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Time Magazine Attacks Cherished Swiss Banking Privacy

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Switzerland Keeping the Secrets of Alleged Tax Evaders

KEN STIER
Time Magazine
Sunday, March 7, 2010

Comment: Authoritarian rag Time Magazine viciously attacks cherished Swiss banking privacy by smearing it as the domain of ruthless dictators – another helpful dose of propaganda graciously appreciated by the IRS, the collection agency for the private, run for profit, Federal Reserve.

Pick a dictator, almost any dictator – Cuba’s Fulgencio Batista, the Philippines’ Ferdinand Marcos, Haiti’s Papa and Baby Doc Duvalier, the Shah of Iran, Central African Republic Emperor Jean-BÉdel Bokassa – and they all have this in common: they allegedly stashed their loot in secret, numbered accounts in Swiss banks, safely guarded by the so-called Gnomes of Zurich. This association – of bank secrecy and crime – has been fed into the public’s imagination by dozens of books and movies. It’s a reputation that rankles the Swiss, who have a more benevolent view of their commitment to privacy – one that happens to extend to tax privacy. Don’t ask, because we won’t tell.

But the dramatic federal investigation of Switzerland’s UBS has blown the lid off bank secrecy – and revealed how Swiss banks abet tax evasion on a far more widespread, if more banal, level. Over the past two decades, these secret banking services have been peddled progressively downmarket – first to the lesser-known fabulously wealthy, then to just the wealthy; more recently, private bankers have been tripping over themselves soliciting business from doctors, lawyers and other folks who are what the biz generally calls “high net worth” individuals. “The IRS has been concerned for decades that a combination of a global economy, the Internet, offshore banking, was really going to take offshore tax evasion from the old so-called ‘gentlemen’s sport’ to tax evasion for the masses,” says Mark Matthews, a former deputy IRS commissioner and now a tax attorney with Morgan, Lewis & Bockius LLP.

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Time Magazine Attacks Cherished Swiss Banking Privacy 100210banner1

The federal investigation into UBS, which led to a $780 million fine and an agreement to turn over the names of more than 4,450 suspected tax cheats, is now in tatters after Swiss courts ruled against the executive-branch deal. To get around it, a special law has been proposed to accomplish the handoff, but that may not get anywhere in the legislature either. One outcome is already known: tax evasion had become a key service of the Swiss economy, not some isolated event. “They have been outed completely because a very large chunk of their business has been shown to include people cheating on taxes,” says Jack Blum, a tax-haven expert. Being “reasonably conservative,” he estimates 30% of Swiss banking is related to tax evasion, a figure that jibes with recently released bank data.

  • A d v e r t i s e m e n t

These revelations come as the financial meltdown has punched a huge hole in projected revenues for governments, which are suddenly a whole lot less tolerant of tax cheats. That’s particularly true in Germany, whose wealthy account for a significant portion (at least 10%) of the $1.8 trillion in Swiss banking assets. That translates into hundreds of millions in lost revenue and is the reason the German Finance Minister recently thundered, “There’s no future for bank secrecy. It’s finished. Its time has run out.” The Swiss are not going to be so easily convinced. The Swiss government has already warned that it will not cooperate with German authorities if they go ahead with plans to purchase purloined data about Germans with Swiss bank accounts.

Full story here.

This article was posted: Sunday, March 7, 2010 at 5:05 am





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