Credit Suisse CEO says aiding U.S. tax evasion is ‘unacceptable’
WASHINGTON -- The chief executive of Credit Suisse told U.S. senators Wednesday it was “unacceptable” for Swiss banks to help Americans evade U.S. taxes and he regrets some of the firm’s employees did so in the past.
“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 U.S. law,” Brady Dougan said in prepared remarks for a Senate subcommittee hearing into the bank’s tax-evasion activities.
On Tuesday, the Senate’s Permanent Subcommittee on Investigations released a report accusing Credit Suisse, Switzerland’s second-largest bank, of helping thousand of Americans hide billions of dollars in assets from the Internal Revenue Service.
The bipartisan report also criticized the Justice Department for not being more aggressive in pursuing tax evaders and bankers who assist them.
“The American public is angry about offshore tax abuse -- efforts by well-off Americans to evade their U.S. tax obligations by hiding money offshore,” Sen. Carl Levin (D-Mich.), the subcommittee’s chairman, said Wednesday at the start of the hearing.
Under Levin, the subcommittee since 2008 has been investigating tax evasion by U.S. citizens and companies. The investigation first focused on UBS, Switzerland’s largest bank, which helped lead to the bank providing nearly 5,000 names of U.S. account holders to U.S. officials.
“The bottom line is that Credit Suisse was in it as deep as UBS, aiding and abetting U.S. tax evasion both in Switzerland and on U.S. soil,” Levin said.
The Justice Department has been investigating Credit Suisse since at least 2011 and has indicted seven bank employees on charges of aiding and abetting U.S. tax evasion.
Dougan noted he is the first U.S. citizen to be the chief executive of a major Swiss bank and that he “recognizes the historical reality that Swiss laws that protect client identity -- commonly referred to as “Swiss banking secrecy” -- were vulnerable to abuse and were abused.”
“To our deep regret, it is ... clear that some Swiss-based bankers at Credit Suisse appear to have helped their U.S. clients hide income and assets in the past,” he said.
“Although it was not and is not illegal for Swiss banks to accept deposits from Americans, it is absolutely unacceptable for Swiss-based bankers to help U.S. taxpayers evade taxes or to provide them with securities advice in the U.S. without being properly licensed,” Dougan said.
On that second point, Credit Suisse agreed last week to pay $196 million and admitted wrongdoing to settle allegations by the Securities and Exchange Commission the bank provided brokerage and investment advisor services to as many as 8,500 U.S. customers without registering with the agency.
Dougan said Wednesday that Credit Suisse has led an effort to change a tradition of secrecy in Swiss banking.
“Credit Suisse has repeatedly and publicly supported the principle that banks have an
obligation not to knowingly assist clients in hiding income and assets,” Dougan said. “We reaffirm that again today.”
But Levin said Credit Suisse has been lax in disclosing names behind accounts of 22,000 American citizens at the bank from 2001 to 2008 that had a total of up to $12 billion in assets.
So far, the U.S. has obtained just 238 of the names, Levin said. And he criticized Credit Suisse and Justice Department officials, who also are scheduled to testify, for not doing more.
“Allowing Americans to evade their tax obligations through hidden offshore accounts deprives the government of needed revenue,” Levin said. “More than that, it deprives honest American taxpayers of something vital to the legitimacy of our tax system: fairness.”
Sen. John McCain (R-Ariz.), the subcommittee’s top Republican, said Credit Suisse hasn’t done enough.
“While it made some changes to its internal policies …. even today the bank still must answer for decades of ill-gotten profits,” McCain said.
In joint prepared remarks, two top Justice officials told the subcommittee “the department is committed to global enforcement against financial institutions that engage in or facilitate cross-border tax evasion.”
The officials -- Deputy Atty. Gen. James Cole and Assistant Atty. Gen. Kathryn Keneally -- said the Justice Department has filed tax-evasion related charges against 73 account holders and 35 bankers and advisors since 2009.