Credit Suisse CEO: Tax Evasion Aid Not Systemic
The head honcho at Credit Suisse (NYSE:CS) is expected to address allegations on Wednesday that the Swiss bank not just helped aid in U.S. tax evasion but was a willing accomplice in helping wealthy Americans avoid paying their dues.
More specifically, Credit Suisse will instead place the blame on a small group of its private bankers who helped Americans disguise their wealth to pay less in taxes, Reuters reports. Credit Suisse CEO Brady Dougan is expected to tell U.S. senators that Credit Suisse only found “scattered evidence” of misconduct and that its top managers were not aware that a small contingency of its private bankers based in Switzerland had helped U.S. customers hide their income and assets.
“We deeply regret that — despite the industry-leading compliance measures we have put in place — before 2009, some Credit Suisse private bankers appear to have violated U.S. law,” Dougan said ahead of his appearance before a Senate subcommittee. ”The evidence showed that some Swiss-based private bankers went to great lengths to disguise their bad conduct from Credit Suisse executive management.”
The subcommittee is exploring accusations that the bankers were creating offshore shell entities, falsifying visa applications, and establishing a branch at Zurich airport that allowed wealthy U.S. clients to fly in, conduct their banking, and leave immediately.
Reuters quoted a report as saying that one banker went so far as to hand account statements to a client tucked inside a Sports Illustrated magazine.
Dougan struck back against the subcommittee’s investigation, attacking some of the methods used and some of the findings of the Senate report. He said that the subcommittee “improperly assumed every U.S. client account held in Switzerland was hidden from the U.S. government,” Reuters reports, adding that in 2006, Credit Suisse held 22,000 U.S. customer accounts worth 12 billion Swiss francs, or $13.5 billion.
The financial crisis did a number on the Swiss banking industry, as the U.S. renewed its crackdown on tax evasion. UBS (NYSE:UBS), one of Credit Suisse’s primary competitors, admitted to helping American citizens hide their wealth and assets to pay lower taxes. The company paid a $780 million fine in 2009 for its role.
Furthermore, Credit Suisse has been taken to task by the country of Switzerland for its cooperation with U.S. authorities. ”We are fighting Swiss lawsuits trying to prevent our delivery of information to U.S. authorities,” Dougan said. “These are not the actions of an institution flouting U.S. law enforcement or hiding behind Swiss law.” He added that the bank had worked with the U.S. to the extent of Swiss law and had also supported transparency efforts like as the Foreign Account Compliance Act in the United States, according to Reuters.