Deal Sought in Swiss Bank Suit
Monday, July 13, 2009
The U.S. government said yesterday that it is trying to settle its demand that Switzerland's largest bank turn over information about thousands of Americans suspected of using secret Swiss accounts to evade taxes.
Stepping back from a legal and diplomatic showdown, the U.S. government joined the Swiss government and Swiss banking giant UBS in asking a federal court to postpone a hearing scheduled for today so they can continue settlement talks.
The parties have agreed that any settlement "would necessarily include a provision requiring UBS to provide the Internal Revenue Service information on a significant number of individuals with UBS accounts," the Justice Department said.
UBS earlier this year admitted that it schemed to defraud the U.S. government by helping American clients hide money from the IRS -- for example, by holding their assets in the names of offshore companies. To avoid immediate criminal prosecution, UBS agreed to pay $780 million.
Since then, in a separate court action, the IRS has been trying force UBS to disclose information about Americans believed to have held 52,000 undeclared accounts, including the names of the account holders.
The Swiss have resisted the demand as a "fishing expedition" and a violation of Swiss law, and last week the Swiss government said it would block UBS from complying, even if it were ordered to do so by a U.S. court. The case threatens to further erode Swiss bank secrecy, a cornerstone of the Swiss economy.
A federal judge in Miami had given the U.S. government a deadline of noon yesterday to say how far it would ask the court to go to compel UBS to disclose the information. For example, the judge asked whether the government would seek an order freezing UBS assets in the United States or placing the bank's vast U.S. operations in receivership.
In a court filing yesterday, the Justice Department said the question was premature, and it did not respond directly. Instead, it said the U.S. government would seek "appropriate steps," including "monetary sanctions sufficient to bring UBS into compliance."
Swiss officials had been talking openly about ongoing efforts to settle the case. Without denying it outright, the Justice Department had suggested that talk of such efforts was unfounded. Yesterday, the parties asked the federal court in Miami to delay the hearing until Aug. 3 while they continue negotiations.