Credit Suisse scandal threatens Swiss efforts to clean up reputation

Swiss banks, having paid more than $5 billion to settle allegations of helping wealthy Americans evade taxes, have trumpeted their reformed ways, publicly encouraging clients to sign up to government programs allowing them to declare untaxed assets. (Reuters)
Updated 06 April 2017
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Credit Suisse scandal threatens Swiss efforts to clean up reputation

ZURICH: An anonymous tip to Dutch authorities on thousands of suspicious accounts at Credit Suisse could hardly have come at a worse time for Switzerland and its banks.
The information that triggered raids in five countries raises new doubts about the effectiveness of Switzerland’s efforts to shed its decades-old reputation as one of the world’s major tax havens.
“It is a wake-up call not only for the banking community but also for (the) authorities,” said Mark Pieth, an anti-corruption expert and criminal law professor at the University of Basel.
“Instead of really just being angry at others they should ask, have we really been zealous enough?”
Switzerland is among the countries that signed up to a global data-sharing program led by the Organization for Economic Co-operation and Development (OECD), known as the Automatic Exchange of Information (AEI), which was designed to root out tax dodgers.
Swiss banks, having paid more than $5 billion to settle allegations of helping wealthy Americans evade taxes, have trumpeted their reformed ways, publicly encouraging clients to sign up to government programs allowing them to declare untaxed assets.
But last week’s raids on Credit Suisse’s offices in London, Paris and Amsterdam as part of a coordinated investigation in five countries show Switzerland still has a way to go to break with its past.
It is a wake-up call for financial markets as well.
“People really thought that, with the upcoming AEI and the cleanup of the European client portfolio completed, this stuff should not be an issue anymore,” Andreas Venditti, a banking analyst at Vontobel, said. “Now the market seems to be confused about what to think.”
Mark Branson, head of Swiss financial watchdog FINMA, said last week’s news was unwelcome at a time when Switzerland is presenting itself as a reformed financial center whose selling point is stability and reliability rather than tax perks.
“These headlines will not vanish overnight although the business model has fundamentally changed,” said Branson, speaking to reporters on Tuesday.
Another sign that Switzerland has to work harder to improve its reputation was the apparently deliberate efforts by Eurojust, the EU judicial agency which helped coordinate last week’s raids, to keep Swiss prosecutors out of the loop on enforcement actions.
Switzerland’s Office of the Attorney General on Friday demanded a written explanation for the snub.
In the new investigation, raids began on Thursday in the Netherlands, Britain, Germany, France and Australia, with visits also made at three of Credit Suisse’s offices. This followed a tip-off to Dutch prosecutors about 55,000 “suspect accounts.”
One of the big questions is how many of the accounts represent existing client relationships at Credit Suisse, Switzerland’s second-biggest bank, and how many are legacy accounts from when Swiss banking secrecy shielded customers’ money from tax authorities.
Iqbal Khan, the head of Credit Suisse’s International Wealth Management division, said in an interview he did not know where the 55,000 figure referred to by the Dutch office for financial crimes prosecution had come from as the bank had fewer accounts than that for all of Europe.
Khan, who is responsible for Credit Suisse’s private banking operations outside of Switzerland and Asia Pacific, said it was not certain if existing clients would be implicated.
Branson said FINMA had been in contact with Credit Suisse about the raids but was not in a position to say what portion of the case related to old accounts.
One thing that does seem certain is legal and regulatory issues are increasingly considered as a cost of investing in Swiss private banks.
Moritz Baumann, a bank analyst and client adviser at Swiss wealth manager Albin Kistler, said: “The fact is that legal issues are practically part of doing business as a bank.”


Iraq, Iran discuss boosting bilateral trade

Updated 17 November 2018
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Iraq, Iran discuss boosting bilateral trade

  • Both countries could raise annual bilateral trade to $20 billion from the current level of $12 billion
  • Iraqi President Barham Salih arrived Saturday and met with his Iranian counterpart Hassan Rouhani

DUBAI: Iranian President Hassan Rouhani said on Saturday Iran and Iraq could raise annual bilateral trade to $20 billion from the current level of $12 billion, in remarks carried live by state television.
“Today, the economic relations between the two countries reach about $12 billion (per year) and, through bilateral efforts, we can raise this figure to $20 billion,” Rouhani told visiting Iraqi President Barham Salih.

Salih's Iran visit comes less than two weeks after the United States restored oil sanctions that had been lifted under the 2015 nuclear deal.
State TV says Barham Salih arrived Saturday and met with his Iranian counterpart, President Hassan Rouhani.
Iran, which has had major influence over Iraq since the 2003 US-led invasion that toppled Saddam Hussein, is hoping to maintain exports to its neighbor despite the renewed sanctions. Iraq is Iran’s second-largest market after China, buying everything from food and machinery to electricity and natural gas.
Trade between the two countries was some $7 billion in 2017, and they have vowed to boost it to $8.5 billion this year.

(With AP)