The acquittal of a Swiss banker on U.S. tax charges is an encouraging sign for other Swiss firms still on the hook, Daniel Wuersch, a Swiss lawyer in New York, tells finews.asia.
Daniel Wuersch, what does the acquittal of Swiss banker Stefan Buck say about the U.S.’ efforts to go after individual Swiss bankers?
It’s a vindication for all bankers and banks who did nothing more than manage accounts on behalf of U.S. tax evaders. It also shows how high the burden of proof is under U.S. law. Prosecutors have to convince all 12 jurors beyond a reasonable doubt. This was massively underestimated in Switzerland – it’s not easy to get a conviction for a conspiracy charge.
What does that mean for the banks – and bankers – still on the hook with U.S. prosecutors?
I believe the banks which adhered to the law as they believed it applied at the time – and keep in mind the Swiss regulator was slow to issue clear guidance – will be emboldened by Stefan Buck’s acquittal.
«For those who actively helped cheating, acquittal doesn't change much»
For those which proactively helped tax dodgers to hide assets from the IRS [Internal Revenue Service] by setting up structures and such, I don’t believe the judgment will change much.
This pursuit has been going on for nearly ten years. What went wrong on the Swiss side?
If Switzerland had grabbed the bull by the horns, the outcome might have been different. Liechtenstein for example allowed its banks to seek a resolution with the IRS without intervening. In Switzerland, you instead saw a kind of anticipatory obedience, combined with what proved to be the wrong method to solve the problem.
You’re criticizing a 2013 government-brokered deal between Swiss banks and U.S. prosecutors for the wider industry.
I was never a fan of the program. Every bank and every situation is different –You can’t resolve complex issues with a simple mathematical formula. Many banks initially submitted to the program, then later left because they realized that they would be better off taking their chances.
«Countless scandals are settled, but tax remains»
The program also didn’t bring a fast resolution. Swiss banks have settled so many scandals in the U.S. since 2012 – from rigging forex and Libor markets to mortgage-backed securities. And yet the tax dispute remains almost 10 years after it began.
Who do you blame for that?
It’s an unfortunate combination of factors: the crackdown on tax evasion caught Switzerland on the wrong foot at the worst possible time during the financial crisis. The warning signs had been ignored for too long.
«Swiss weakness shrewdly exploited by U.S.»
The Swiss system of collegial government isn’t ideal when rapid decision-making is essential. And each of the roughly 300 Swiss banks of course had a very different exposure to the problem. All this confusion was very shrewdly exploited by U.S. prosecutors.
The U.S. tried going after bankers in order to pressure firms, and has now failed to nail two of them – UBS' Raoul Weil and Stefan Buck.
In theory it should be easier to go after the bankers – just show someone flew into the U.S. carrying more than $10,000 in funds can be a crime, for example. The fact that the U.S. has had trouble getting convictions of individual bankers doesn’t bode well for their chances at going after institutions.
The U.S. has more bark than bite?
You have to take the threat of prosecution seriously, but the legal arguments of U.S. prosecutors are not the law.
Vontobel is a Swiss bank which didn’t cringe from the bark, declaring itself in a third program category.
They seemed to have judged the situation correctly, and also had the courage to be proactive. Many bank boards and executives fell into line with the U.S. approach because they were scared of the threats. In hindsight, they may have paid a higher price than necessary.
Daniel Wuersch co-founded New York-based white-collar law firm Wuersch & Gering in 1997. Together with Henry Klingeman of Krovatin Klingeman, Wuersch served as U.S. counsel for now-defunct Bank Frey. Wuersch has represented U.S. and foreign firms from finance and other industries in mergers and acquisitions, corporate finance and regulation. A Swiss native, he began his career at Zurich law firm Homburger as well as Baker & McKenzie in Zurich, where he studied law.
