Banks Sacrifice Employees For Leniency In Prosecution
Swiss banks are turning over thousands of employee names to U.S. authorities as they seek leniency for their alleged role in helping American clients evade taxes, according to lawyers representing banking staff.
“The banks are burning their own people to try and cut deals with the DOJ,” said Hornung. “This violation of personal privacy is unprecedented in the Swiss banking industry.”
Swiss banks want to settle a U.S. tax-evasion probe after the Justice Department indicted Wegelin & Co. on Feb. 2 for allegedly helping customers hide money from the Internal Revenue Service. Credit Suisse, HSBC and Julius Baer, which have said they expect to pay fines to resolve the tax matter, are handing over data to mollify the U.S., according to Hornung. The Swiss government authorized the delivery of staff names and that the “large majority” of employees have nothing to fear. Julius Baer and Zuercher Kantonalbank also said they received authorization. HSBC said it has delivered documents and is cooperating with the U.S.
HSBC shares declined 0.1 percent to 561.9 pence at 8:21 a.m. in London trading, paring this year’s gain to 14 percent. Credit Suisse climbed 0.3 percent in Zurich, while Julius Baer shares fell 0.1 percent.
Swiss banks, the biggest managers of offshore wealth, have seen secrecy erode since UBS AG (UBSN) admitted in 2009 to fostering tax evasion and paid a fine of $780 million to avoid prosecution. Switzerland’s largest wealth manager later turned over data on about 4,700 accounts to the IRS.
While Swiss companies are usually prohibited from sending evidence to assist foreign legal proceedings, the country’s governing Federal Council authorized an exemption in April at the request of an undisclosed number of banks.
“The Federal Council had no right to grant permission for banks to send any information to a foreign authority,” said Marcel Niggli, a professor of law at the University of Fribourg. “The companies know the risk of penalties in Switzerland is insignificant compared with the business risk in the U.S. It’s a cold-blooded action by the banks.”
Read More @ Bloomberg HSBC, Credit Suisse Sacrifice Employees To U.S.