GENEVA – Washington’s intensifying hunt for tax evaders and their accomplices is creating a state of paranoia in the Swiss banking industry, with many bankers afraid to even leave the country, observers say.
“There are many hundreds, up to a thousand (Swiss bankers and others who have worked directly with U.S. clients) who are afraid of traveling to the United States or even to leave Switzerland,” Martin Naville, the head of the Swiss-American Chamber of Commerce, said.
Business lawyer Douglas Hornung agreed with that estimate, pointing out that for people who used to work in Swiss banks’ U.S. divisions, “certainly even the lower level people are probably afraid to leave Switzerland.”
Swiss banks are believed to have accepted tens of billions of undeclared dollars from American citizens, though they now refuse such money, and a number of them are under U.S. investigation.
In a bid to end the bitter dispute, Switzerland recently concluded a deal with the U.S. that ended its decades-long legal tradition of banking secrecy, enabling the banks to hand over information on American citizens’ accounts.
Far more data on the people who helped create and service those accounts will also soon be available to U.S. authorities, allowing them to intensify their hunt for the accomplices of tax dodgers.
The United States has not made public which individual bankers it is probing, but according to Swiss media at least 24 bankers have already been indicted, while more could figure unbeknownst to themselves on Interpol wanted lists.
In October, the extent of U.S. reach was amply demonstrated when a former high-ranking UBS executive was suddenly arrested in Italy on suspicion he helped American customers conceal their assets.
Raoul Weil, the 54-year-old ex-chairman of UBS’s global wealth management service, was indicted by a U.S. federal grand jury in 2008 for his alleged role in overseeing the cross-border business. The indictment alleges that Weil and co-conspirators helped U.S. customers hide around $20 billion in assets from tax authorities.
Weil probably “thought that after all of these years the U.S. would not continue to trace him and certainly not put him on the Interpol list,” Hornung speculated, “but he was definitely wrong”.
“Other people of his previous rank just don’t leave Switzerland. They just don’t,” he said.
Swiss banks and industry representatives have for more than 1½ years been warning those who worked directly with U.S. clients to be wary of traveling, but Weil’s arrest has likely adding to bankers’ angst, said Hornung.
“They are paranoid, and this kind of event obviously is quite bothersome for them, because nobody can guarantee them that they don’t risk anything,” he said, adding that he had received numerous calls before the summer holidays from bankers concerned about the dangers of leaving Switzerland.
Denise Chervet of the Swiss Bank Employees Association stressed, however, that “Weil was not just anybody,” insisting that lower-level employees had little to fear.
“It is the employees who regularly went to the United States to visit clients there or the ones who managed undeclared U.S. fortunes of more than $1 million who should worry,” she said.
She acknowledged that her organization had told some bankers who clearly had reason to worry: “Don’t go abroad, at least not by plane, and don’t check into a hotel.”
“I don’t even dare leave Zurich anymore,” one anonymous banker who recently found out his name had been handed to U.S. authorities told the Le Matin Dimanche weekly.
Naville meanwhile insisted that the many people he has spoken with in the industry who are refraining from travel are not suffering from paranoia, but would just “rather be safe than sorry.”
“Many, many thousands of people have been engaged in this business in some way,” he said. “Some know they have completely overdone it, but others think they are not in trouble, because they haven’t done anything bad. But do you really want to travel and take the risk?”