A special panel of the Swiss Parliament has concluded its 15 month investigation into the government’s handling of what has been referred to as a “tax crisis”: the UBS collapse amid allegations of tax evasion. The panel has heavily criticized the government for its response to the crisis, saving its harshest rebukes for Finance Minister Hans-Rudolf Merz.
The panel slammed Merz’ handling of the situation, faulting him for not understanding the scope of the crisis. They claim that had Merz involved other members of Parliament, rather than trying to fix the situation himself, UBS might have avoided having to turn over banking data to the US government. The turnover is part of a deal reached by the US government, the Swiss government and the banking giant following allegations that UBS was assisting US taxpayers in tax avoidance schemes (for its part, UBS admitted fault and paid a hefty fine).
Merz has admitted that he did not brief the Cabinet about the scandal – but claims he had good reason. He felt that leaking too much information would jitter financial markets. So, crisis avoided there, huh?
UBS is set to turn over an additional 4,500 names of US taxpayers with accounts at UBS that meet certain criteria this year. Interestingly, UBS is anxious to take part in the turn over; apparently, as part of the deal, the bank will be shielded from some additional civil lawsuits. But the Swiss government is still unhappy about the whole thing: in January of this year, the country’s highest administrative court ruled that the turnover was illegal.
Realistically, I don’t expect any dramatic last minute departures from the agreement. It was hard fought (the IRS originally wanted 52,000 names) and the US will not back down since it’s so high profile. Additionally, UBS just wants to move on (and, oh, not get sued). So really the only impediment would be Parliament. And despite the fact that Parliament is screaming about the turnover, there’s really only one party, the Social Democrats, willing to fight it. That won’t be enough to make the Swiss change directions.
