Swiss bank admits to helping wealthy Americans avoid taxes, fined $2.6 bn

AFP Photo / Fabrice Coffrini

Swiss bank Credit Suisse pleaded guilty Monday to the charge that it facilitated wealthy Americans who sought to commit tax evasion, becoming the first major bank to admit criminal wrongdoing in over 20 years and agreeing to pay $2.6 billion in fines.

The settlement announcement Monday included an acknowledgement from bank officials that they knowingly and intentionally helped thousands of US citizens put their money into offshore accounts, allowing them to hide financial assets from the US Internal Revenue Service. #US Attorney General Eric Holder, who has been criticized for being too slow to go after major banks, told reporters that the admission of guilt was a major step forward for prosecutors investigating financial institutions.

“This case shows that no financial institution, no matter its size or global reach, is above the law,” Holder said, as quoted by The New York Times. “Credit Suisse conspired to help US citizens hide assets in offshore accounts in order to evade paying taxes. When a bank engages in misconduct this brazen, it should expect the Justice Department will pursue criminal prosecution to the fullest extent possible, as has happened here.”

The penalty was handed down during a 45-minute hearing in New York City on Monday, forcing the bank - which has an American chief executive - to shell out the large sum and hire an independent monitor for two years.

The bank agreed to shell out a federal fine of $1.13 billion, $670 million to the IRS, another $715 million to the New York State Department of Financial Services, and $100 million to the Federal Reserve.
The deal was struck just months after a US Senate panel determined that Credit Suisse had specifically wooed more than 22,000 US customers with a net worth between $10 billion and $12 billion, with little - if any - of that money ever paid to the IRS.

Reuters / Eric Thayer

Bankers traveled from Switzerland to recruit clients at US golf tournaments, according to the panel, and at one point a banker handed over financial documents hidden in a copy of 'Sports Illustrated' magazine.

“The bank went to elaborate lengths to shield itself, its employees, and the tax cheats it served from accountability for their criminal actions,” Holder went on. “They subverted disclosure requirements, destroyed bank records, and concealed transactions involving undeclared accounts by limiting withdrawal amounts and using offshore credit and debit cards to repatriate funds. They failed to take even the most basic steps to ensure compliance with tax laws.”

Before Credit Suisse agreed to plead guilty, six of the company's former bankers were indicted on charges that they helped wealthy Americans hide $4 billion in assets, one of which pleaded guilty. Holder said the settlement took months of planning, with the charges serious enough to close the bank down entirely.
“We deeply regret the past misconduct that led to this settlement,” Brady Dougan, the American CEO, said in a statement on Monday. “The US cross-border matter represented the most significant and longstanding regulatory litigation issue for Credit Suisse. Having this matter fully resolved is an important step forward for us.”

The pressure has increased for top officials who remain at the bank, as well, with well-known Swiss industry leaders calling for the Dougan’s resignation.
“In my opinion, the CEO as well as the chairman of the board must go in order to save the bank,” Christoph Blocher, a billionaire industrialist and influential politician, told Swiss newspaper Schweiz am Sonntag.

Pressure has amplified on several European banks in recent years. In 2009, UBS – the largest bank in Switzerland - entered into a deferred prosecution agreement with the US Justice Department. Under the terms of the deal, the bank agreed to hand over $780 million in fines and provide the names of the thousands of customers who were thought to be evading the IRS.

The next major bank to plead guilty is expected to be BNP Paribas, a massive French bank suspected of doing business with Sudan and Iran - countries that are blacklisted by the United States. Estimates on the size of the fine have ranged from $3 billion to north of $5 billion. The stiff penalties are an indication that the US Department of Justice is trying to shed its reputation of being soft on banking criminals, according to Samuel Buell, a former federal prosecutor who now teaches law at Duke University.

“The Justice Department is trying to play to two audiences at the same time: the public, which wants something that looks like real punishment, and the financial industry, which needs to be sent the sort of message that will deter these behaviors,” he told Bloomberg.

 Source: RT

Switzerland rejects world's highest minimum wage

The proposal "to protect equitable pay" was the most prominent of several referendums

Swiss voters have overwhelmingly rejected a proposal to introduce what would have been the highest minimum wage in the world in a referendum.

Under the plan, employers would have had to pay workers a minimum 22 Swiss francs (about $25; £15; 18 euros) an hour. Supporters said the move was necessary for people to live a decent life. But critics argued that it would raise production costs and increase unemployment.

The minimum wage proposal was rejected by 76% of voters. Supporters had argued it would "protect equitable pay" but the Swiss Business Federation said it would harm low-paid workers in particular.
The issue was the most prominent of several referendums held on Sunday.

Votes were held on a number of issues with the minimum wage attracting the most attention

Most of Switzerland's low-paid workers operate in the service industry

Critics of the proposed $2.8bn purchase of the jets made by Saab say that it requires cost cuts in other key policy areas such as education

A controversial plan to buy 22 Swedish-made Gripen fighter jets for the Swiss Air Force was narrowly rejected by 53% of voters. Meanwhile, 63% of voters backed a plan to impose a lifelong ban on convicted paedophiles working with children. But it was the trade union-backed proposal to ensure that an annual salary was not less than £32,000 ($53,600) a year that provoked the most debate.

 Analysis: Imogen Foulkes, BBC News, Geneva
 
This was the third referendum on pay in Switzerland in the last 18 months, reflecting concern that the gap between rich and poor is growing here too.

Last February the Swiss backed restrictions on bosses' bonuses, but in November they rejected even stricter controls which would have limited top salaries to no more than 12 times that of the lowest paid.

The vote is a sign that Switzerland's long tradition of social partnership between business leaders and workers may be eroding: the bankruptcy of national airline Swissair over a decade ago, the disastrous losses suffered by the big Swiss banks in the subprime mortgage scandal, and the huge salaries and bonuses which continue to be paid in the banking and pharmaceutical industries have led many Swiss to lose trust in their business leaders.

Unions argued that the measure was necessary because of the high living costs in big Swiss cities such as Geneva and Zurich. The unions are angry that Switzerland - one of the richest countries in the world - does not have a minimum pay level while neighbouring France and Germany do.

They argue that surviving on less than 4,000 francs a month is not possible because rents, health insurance and food are all prohibitively expensive.

The minimum wage in Germany will be 8.5 euros an hour from 2017.
A key element of the campaign in favour of a minimum wage was the argument that the Swiss welfare system was being forced to subsidise businesses which refuse to pay a living wage.
But business leaders and the government said low unemployment and high standards of living for the majority showed there was no need for change.

Small businesses, in particular Swiss farmers, were especially worried that being forced to pay their staff 4,000 francs a month would price their products out of the market.
Most of Switzerland's low-paid workers operate in the service industry, in hotels and restaurants, and the majority of them are women.
Source: BBC News