Swiss Bankers Fear 'Economic War' with G-20

The Washington Times (Washington, DC), March 27, 2009 | Go to article overview

Swiss Bankers Fear 'Economic War' with G-20


Byline: John Zarocostas, SPECIAL TO THE WASHINGTON TIMES

GENEVA -- Swiss bankers see sinister motives behind the mounting international pressure on the country to loosen its strict bank-secrecy laws.

The bankers said the United States and Britain - backed by France, Germany and other Group of 20 powers - are waging an economic war to force the staunchly neutral nation to bring its tax disclosure norms for offshore accounts into conformity with global transparency standards. Switzerland risks being blacklisted if it fails to comply, they said.

We have been very successful, and we are making many of our competitors jealous. So this is an angle to attack, an economic war to gain market share. That's what we are talking about, Pierre Mirabaud, chairman of the Swiss Bankers Association, said in an interview with The Washington Times.

Swiss banks manage an estimated $2.42 trillion in offshore accounts. About two-thirds of that belongs to foreign private investors, according to an internal study by the association.

That makes the landlocked nation the biggest offshore banking-services center in the world, with about 27 percent of the global market.

Thousands of wealthy Americans have numbered accounts in Swiss banks. Although the banks know the identities of these customers, their names do not appear on statements or in the banks' computer records.

Mr. Mirabaud was critical over the U.S. government's recent prosecution of UBS, the Swiss banking giant, for trying to help its U.S. customers evade taxes by placing their funds in secret accounts.

UBS agreed in February to pay $780 million to the U.S. Justice Department, and Swiss authorities agreed to provide the names of about 300 people accused of evading taxes to the Internal Revenue Service. UBS refused, however, to honor a request for information on an additional 50,000 accounts.

The IRS is giving Americans six months to provide evidence against their advisers or bankers, the Associated Press reported Thursday.

Mr. Mirabaud acknowledged that UBS had engaged in criminal conduct in the United States and agreed that the case must be pursued.

But he questioned the pursuit of the 50,000 U.S. banking customers in Switzerland, insisting that the U.S. actions violate international law and the terms of a bilateral tax treaty.

The Swiss are 100 percent right in this situation. They have a sovereign right to control the law inside their own border, said Daniel Mitchell, a Cato Institute analyst in Washington.

It is not the job of Switzerland or Swiss banks to enforce U.S. tax laws, Mr. Mitchell said. Countries can agree to enforce each other's laws, but they are not required to do so.

To avoid being placed on the G-20's list of uncooperative states, the Swiss government agreed March 13 to adopt international standards concerning tax-evasion issues pertaining to foreign bank accounts. That agreement will allow the exchange of information with other nations in individual cases.

Other tax havens recently agreed to adopt similar measures - including Austria, Liechtenstein, Luxembourg and Singapore - in order not to be included in the Organization for Economic Cooperation and Development's list of uncooperative nations. …

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Swiss Bankers Fear 'Economic War' with G-20
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