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US Senate accuses Credit Suisse of concealing accounts


Switzerland's second largest bank, Credit Suisse, used elaborate measures to help an estimated 19,000 US customers evade American tax authorities, said a scathing report from a US Senate inquiry.


The report was released on Tuesday, the day before the heavily-anticipated questioning of Credit Suisse chief Brady Dougan and other top bank officials before the Senate Permanent Subcommittee on Investigations. The panel has been examining the use of Swiss secrecy laws by banks to enable tax evasion by Americans and has been focusing on Credit Suisse for two years.

Bank figures suggest there were “nearly 19,000 US customers with hidden Swiss assets totaling nearly $5 billion” as of 2006, the Senate report said.

That figure represents some 85 percent of the bank's more than 22,000 US customers in 2006 with Swiss accounts whose assets, at their highest, exceeded $13.5 billion, the report said.

Among the bank's cloak-and-dagger practices, Swiss bankers were sent to the United States to secretly find clients, leaving no paper trail, at events sponsored by the bank -- such as at golf tournaments in Florida and an annual “Swiss Ball” in New York.

The bank also found its clients "intermediaries" who could help them create offshore shell companies to hide the money trail from the Internal Revenue Service (IRS).

"One former customer described how, on one occasion, a Credit Suisse banker traveled to the United States to meet with the customer at the Mandarin Oriental Hotel and, over breakfast, handed the customer the bank statements hidden in a Sports Illustrated magazine," wrote the investigators.

Hidden funds

Third-party companies were also engaged by the bank to provide credit cards permitting clients to secretly use their hidden funds.

The bank filed visa applications for employees that falsely portrayed them as tourists and maintained a New York office with lists of middlemen who set up offshore shell companies for US customers, the committee asserted.

"The battle against tax havens using secrecy laws to facilitate US tax evasion has bogged down, causing a huge loss to our treasury," US Senator Carl Levin, chairman of the subcommittee, told a press conference on Tuesday.

Credit Suisse “aided and abetted US tax evasion, not only from behind a veil of secrecy in Switzerland, but also on US soil by sending Swiss bankers here to open hidden accounts,'' Levin said.

By 2008, the report says, there were more than 1,800 Credit Suisse bankers employed to manage US client accounts, many of which were never declared to the IRS, and whose transactions were structured to avoid US tax reporting requirements.

The US government has received only 238 names of US citizens with secret accounts at Credit Suisse, or just 1 percent of the estimated total, the report said.

From 2008 to 2011, after a tax evasion scandal broke concerning Switzerland's largest bank, UBS, Credit Suisse started asking clients to close their accounts or declare them.

On Wednesday, the bank acknowledged that there had been "misconduct" by some of its employees but insisted the Credit Suisse management had been unaware of the misdeeds.


"Credit Suisse acknowledges that misconduct, centred on a small group of Swiss-based private bankers, previously occurred at our bank," it said in a statement submitted to the US Senate.

Reveal names

Levin said the US Justice Department has failed to use the methods that had earlier forced UBS to reveal the names of US account holders.

"The Department of Justice has failed to use the US legal tools that won the UBS case," Levin said.

"It's time to ramp up the collection of taxes due from tax evaders on the billions of dollars hidden offshore," he said.

The Justice Department responded with a statement saying it is investigating up to 14 Swiss financial institutions, “and we won't hesitate to indict if and when circumstances merit.'' It did not name the banks.

Since 2009, the Department said, it has charged 73 account holders, and 35 bankers and advisers with violations related to offshore tax evasion.




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