Trying to Get the Swiss to Talk

[David Farber <dave () farber net>]

Begin forwarded message:
From: dewayne () warpspeed com (Dewayne Hendricks)
Date: March 29, 2008 10:09:08 PM EDT
To: Dewayne-Net Technology List <xyzzy () warpspeed com>
Subject: [Dewayne-Net] Trying to Get the Swiss to Talk

March 29, 2008
Trying to Get the Swiss to Talk
By CARTER DOUGHERTY
<http://www.nytimes.com/2008/03/29/business/worldbusiness/29swiss.html?ex=1364443200&en=947a14d5ebf02aeb&ei=5090&partner=rssuserland&emc=rss&pagewanted=all 
>

GENEVA — Like Paul Revere, Konrad Hummler sounded the alarm last week  
as he made his way by train and by plane to his bank’s branches across  
Switzerland. This country’s storied role as secret banker to the  
world’s wealthy is under threat like never before, Mr. Hummler warned.

Mr. Hummler, the jaunty, blunt-spoken managing partner of Wegelin &  
Company, a small private bank in St. Gallen, has watched a German tax- 
evasion scandal evolve into a debate about banking secrecy here.  
Worried that the treasured discretion of Swiss banks is under assault,  
Wegelin’s foreign clients have been inquiring about their money.

Mr. Hummler says that this time, Switzerland may not be able to stop  
the rest of the world from prying open Swiss banking.

“What is going on is a power play,” he said. “It may be unusual in  
today’s Europe, but it is here.”

This land of stunning Alpine vistas, which has chosen to remain  
outside the European Union, has always loomed large in the global  
imagination as the place where the wealthy stash their money beyond  
the tax man’s reach. The best estimates suggest that image is true, to  
the tune of $1 trillion to $2 trillion.

The scandal that threatens that lucrative business began when German  
authorities obtained secret financial data from Liechtenstein,  
Switzerland’s tiny neighbor with similar banking laws. The information  
in hand, investigators fanned out across Germany to seize documents  
thought to be related to tax evasion by hundreds of wealthy Germans.  
Cases are now being prepared based on the information, a process  
likely to take years. The fallout has claimed the job of one top  
executive, Klaus Zumwinkel, who had headed the German postal service,  
and has given the German left a political boost.

But Switzerland is the bigger prize. And its continuing refusal to  
help other countries catch tax cheats hiding their money there appears  
to have hardened Europe’s resolve to force change.

“If a car is stolen in Germany and taken to Switzerland, the Swiss  
help find it,” said Hans Eichel, a member of the German Parliament and  
a former finance minister. “But when it’s about tax evasion — and much  
larger sums — they do nothing. No one outside Switzerland understands  
that.”

To Thomas Borer, a former Swiss ambassador to Germany, few inside  
Switzerland understand the depth of foreign discontent.

“It is obvious,” said Mr. Borer, now a lobbyist, “the government and  
the banks, really, are heavily underestimating the impact of this  
scandal.”

“There may be an avalanche coming, and we are not ready,” he added.

Mr. Borer compares the coming storm to the debate Switzerland faced in  
the late 1990s over dormant bank accounts belonging to Holocaust  
victims and their families. When first faced with demands for  
restitution, Swiss banks dismissed the claims despite urgent warnings  
from some Swiss diplomats that the issue would not go away.

After an international blowup that sullied their reputation, the banks  
settled the matter by creating a $1.25 billion restitution fund.

[snip]

-------------------------------------------
Archives: http://www.listbox.com/member/archive/247/=now
RSS Feed: http://www.listbox.com/member/archive/rss/247/
Powered by Listbox: http://www.listbox.com