washingtonpost.com
Business Digest

Tuesday, July 14, 2009

LEGAL

Judge Delays Case on Swiss Bank Secrecy

A federal judge agreed to delay a hearing in a U.S. government challenge to Swiss bank secrecy, giving the Justice Department and the Swiss government about three weeks to negotiate a settlement.

The United States had been scheduled to square off yesterday against Switzerland's largest bank over a U.S. demand that the bank, UBS, turn over information about thousands of Americans suspected of using secret Swiss accounts to evade taxes. The judge delayed the hearing until Aug. 3, as the parties requested.

The case pits the U.S. government's interest in stopping tax dodgers against Switzerland's tradition of bank secrecy, one of the engines of the Swiss economy.

Swiss officials had argued that the case could damage relations between the two countries. The Swiss government had also been using as a bargaining chip a pending treaty amendment that could grant the United States increased access to account information in future cases of alleged tax evasion. Whether the proposed treaty language would be of much practical use to the United States is a subject of debate.

The IRS has been trying to force UBS to disclose information about Americans believed to have held 52,000 undeclared accounts, including the identities of the account holders. The Swiss government has said it would block UBS from complying, even if it were ordered to do so by a U.S. court.

Meanwhile, UBS has been closing all Swiss-based accounts of American depositors, in some cases telling them they must travel to Switzerland if they want to collect their money. Those actions have already given clients and potential clients reason to question whether they can count on Swiss banks to discreetly hold their money over the long term.

-- David S. Hilzenrath

Stanford CFO Pleads Not Guilty, for Now

James M. Davis, accused of helping financier R. Allen Stanford swindle investors in a multibillion-dollar fraud, pleaded not guilty to criminal charges in a U.S. court and was released on bail.

Davis, 60, who was chief financial officer at Stanford Group, one of the companies implicated in the alleged plot, will change his plea to guilty at a hearing before U.S. District Judge David Hittner in Houston within the next two weeks, his lawyer said.

"We don't have an agreed sentence," David Finn, Davis's attorney, said after yesterday's arraignment. "It's going to be completely the judge's call."

Davis, who faces as many as 30 years in prison, was released by U.S. Magistrate Judge Calvin Botley on $500,000 bond with a $5,000 cash deposit, with his in-laws and son as co-signers.

Stanford and four other people were indicted by a Houston federal grand jury for their roles in an alleged scheme that included the sales of certificates of deposit through Antigua-based Stanford International Bank. Stanford has denied all charges of wrongdoing.

-- Bloomberg News

CONTRACTING

Aetna, UnitedHealth Win Tricare Awards

The Pentagon said yesterday that it has awarded health-care contracts worth tens of billions of dollars to managed-care providers Aetna and UnitedHealth Group, deciding not to renew deals with three current contractors. Tricare is the Defense Department's health-care program for service members, their families and survivors.

Aetna received the support contract for the Northern states, worth up to $16.68 billion, and will provide health-care and administrative services for about 2.8 million members of the military. The region is currently served by Health Net. UnitedHealth received a contract that could be worth up to $21.83 billion to cover services in southern states, where Humana and TriServ currently provide services. The western-region contract, worth up to $16.96 billion, went to TriWest Healthcare Alliance of Phoenix, which currently administers Tricare services there.

Health Net, Humana and TriServ all expressed disappointment with the decision and each said it was considering all options, including a protest of the award.

-- Associated Press

View all comments that have been posted about this article.

© 2009 The Washington Post Company