Search Result for baer — 12 articles

Why is Switzerland giving up banking secrecy? Could it be it’s all about bankers avoiding justice?

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The FT notes that:

Switzerland has taken a decisive step to resolve its dispute with the US over tax evasion unveiling plans to relax its once untouchable bank secrecy laws to allow banks to make individual settlements with the US over their role in helping Americans evade taxes.

Since Switzerland’s biggest lender, UBS, admitted in 2009 it had helped thousands of clients avoid paying US taxes, American authorities have been investigating other Swiss banks they believe may have offered similar services, including Julius Baer and Credit Suisse.

Now I should be welcoming this. But as ever the devil is in the small print and my concern is here:

US authorities last year intensified pressure on Switzerland over this by indicting Wegelin, Switzerland’s oldest private bank on tax charges. After pleading guilty in January to aiding US citizens from paying taxes on $1.2bn held offshore and paying $57.8m to the US government, the 270-year-old bank had to close.

In a bid to prevent other banks suffering a similar fate, the Swiss government on Wednesday outlined a draft law to enable Swiss banks to sidestep stringent bank secrecy laws and reach individual settlements with US authorities.

Of course I want an end to baking secrecy but if the aim of this deal is to let bankers off the hook without delivering the killer blow to stop this pernicious trade because a compromise has been reached then I suspect that, yet again, bankers may be getting away with robbery here. And that means justice is not being done and if that;s true I regret it.



Laughing all the way to the Swiss bank

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The FT reports:

Julius Baer became the first Swiss private bank to reach a settlement with the German authorities over its potential role in helping rich customers to evade taxation with a one-off €50m ($75m) payment.

The good news they have admitted they knew what they were doing.

The bad news is that there is nothing to stop them carrying on doing it. Swiss banking secrecy is still intact.

And worse, is the fact that the settlement is so small they must be laughing all the way to their own Swiss bank.

The underlying theme: tax evasion is a crime that still pays.

There will come a time when there’s nowhere to hide

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As the FT notes:

Julius Baer, the Swiss private bank, is considering setting up a dual head office in Asia, most likely in Singapore, as part of a push to make the region its “second home”,reports the FT. The Zurich-based bank, which had assets under management of SFr166bn ($163bn) as of end-June, has increased the proportion of such assets in Asia from zero to 10% since 2006, and is targeting 25% in 3-5 years, CEO Boris Collardi told the FT. The bank now employs more than 300 staff in the city-state, compared with 23 four years ago.

Let’s cut through the verbage: this is recognition that Swiss secrecy is broken and Singapore’s is intact.

The reality is that private banking depends on secrecy – for reasons explored on this blog since the day it began, none of which are attractive. And that’s the sole real reason why money is going to Singapore.

But let’s also be clear: Singapore will be broken too in time, and this is a finite world. The places to which hot money can run will eventually disappear. Not yet, but inevitably. Of that I have no doubt. That’s what the Tax Justice Network set out to do and that’s what it will secure. This move is indication of its success to date. And that success will continue.

Just because you’re paranoid doesn’t mean people don’t like you

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I think it was Woody Allen who wrote the above title.

Raymond Baer of Swiss bank Julius Baer should take note.

He told his bank’s AGM yesterday:

Many people in our country are very concerned about the damage to our reputation. “Switzerland bashing” – the undifferentiated verbal condemnations of Switzerland – has become an acceptable practice. Europe has discovered Switzerland as the last major payer on the continent. And the greedy demands on Switzerland are growing with each partial success. Hunger, of course, is spurred by eating. It is repeatedly forgotten in all of this, however, that we do not need to be loved, but that first and foremost we should be respected as a sovereign country.

Not if you use your sovereignty to harbour criminal activity. That’s an abuse of sovereignty. And you’re right Raymond. We don’t love that.

Swiss banker making no sense at all

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Julius Baer Chairman Hits Back At Criminalization Of Clients -

Swiss bankers have really lost sense with reality. In an article in the Wall Street Journal Raymond Baer of Swiss bank Julius Baer is reported to have said:

In recent years, virtually no new untaxed European money has flowed into Switzerland


Swiss bank-client confidentiality, as we have known it, does not exist any longer

Despite which

If the identities of the account holders must be disclosed to the governments, then Europe will run the risk of large amounts of money flowing to Asia and of tax revenues thus definitively being lost

Ahh. I get it. We used to handle stolen money, he's saying. But now we don't. But if you want proof we'll shift it all to our branch in Singapore.

Of course. That makes complete sense after all.

Well it would if you were a Swiss banker.

More Banks in Europe Identified in US Tax Probe

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More Banks in Europe Identified in Tax Probe -

Wealthy U.S. citizens using a tax-evasion amnesty program have identified nearly 10 Swiss and European banks where their accounts are held, opening new fronts in the Internal Revenue Service's probe into potential tax crimes, according to people familiar with the situation.

Among the banks named in the voluntary disclosures are Swiss banks Credit Suisse Group AG, Julius Baer Holding AG, Z?ºrcher Kantonalbank and Union Bancaire Priv?©e, known as UBP.

The disclosures don't signal wrongdoing at the banks. It may mean that a U.S. citizen simply kept money at a European bank and now wants to report it. Nor does it signal that other banks mirrored UBS AG in the way the Zurich bank and its private bankers used subterfuge to meet with and communicate with clients for whom the bank created complex structures to evade taxes.

The dam has burst. We don't know that these banks assisted clients to abuse, like UBS, but the evidence is mounting they were used for abuse.

It's time the US sought ways to use bank licence regulation in the USto say to banks operating there 'open up or get out' as it looks likely the UK is doing.

That will put the cat amongst the pigeons.

Cayman: Elmer’s allegations

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Ruedi Elmer's allegations against his former employers Julius Baer in Cayman feature in the Guardian today.

Ruedi admits to having made mistakes in his campaign.

Clearly he's a whistleblower with data he should not possess.

But he's a man who has put principle ahead of personal gain: a bit like Paul Moore whose own action in doing so in the UK banking system has suddenly become very relevant.

I admire what Ruedi has done: even if some in Cayman never break the law he adds clear evidence to support that falling out of UBS day by day that shows that some banks seem to have been knowingly engaged in nefarious activity, which is what I have always said.

Breaking open a Swiss Bank

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Lucy Komisar has an article in the Mail on Swiss bank Julius Baer. The article is prefaced:

As anger mounts about the global economic meltdown, Barack Obama and other leaders are promising a war on offshore tax avoidance. But as this investigation into Swiss bank Julius Baer reveals, it will be a huge challenge.

What follows is a description of the artificial structures banks pout in place in an effort to justify the relocation of their profits to places like Cayman. It's well worth reading. It all seems entirely plausible.

So too are the comments. The first says:

Don't they have enough to sort out without going after this lot, if you keep destroying the money makers, pretty soon nobody is going to be making anything. Joe public will not see a drop in our tax rates, so its just more money for the government to fritter away. Let the off shore boys keep it, it does then arrive in the economy somewhere and not direct to a CService pension fund

- Jon, Wiltshire

That's full on Daily Mail prejudice for you. But it's wrong. The second says:


Offshore makes nothing: let's be clear about that. What it does is free-ride on those who do make real money - here in the UK, and in other major economies. What it does is let those with resources not pay the tax they rightly owe in the places where they really make their money, so undermining the rule of law, undermining democracy by denying resources to democratically elected governments to fulfil their mandate, undermining the regulation that protects us all from abuse, and in the process promoting secrecy that allows corruption to flourish.

But Lucy is wrong to be pessimistic: if we work on a case by case basis offshore will be hard to crack. That is why the real option is sanctions: hard economic sanctions to stop the economic warfare that these places wage on our state. And to stop these places providing 'the get out of regulation free' card that our banks are using.

Richard Murphy

Congratulations to Lucy for getting this out; it's another useful case study.

What really happens in secrecy jurisdictions

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TJN has an important blog on its site by Rudolf Elmer, who also comments here on occasion. Rudolf is a whistleblower in what really happens in tax havens.

As he notes, not all is quite as some would like to suggest it is in these places:

[O]ffshore employees might be instructed by the management to "clean the records" and remove from the data base instructions such as:

• Do not contact the Settlor in America!
• Client is highly sensitive regarding telephone security and always confirm identity of Settlor before disclosing information;
• The secret code is "Rainbow";
• Use only his mobile number (xx xxx xxx xxx);
• No communication with client on work address or email;
• Change of trust name from "Sugar Spoon" to "Coffee Cup";
• When making distribution to the Settlor do not say "Distribution" say donation;
• This Trust has a "Dummy Settlor";
• The trust should be treated for US tax purposes only as owned by another person;
• And many more!

As a reasonable employee this gets you thinking, and I believe it is fair to say that all those remarks point in a direction where an ethical and moral person is in a conflict and has reasonable grounds to believe that the employer is not complying with the law.

However, what would you (and I mean you!) do when you are confronted with such a request from management?

I tell you! And I tell you straight: 99 % of all employees would do as instructed by the management. Why does this happen even though it goes against the employee's moral and ethical standards?

It is simple: any employee who speaks up faces instant job loss; and when employees go public and become whistleblowers they place their own (and their family's) future in serious jeopardy.

I believe Rudolf.

He worked for Swiss bank Julius Baer in Cayman.

But I accept: this is his word against most of the rest. Except there's another reason for believing him. It's called UBS.

When names like that are clearly corrupt why should we believe the stories that the rest offer in their defence?