I always very much enjoy posts from and about other countries, e.g. Debs from NZ. So from Switzerland. This matter is the Nth bras the fer between the US and CH.
The US -IRS, then the Gvmt.- requested that the UBS turn over X number of names of ‘tax evaders’, who had, or still have, accounts in UBS-CH. The number of names has varied, some will remember figures like 4,000, 17,000, 52,000 accounts - the final no. is 4,450, bitterly negotiated. The bulk have not yet been revealed, the deadline for doing so is Aug. 2010.
The Swiss at first refused, offended, maidenly like.
They had a bi-lateral agreement with the US, called the QI (Qualified Intermediary) and the request fell completely outside it. Secondly, and this is generally not known, that accord permitted the US, in certain circumstances, to obtain names, but the US never used it, with the possible exception of one or two cases. Nor did they ever request the ‘back’ taxes owed them but that is another story.
The US played bully on the block and threatened to sue UBS for trillions, in effect to bring it down. Was this an empty threat? Nobody knows, opinions vary; in any case, the US had the upper hand, it could calibrate the threat to have various effects, from tsunami-awesome to merely bothersome.
The Federal Council capitulated. Violating banking secrecy is a penal crime in CH, prison time guaranteed. They have been, for once, open and candid about their choices, and have even revealed that one member, Moritz, wrote a co-report (dissenting opinion.) Readers will grasp that a Constitutional Crisis of Major Proportions is brewing.
Their choices were as follows.
Refuse and let the US shatter UBS. This would have lead to war, without arms. Use their prerogative - ‘reasons of State’ - that permits them to do, literally, anything at all, and reveal the names themselves. Enjoin the UBS to transmit the names - UBS would have loved that. Have the Finma, the bank surveillance authority, fork over the names. They chose this last option, because, from their pov, on the face of it, it was the most ‘legal’, ‘proper’ route. (Perhaps also because it was the most complicated and left wiggle room.)
They explained that using ‘reasons of state’ was not warranted in this case -UBS is a private entity- and that they have abused it in the recent past (The Tinner brothers affair, involving nuclear proliferation, the CIA, US threats, spies, Pakistan, and more. )
The matter went straight to the Federal Administrative court, who handed down their decision relatively quickly: The Finma is guilty. The Finma defense was super lame, they committed a blatant violation of the Constitution. Both the Finma and the Fed council tell the same tale: the Finma was not coerced, discussions took place, the Finma acted in good faith, etc. The Finma has appealed the decision, the case will now go to the ‘Supreme’ court. (Finma will lose.)
Have the UBS clients sat still? No sirree.
The first judgement came down last Friday.
One American lady, either confident or just furious and ballsy, sued ‘immediately’, not the Finma, but the Federal Council, as the Fed. council had itself *promised* the US to reveal the names. The court decision (which I have not read) likely rests on that promise - if the highest authority in the land engages itself in this way, who actually does the dirty deed is immaterial.
She won!
There are 25 identical cases behind her on the docket, and about 4,200 of the ppl concerned are in the same position. This decision CANNOT be appealed. (Not by her because she won; not by the CH authorities; and not by an ‘international’ court.)
The Fed council acted illegally.
This decision may imply that the ‘new’ accord with the US, elaborated in Aug. 09 - which includes the promise to transmit the 4,450 dossiers by Aug. 2010, re defines ‘tax fraud’ and so on - is...retroactively invalid?
On Saturday, the US stated that it expects CH to uphold (continue to apply, etc.) the accord.
The Feds. will make a statement on Wednesday.
Meanwhile, various forces that were waiting for the Friday ballsy US lady decision, are now gearing up. For one, the Cantons. it is unbearable to them that the IRS could view Swiss citizens accounts when they themselves cannot.
Too big to fail - erosion of internal and international law and ‘respect’ (see AIG bail-outs in the US for ex.) - gradual take over by corporations (last US Supreme court decision) - globalization, not only of commerce through wage (etc.) arbitrage but of mafia-like strong arming - squashing of poor/helpless/powerless ppl everywhere - .... - well my friends it doesn’t look good.
Obama is best buddies with the head of UBS-US, plays golf with him as a public statement, lots of photos! Only 6 (!) UBS-CH accounts have been treated through the conduit of UBS>Finma/Gvmt>IRS, and that was with the holder’s agreement, a direct order from them to the Bank. The other names transmitted are still in limbo and not revealed/treated/acted upon. |