Advertisements

The Secrets of the Swiss


Photo: Pixabay

By THÉRÈSE MARGOLIS    

When it comes to financial transparency, Switzerland has a pretty miserable record.

For more than 300 years, the country’s financial institutions have prided themselves on their tight-lipped discretion and no-questions-asked deposits.

In fact, in 1713, the Grand Council of Geneva adopted a formal code of secrecy prohibiting banks from divulging information with anyone except the account holder.

And so, for three centuries, Swiss banks were the financial institutions of choice for all those who were less than eager to declare their incomes or fork up tax payments to their respective governments.

Switzerland’s taciturn bankers provided tax refuge for criminals and not-so-forthcoming politicians from around the globe to stash their cash, and by 1934, the country decided to make the code a legal mandate, passing the Swiss Federal Banking Act, which made revealing a client’s identity a criminal offence punishable by imprisonment.

When the Nazis looted Jewish homes and businesses, they hid their booty in Swiss banks.

When Raúl Salinas de Gortari (brother of Mexico’s notorious former President Carlos Salinas de Gortari) wanted to discretely hide the $64 billion he skimmed from the country’s coffers, he squirreled it away in a Swiss bank.

And when Citibank and other big U.S. banks were reticent to disclose their assets to Uncle Sam in the late 1990s, guess where they turned to conceal their resources?

In 2008, a former Union Bank of Switzerland (UBS) employee-turned-whistleblower pleaded guilty to charges of a conspiracy to defraud the U.S. Internal Revenue Service (IRS) by helping Americans to evade taxes on funds held in offshore accounts.

The subsequent scandal and public relations nightmare for Switzerland led to the Alpine nation signing a landmark convention in 2013 to share information with the Organization for Economic Cooperation and Development (OECD) and agreeing to exchange financial data with 60 countries worldwide.

And with that – theoretically – the three-century-long practice of Swiss banking secrecy went out the window.

Or, at least, it was supposed to.

Asking Swiss banks to come clean and open up their accounts for international scrutiny is about tantamount to asking Kim Jung-un to sign a nuclear nonproliferation accord – it simply ain’t gonna happen.

Despite a flamboyant display of financial policy turnover and unending promises to cooperate with other institutions around the globe, it’s pretty much business as usual in good old Switzerland, with bankers doing everything in their power to help their clients keep their fiscal secrets.

After the UBS fiasco, the Swiss banking community began playing a shell game, switching off their client’s accounts from one institution to another in order to stay one step ahead of auditors.

And then Swiss authorities began passing the buck, actively investigating how private data about individual accountholders was leaked by foreign tax institutions – including those in France and Germany – rather than going after their own banks.

The end game is that Switzerland is trying to distract attention elsewhere as its financial institutions pay little more than lip service to transparency policies while, in fact, they are far more interested in keeping longtime clients than outing them.

The service-conscious practices of Swiss bankers are diametrically opposed to the role of global tax enforcers.

It is not in their nature to betray their clients.

But it is in their nature to keep aiding and abetting tax evasion.

Thérèse Margolis can be reached at therese.margolis@gmail.com.

 

Advertisements
Categories: Finance, OpinionTags: , , , , , , , , , , ,

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

w

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.