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Europe

Parliament rejects UBS account list deal with US

Text by News Wires

Latest update : 2010-06-08

Switzerland's parliament rejected by 104-76 votes on Tuesday a landmark 2009 out-of-court settlement that the government had reached with banking giant UBS and the United States to reveal 4,450 American bank clients' names.

AFP - A landmark US tax evasion settlement for banking giant UBS was put in limbo Tuesday as Swiss parliamentarians rejected the accord in a heated debate dominated by disagreements over banking bonuses.
  
The Socialist Party made a tax on bank bonuses a condition for its support, while the country's biggest party, the far right Swiss People's Party, demanded the opposite -- a rejection of separate legislation on such taxes.
  
As a result, the accord was rejected, with 104 votes against and 76 in favour, following a debate broadcast live on Swiss television.
  
Switzerland, the United States and UBS agreed in August 2009 that the bank would reveal the identities of about 4,450 American clients in an out-of-court settlement for a US tax evasion case which challenged Switzerland's sacrosanct banking secrecy.
  
But the deal had to be put to parliament for endorsement after a court ruling earlier this year called its legal basis in Switzerland into question.
  
Ahead of Tuesday's vote, Justice Minister Eveline Widmer-Schlumpf called on lawmakers to "close this difficult chapter and fix the problems" of the Swiss financial services centre.
  
Several parliamentarians also spoke in favour of the deal.
  
Any further delays would "put us in a risky situation and endanger cooperation with one of the most important economic partners" of Switzerland -- the United States, warned Hans Grunder, a centre-right politician.
  
But the Socialists wanted a tax on wages and bank bonuses above one million Swiss francs (720,000 euros), as well as regulations on bank capital as conditions for the deal.
  
"Those who do not agree to this tax are simply protecting such rip-offs," said the party's Susanne Leutenegger.
  
Another Socialist Hans-Juerg Fehr accused parties blocking the tax of "protecting tricksters, tax evaders, and criminal actors in certain banks."
  
The Socialists' demand for a bank tax was opposed not only by the Swiss People's Party but also by centre-right parties.
  
Fulvio Pelli, heads of the centre-right Radical Liberal Party, likened bonuses to alcohol or tobacco consumption.
  
"The practice of bonuses is like tobacco or alcohol -- we can impose more taxes to get more money for state pensions but we can't stop people from smoking, from consuming alcohol with such taxes," he said.
  
After Tuesday's negative vote, the deal would return to the Senate, which last week approved the deal.
  
Depending on the upper house's decision, the accord could then be put again to the lower chamber.
  
With the summer parliamentary session ending on June 18, lawmakers will have to find a compromise by then.
  
The Swiss government has repeatedly emphasised the importance of the deal, warning that a failure to approve it would hurt the Swiss financial industry.
  
But following its financial troubles in the US subprime home loan debacle, public hostility towards UBS is rife. In addition, resistance to a breach of traditiohnal banking secrecy is strong.
  
The Swiss Bankers Association expressed disappointment at the vote.
  
The association's chief Urs Roth reiterated that it was in Switzerland's interest to agree on the deal with the United States, Swiss news agency ATS reported.
  
The Swiss government granted UBS an emergency 60-billion-dollar (47.4-billion-euro) aid package in October 2008 when it suffered huge losses from the US subprime crisis, weeks before the bank was hit by US litigation.
 

Date created : 2010-06-08

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