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No let-up in US fight against tax evasion

The tax authorities continue to target customers of Swiss banks in the United States, like this branch of UBS in New York

While uncertainty surrounds negotiations with the United States on a global bank accord, Washington has cut the number of investigators assigned to fighting tax evasion.

But this measure does not mean the US is softening its hard line towards the Swiss banks or that the Obama administration has revised its priorities.

The Bloomberg news agency reported on March 27 that the US Justice Office has reduced the number of investigators and prosecutors in its fiscal service by 30 per cent.

Quoting four anonymous sources, the article said 25 of 95 members of this service had been seconded for six months to regional offices of the federal prosecutor. Three others had been permanently transferred.

Charles Miller, spokesman for the US Department of Justice (DoJ), confirmed the personnel changes but downplayed their significance.

“This move doesn’t mean anything in particular, it’s a temporary situation until sometime in September when those prosecutors will come back here to Washington,” he told “Off-shore non-compliance remains a priority for this government.”

Miller stressed that those investigators seconded to the regions would continue their involvement in the tax evasion fight. “Prosecutors will take a case with them if they’re working on a case right now,” he said.

“We work very closely with the Internal Revenue Service and the IRS refers cases to us,” Miller said.

Hiring freeze

Scott Michel, a lawyer representing dozens of customers with UBS and other Swiss banks, doesn’t believe either that the move “signifies any reduction of interest of the US government in off-shore compliance”.

“This reduction in staff is not a political move, it’s a budgetary move due to the hiring freeze in the federal government,” he said.

A former top official in the US Treasury, who wishes to remain anonymous, doubts that the reduction in staff in the fiscal service is linked to these cutbacks in the federal administration, pointing out that the fiscal year 2012 began six months ago.

Michel himself prefers to see a connection with progress in examining the files of Swiss bank account holders who turned themselves in to the US authorities over their tax arrears.

But the former Obama administration top official also believes the reduction in the number of investigators dealing with tax evasion should not be taken as a government climbdown: “Ninety-five was a big number, so the remaining 67 is still a very large number of prosecutors.”

Hard to read

At the Swiss embassy in Washington, spokesman Norbert Bärlocher said “Switzerland is not trying to interpret” the DoJ move.

But he also sees no reason to believe the Obama administration is laying less stress on the fight against tax offences. On the contrary. “It could be that they have had people making voluntary disclosures across the US and now they are sending investigators into the regions to be closer to the cases in question,” said Bärlocher.

On the political and diplomatic front, with bilateral negotiations underway to reach a global accord on resolving fiscal and banking differences, the situation is harder to read.

“It’s been completely silent in the last six weeks or so, while in the past there were statements and leaks in the press,” commented Michel.

The Zurich Tages-Anzeiger newspaper believes high-level negotiations between Switzerland and the US could resume, and that the state secretary in the Swiss finance ministry, Michael Ambühl, is getting ready to travel to Washington for what could be a decisive visit.

Bärlocher, however, said he could not confirm Ambühl’s visit. “The Swiss and American delegations are in permanent contact, usually through an exchange of emails.

“But we are currently considering whether it makes sense for him to come to Washington,” said the embassy spokesman, recalling that “the last meeting between the delegations was five or six weeks ago”.

The Swiss cabinet confirmed on Wednesday that it was seeking progress with the Americans so as to reach a “global and definitive” solution for Swiss banks. The government discussed at its weekly meeting possible ways for the banks to cooperate with the US authorities.


Last December Swiss ambassador to the US Manuel Sager told that Switzerland and the US were “relatively close” to a global accord.

But on March 8 this year, Finance Minister Eveline Widmer-Schlumpf seemed to blame the US for the impasse when she told the New York Times that, “We could sign it [a deal] tomorrow if the United States wants to.”

The embassy considers it “subjective” to speculate on how close the two sides are to an accord.

“There are important questions that still have to be clarified,” said Bärlocher. “We agree on the broad lines, but we still have to agree on the figures, for example the number of dossiers on which an exchange of information will apply.”

But the Swiss spokesman says he “remains optimistic as both sides would gain from an agreement”.

UBS was the first Swiss bank to find itself under scrutiny by US justice. It was fined $780 million in 2009 for aiding American citizens in defrauding the tax authorities.

The following year the Swiss government signed an accord on handing over to the US authorities the details of 4,500 American clients of UBS. The accord was ratified by parliament in 2010.

US tax amnesties led to more than 30,000 tax evaders being identified. The US justice authorities were able to find evidence that Swiss banks were complicit in this tax evasion.

Several Swiss bankers and lawyers have been arrested or put under investigation in the US in recent months. They include three managers with the private Wegelin bank. At the end of January, Wegelin announced it was selling most of its business to the Raiffeisen Group.

Several days later, the Justice Department charged Wegelin with aiding and abetting US clients to defraud the tax authorities. It is the first time a foreign bank has been formally charged for such practices in the US.

Eleven banks in Switzerland, including Credit Suisse, are under investigation by the US. 

(Translated from French by Morven McLean)

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