When the world gets closer.

We help you see farther.

Sign up to our expressly international daily newsletter.

Already a subscriber? Log in .

You've reached your limit of one free article.

Get unlimited access to Worldcrunch

You can cancel anytime .


Exclusive International news coverage

Ad-free experience NEW

Weekly digital Magazine NEW

9 daily & weekly Newsletters

Access to Worldcrunch archives

Free trial

30-days free access, then $2.90
per month.

Annual Access BEST VALUE

$19.90 per year, save $14.90 compared to monthly billing.save $14.90.

Subscribe to Worldcrunch

Are The U.S. And Switzerland Set For A Grand Bargain In Tax Fraud Probe?

The reassigning of US prosecutors away from foreign tax fraud cases is the latest sign that the standoff between Washington and Bern may be moving rapidly toward a final, negotiated settlement. Heads rolling at top Swiss banks may have helped pave the way

Rolling in the right direction? (LKM)
Rolling in the right direction? (LKM)
Walter Niederberger and Arthur Rutishauser

ZURICH - Tensions have eased in the Swiss-American tax conflict, with Washington -- at least for the time being -- putting its vast tax-fraud proceedings against Swiss banks on ice.

Of the 95 prosecutors at the Department of Justice (DOJ) who deal with tax matters, 25 are being relocated for six months, and three others have been assigned to other tasks. What is remarkable is that the prosecutors concerned are those who were working on tax evasion issues concerning foreign banks -- notably those in Switzerland.

Although a DOJ spokesperson told the Bloomberg news agency that those cases were still being pursued, in practice the removal of the prosecutors means that many of the Swiss cases are on hold – and that means a window of opportunity has opened for a broader agreement over the conflict.

At the moment, it can also be assumed that the U.S. tax authorities are not preparing a major attack on Swiss banks. They simply don't have the staff capacity. Florida-based attorney Jeffrey Neiman, the former lead prosecutor in the UBS case, confirms: "How much priority is given to tax fraud at the DOJ can be measured by how many prosecutors they assign to it. And if a lot of specialists are on it, there's less time for other pending cases."

William Sharp, a tax lawyer with many Swiss clients, goes further: "The brakes have been put on the on-going investigations of Swiss banks, bankers and clients. The Justice Department is fully occupied with other investigations."

Well-informed sources in the Swiss capital Bern say that negotiations between Switzerland and the U.S. have reached a decisive phase. Officially Bern is not commenting on the withdrawal of the U.S. prosecutors from the Swiss tax cases. Mario Tuor, spokesman for the Swiss State Secretariat for International Financial Matters (SIF), declined to address the issue. But behind the scenes the information is that SIF head Michael AmbĂĽhl is planning an imminent trip to the States to negotiate a final agreement.

Swiss president Eveline Widmer-Schlumpf may also meet with U.S. Secretary of the Treasury Timothy Geithner when she goes to Washington to attend the spring meeting of the International Monetary Fund. Because of this rapprochement between the Americans and the Swiss, any hard-nosed action taken by U.S. authorities would torpedo the possible agreement.

Swiss concessions

Another indication that an agreement may be imminent are the numerous concessions that the Swiss have already made. Both Houses of Parliament have approved a new interpretation of the double taxation agreement with the U.S. that makes it possible for U.S. authorities to request information about thousands of possible tax evaders without having to deliver specific details such as the names of the persons or the banks concerned. A task force to deal with the legalities of questionable cases has also been created. The Swiss Bankers Association has been sounding out the eleven most targeted banks with regard to how much each would contribute to the expected billions, either in fines or settlement if a global solution was found.

It has also been observed that all eleven banks in question have seen recent changes in top management. The latest is the retirement of Raymond Bär as chairman of Julius Bär. At 52, he is now the country's youngest honorary bank chairman, and his only task is to work towards finding a solution to the Swiss-American tax conflict.

Last summer, Walter Berchtold of Credit Suisse was removed as head of private banking and relegated to the relatively unimportant post of chairman. In February, Alexandre Zeller, CEO of HSBC (Schweiz), left the bank. At the Basler Kantonalbank the top private banking manager left in May 2011, and the departure of their private banking head in Zurich was announced in December. At Bank Wegelin, the head of the Zurich branch was removed before the bank started selling off most of its business to Raiffeisen.

The changes also affected the Swiss branches of foreign banks, such as Israeli bank Leumi, which is also on the list of eleven banks. Its chairman and CEO resigned earlier this year. The chairman of the United Mizrahi Bank (Switzerland) had already resigned in November 2011.

Asked about the resignations by the Swiss paper Neue ZĂĽrcher Zeitung, all the banks concerned stated that they were not connected to the tax conflict. But nobody on the market believes in that many coincidences.

Observers generally point to the example of UBS: an agreement with the U.S. followed immediately after Marcel Rohner and Peter Kurer, the most controversial members of management, took their leave. The other banks are hoping their management changes will have a similar effect.

Read the original article in German

Photo - LKM

You've reached your limit of free articles.

To read the full story, start your free trial today.

Get unlimited access. Cancel anytime.

Exclusive coverage from the world's top sources, in English for the first time.

Insights from the widest range of perspectives, languages and countries.

eyes on the U.S.

Murdoch's Resignation Adds To Biden Good Luck With The Media — A Repeat Of FDR?

Robert Murdoch's resignation from Fox News Corp. so soon before the next U.S. presidential elections begs the question of how directly media coverage has impacted Joe Biden as a figure, and what this new shift in power will mean for the current President.

Close up photograph of a opy of The Independent features Rupert Murdoch striking a pensive countenance as his 'News of the World' tabloid newspaper announced its last edition will run

July 7, 2011 - London, England: A copy of The Independent features Rupert Murdoch striking a pensive countenance as his 'News of the World' tabloid newspaper announced its last edition will run July 11, 2011 amid a torrid scandal involving phone hacking.

Mark Makela/ZUMA
Michael J. Socolow

Joe Biden was inaugurated as the 46th president of the United States of America on Jan. 20, 2021.

Imagine if someone could go back in time and inform him and his communications team that a few pivotal changes in the media would occur during his first three years in office.

There’s the latest news that Rubert Murdoch, 92, stepped down as the chairperson of Fox Corp. and News Corp. on Sept. 21, 2023. Since the 1980s, Murdoch, who will be replaced by his son Lachlan, has been the most powerful right-wing media executivein the U.S.

While it’s not clear whether Fox will be any tamer under Lachlan, Murdoch’s departure is likely good news for Biden, who reportedly despises the media baron.

Keep reading...Show less

The latest