Credit Suisse Doing ‘Everything’ to Resolve U.S. Tax Probe
February 10, 2012, 12:49 AM ESTBy Elena Logutenkova and Mark Barton
(Updates with CEO comments from second paragraph.)
Feb. 9 (Bloomberg) -- Credit Suisse Group AG is doing “everything” it can to resolve a U.S. probe into whether the bank helped American clients evade taxes, Chief Executive Officer Brady Dougan said.
“We’re doing everything that individually we need to do to cooperate with all the authorities,” Dougan said today in an interview with Bloomberg television in Zurich. “But it is a complex matter and it will take time to complete.”
The bank is a target of a criminal investigation by the U.S. Department of Justice over former cross-border private- banking services to American customers, the company said in July. Switzerland and the U.S., which have been holding talks for a year to resolve an offshore tax evasion probe involving 11 Swiss financial firms, may reach an agreement within months, Swiss Finance Minister Eveline Widmer-Schlumpf said on Jan. 28.
Credit Suisse took a provision of 295 million Swiss francs ($324 million) for U.S. tax matters in the third quarter. The cost to the bank of resolving the probe “could be” higher than that provision, Dougan said.
“It’s hard to speculate as to exactly what it will take to resolve this,” he said. “We think that probably there will be some level of monetary requirement in order to resolve it. As to how much, it remains to be seen.”
Baer Expects Fine
Julius Baer Group Ltd. CEO Boris Collardi said earlier this week that he expects the Swiss wealth manager founded in 1890 to pay a fine to resolve tax matters with the U.S. The Zurich-based bank said it has “resources to satisfy a resolution,” without giving further details.
Credit Suisse is handing over information to authorities as required to help resolve the U.S. issue, Dougan said. “This has to be done within the framework of the law and the agreements between the governments,” he said.
Wegelin & Co., the 270-year-old private bank, last week became the first Swiss lender to face criminal charges in a broadening U.S. crackdown on offshore firms suspected of helping Americans evade taxes. Wegelin helped Americans hide more than $1.2 billion in assets and evade taxes, wooing clients that were fleeing UBS AG, Switzerland’s biggest bank, according to an indictment filed in federal court in New York.
“Those events clearly underline the seriousness of the issue,” Dougan said. “But we continue to be constructively engaged toward a resolution and we have I think worked hard to be responsible in how we conducted our business.”
UBS Case
In 2008, U.S. prosecutors conducted a probe into whether UBS helped Americans evade taxes. In February 2009, UBS avoided criminal prosecution by paying $780 million, admitting it fostered tax evasion, and giving the U.S. Internal Revenue Service data on more than 250 accounts to avoid criminal prosecution. It later turned over data on another 4,450 accounts, and, in October 2010, the U.S. dropped its criminal case against UBS.
“We didn’t take any accounts from UBS as they were having their issues in the U.S. and closing down their business,” Dougan said.
Eight bankers, including Credit Suisse’s former head of North America offshore banking, were charged last year with conspiring to help American clients evade taxes through secret bank accounts.
In the fall of 2008, when the bank began closing its cross- border business with U.S. clients, it had “thousands” of accounts with $3 billion in assets not declared to the U.S. Internal Revenue Service, according to the indictment of bankers in February 2011. The Justice Department said “conspiracy dates back to 1953 and involved two generations of U.S. tax evaders including U.S. customers who inherited secret accounts.”
“We have no interest in doing business with clients who are not tax compliant,” Dougan said today. “And obviously we take the measures that we can to ensure that.”
--Editors: Dylan Griffiths, Jon Menon.
To contact the reporter on this story: Elena Logutenkova in Zurich at elogutenkova@bloomberg.net
To contact the editor responsible for this story: Frank Connelly at fconnelly@bloomberg.net
