Credit Suisse’s chief executive Brady Dougan has hit back at allegations the Swiss bank was a willing accomplice in US tax evasion, blaming instead a small group of its private bankers for helping Americans conceal their wealth.This content was published on February 26, 2014 - 21:37
Dougan, himself an American citizen, told US senators on Wednesday that Credit Suisse only uncovered “scattered evidence” of improper conduct, and its top managers were not aware that a small group of Swiss-based private bankers had helped US customers hide income and assets.
“We deeply regret that – despite the industry-leading compliance measures we have put in place – before 2009, some Credit Suisse private bankers appear to have violated US law,” Dougan said in prepared remarks released before his appearance later on Wednesday in front of a US Senate subcommittee on offshore tax evasion.
“The evidence showed that some Swiss-based private bankers went to great lengths to disguise their bad conduct from Credit Suisse executive management.”
Credit Suisse has been accused by US senators of helping American customers dodge taxes with a variety of tactics, including creating offshore shell entities, falsifying visa applications and establishing a branch at Zurich airport, where wealthy US clients could fly in, conduct their banking and leave.
A scathing report released by The Senate Permanent Subcommittee on Investigations on Tuesday alleged misdeeds by Credit Suisse including secret meetings in luxury hotels and hidden elevators which one senator said belonged in a spy novel.
One Credit Suisse banker even reportedly handed account statements to a client tucked inside a Sports Illustrated magazine.
On Wednesday, United States senators also lashed out at federal prosecutors for a lack of zeal in going after Swiss banks that helped Americans dodge taxes, blaming them for billions of dollars in missed revenues.
“Taxes owed on billions of dollars in hidden offshore assets remain uncollected,” subcommittee chairman Carl Levin, one of Capitol Hill’s toughest questioners, said in a public hearing where bankers testified before the panel.
“To collect those unpaid taxes and hold US tax evaders accountable, the critical first step is to get their names,” said Levin, a Democrat from Michigan.
In his testimony, Dougan disputes some of the methods used and some of the findings of the Senate report, saying the subcommittee improperly assumed every US client account held in Switzerland was hidden from the US government.
The report said that in 2006, Credit Suisse held 22,000 accounts from US customers worth CHF12 billion ($13.5 billion).
Switzerland’s private banking model has been rattled to its core by the US crackdown on tax evasion. Credit Suisse’s rival UBS admitted to helping US taxpayers hide money from the tax man and paid a $780 million fine in 2009.
Evidence culled from the UBS probe as well as thousands of Americans coming forward under a tax amnesty in the United States has fed a second wave of investigation, which has ensnared Credit Suisse and 13 other large Swiss banks.
Credit Suisse last week settled charges levied by the US Securities and Exchange Commission, admitting to wrongdoing and paying $196 million in fines.
“This fine ... pales in comparison with the severity of the full extent of Credit Suisse’s misconduct,” said Senator John McCain of Arizona, the subcommittee’s highest-ranking Republican, on Wednesday.
Credit Suisse shares closed the day down 2.5% in Zurich.
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