could cost
at least $500 billion.
Hug believes Liechtenstein's move shows the air
is also getting thinner for the Swiss elite.
And he sees the first cracks appearing in the
country's usually unshakeable facade.
"There is a conflict of interest between Swiss
industry and the banks," he said. "Industry
wants compromise on bank secrecy so that the
country's image is not spoilt."
Switzerland's banks - the liabilities of its
two largest are more than seven times the
country's Gross Domestic Product - have been
talking up the services they offer beyond
hiding customer identity.
"This is not all we have," said Urs Roth, Chief
Executive of the Swiss Bankers Association.
"We do have a number of traditional advantages,
like the economic, monetary and social stability."
Ultimately, however, it may not be the industry
but Swiss pride that is the biggest hurdle to
dropping bank secrecy. A nationwide vote would
likely be needed to change the rules.
Few speak out publicly on the subject. No major
Swiss bank wanted to discuss it with Reuters.
"The Swiss are so brainwashed, that the bank
there is untouchable," said Maram Stern, who
as Deputy Secretary General of the World
Jewish Congress oversaw negotiations with the
Swiss banks about dormant accounts.
"This was what the normal person on the street
was not capable of understanding. There were
people asking me: how can you question the bank?"
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Swiss banks were not even genuine Holocaust survivors,
nor genuine descendents of people who died in WW2.
Secondly, back in the 50's, 60's and 70's over
$100,000,000 had already been paid out to people who
could prove that they were descendents of people
similar to the above, or who were the people themselves
who had left Germany and were living elsewhere and had
put their money into Swiss banks to keep it safe. Many
of these people then claimed - and received money yet
again back in the late 90's, so these profiteers got
twice the money they were entitled to.
Thirdly, before a Swiss bank can close an account and
mark it as "lost", they must publish the information in
the official Council Advertisers all over the country.
This was done every week for 3 months and people were
asked to visit the bank and enter their claim. With
people who had opened accounts being scattered all over
the world, it is simply not possible for ANYONE to
advertise everywhere all over the world in order to
find the owners of bank accounts. People seeing the
advertising had 10 years to make their claims. Only
some mentioned in point 2 above claimed - and received
money and interest due to them.
Fourthly, After the period of validity for making
claims was over, the money reverted to the bank. Most
Swiss banks donated large amounts to charities, the
Swiss National Pensions Schemes etc. It was only after
that, that some lawyer in NY heard about it several
months too late and immediately started a lawsuit. If
he had followed his nose a bit quicker, he would still
could earned himself his 8-figure fee in "commission"
but his clients would have saved themselves his f-ing
about.
Fifthly - the current state of affairs with Germany
demanding access to Swiss bank accounts is typical of
the Big Brother state of the EU. Did you Americans
know, for example, that Paypal Germany LIMITS the
amount that you can receive in one year unless you send
them proof in writing that you have declared all such
Paypal income to the Tax Office. Did you Americans
know, for example, that users with a a Paypal account
registered in Germany MUST tell Paypal Germany how much
they earn, how they earn it, how much they are planning
to earn in the following 12 months etc. before their
account is released again, if indeed you take in more
that x Euros in which case they BLOCK your account
until you supply them with the information they demand.
The Germans are totally pissed off because Switzerland
is still a FREE country and every attempt of traitors
in the Swiss Government to try and make us join the
Fourth Reich (alias the EU) has FAILED - because we are
still a true democracy and any such important decisions
MUST be made by the citizens in the form of a national
referendum. The Germans already have deals with other
countries to exchange personal details, bank
information etc. of citizens and are, as I say, totally
pissed off that our banks refuses to let them have
access. So, f*** the Germans and their Big Brother
attitude and their other attempts of hassling we Swiss
into joining their new Reich.
Helvetica in Switzerland