GENEVA: The recent news that Zurich-based Swiss Bank Julius Baer has set aside $547 million in anticipation of a U.S. charged settlement is a tiny drop in the bucket of wide-ranging bank accounts that the Swiss have been charged with making available as safe harbor for potential tax evasion.
The U.S. has been aggressively tracking down Swiss accounts since 2008, hoping thereby to severely reduce this method of tax evasion. This has been utilized as a means of protection under Switzerland’s laws that put a shroud of secrecy over private accounts used by wealthy U.S. tax avoiders and others.
Julius Baer is one of a dozen Swiss financial institutions that have come under the Justice Department’s investigation for allegedly providing Americans with undeclared accounts that were shielded by the country’s bank secrecy laws.
In May of 2014, Zurich-based Credit Suisse Group AG settled its own U.S. probe by pleading guilty to aiding American tax evasion by agreeing to pay $2.6 billion to the U.S. tax agency. This led to Julius Baer negotiations, which will likely settle with an equally stiff penalty.
These incidents are only the “tip of the iceberg” of the alleged funds, numbering in the many billions, swallowed by the Swiss banks during World War II. Ironically, this not only affected primarily wealthy German/Jewish residents, but also leading Nazi officials, who wanted to hide their ill-gotten gains in banks protected by Switzerland’s secrecy laws. Since neither of these parties were available to claim their “secret accounts,” survivor family members of German Jews were met with denial, since they had no legal proof of their right to these accounts.
At the same time that the U.S. Government went after the prospective “tax avoiders” in 2008, former Federal Reserve Board Chairman Paul Volcker took on the task of discovering thousands of such “victims” accounts and making their contents available to legal heirs. Volcker was met with a brick wall of frustration and finally settled with a consortium of Swiss bankers who came up with an overall settlement, estimated to be less than five percent of the amount contained in the original deposits. This residue was distributed to those claimants, still available to prove their relationship to the deceased claimants.
For Switzerland, a land of less than 10 million persons, but untold wealth, neutrality in the lethal European wars since the Napoleon era, has paid off handsomely for the intrepid Swiss trading economy.
