Pressure Builds on UBS Over Secrecy
U.S. Officials Vow Tough Action On Tax Havens
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Thursday, March 5, 2009
The chairman of Switzerland's largest bank announced yesterday that he is stepping down, less than two weeks after the banking giant UBS admitted it defrauded the U.S. government by helping American clients evade taxes.
Meanwhile in Washington, a Senate investigative panel increased the pressure on UBS to reveal client secrets, and other leaders vowed new efforts to combat bank secrecy.
Testifying on Capitol Hill, Treasury Secretary Timothy F. Geithner promised "a much more ambitious effort to deal with offshore tax havens." Addressing a joint session of Congress, British Prime Minister Gordon Brown called for a global ban on "shadow banking systems." Brown urged that G-20 nations tackle the issue at an April summit in London.
UBS's $780 million settlement with the U.S. government last month enabled the bank to avoid a potentially crippling criminal prosecution, at least temporarily. But yesterday's developments underscored that the settlement resolved relatively little and served largely to set the stage for broader battles.
The stakes are high all around. For the United States, Britain and other like-minded nations, it's about collecting sorely needed tax revenue and holding tax cheaters accountable.
For Switzerland, it's about preserving the cornerstone of its economy, an approach to banking that attracts deposits from around the world.
Under the settlement, the Swiss gave the U.S. government information about 250 to 300 American clients, the Swiss president has said.
That concession provoked protests from bankers and others in Switzerland who fear it could shatter confidence in the nation's banks.
UBS made no explicit mention of the settlement in a news release yesterday announcing that Peter Kurer won't stand for reelection as chairman next month. The statement credited Kurer with addressing another problem, the global banking crisis. UBS has suffered heavy losses on mortgage-related investments.
Kurer's departure follows the replacement last week of UBS's chief executive.
UBS clients have withdrawn a large volume of deposits; either they need their money or they no longer want to keep it at UBS.
At a Senate hearing yesterday, the focus was on secrets UBS still refuses to give up -- details about tens of thousands of accounts in which Americans' money was hidden from the IRS.
