Sunday, April 1, 2012

The Weak Empire Strikes Bank (4/1/12)

There is a report that Switzerland is seeking to arrest a whistleblower who turned over Credit Suisse data on German citizens to the German tax authorities in return for payments.  The charge is economic espionage.  See Richard Weiss and Leigh Baldwin, Switzerland Wants German Investigators Arrested on Espionage (Bloomberg 3/31/12), here.

I have no idea as to the back story but it strikes me as odd that Switzerland would become aggressive on this front.  Readers' comments will be appreciated, particularly if they have some appreciation for the back story -- what is really going on.

Perhaps, extending the story a bit, Switzerland might proceed against the DOJ attorneys -- I won't mention names -- who consorted with Mr. Birkenfeld to pry open Switzerland and UBS's dirty secrets.  And,  maybe if Mr. Birkenfeld ultimately gets some whistleblower award(s), the list of Swiss targets might be expanded to the Whistleblower Office.  I wonder if the Swiss have something like sealed indictments so that any person who it thinks has committed such economic espionage can be arrested if found within its borders.  For some, traveling to Switzerland may not be the ideal vacation or even business trip.


  1. I intended to visit Switzerland later this year, but I dont think I will now lest I get arrested and put in a Swiss Fed Max.

    What are they thinking?! I suppose David did get a lucky shot off at Goliath....


  2. Switzerland has jailed bankers who have released client data (for short periods of time). There are disaffected bankers who turn informant from time to time, to foreign governments usually.

    Germany has been the most aggressive to solicit such information, paying millions in "bribes" for inside information and client data, which it then uses to tax German citizens.

    Even Mr. Birkenfeld is wanted by the Swiss for disclosing bank and client information.

    But this is a crime in the US too. If a bank manager were to disclose to Wikileaks how much famous celebrities or politicians have in his bank, he would be charged by the US.

  3. Actually, the names of the people in the DOJ Tax Division would be Kevin Downing, Karen Kelly and John DiCicco. Treasury Agent Matthew Kutz was also in the room when Birkenfeld told them all what was going on, in the Spring of 2007. If the Swiss are wondering where Matthew Kutz is now, they should know that he was conveniently and quietly hired away from Treasury to work at DOJ where he is now.

    If the Swiss want to make a statement and be tough guys, then go ahead an indict IRS Commissioner Shulman. Go ahead, I dare you. See what happens.

    Realistically, taking a disc with internal client data information and selling it to a third party bears no resemblance to what Birkenfeld did. Birkenfeld went to the authorities and revealed how UBS was circumventing U.S. law, at a high corporate level.

    He actually gave much more information than the prosecutors at the DOJ wanted to hear. DOJ prosecutor Kevin Downing actually became agitated when Birkenfeld started naming names and he actually cut Birkenfeld off in mid-conversation after he started to name names. I guess it hit a little too close to home for his liking. And you wonder why Downing targeted Birkenfeld?

  4. What prompted the Swiss "indictments" was that not only did the German taxmen pay for stolen evidence whch was presented to them, but the investigation seems to show that the German taxmen then actually sent(hired)their informant to go back to his employer (Credit Suisse) to steal more "evidence" for their enforcement efforts, which he did. That is against the law in Switzerland, and in Germany too (except in the opinion of the left socialists). I presume it is against the law in the US too, and the DOJ is not that stupid to go down that slippery road. The DOJ did it the elegant way, put the sqeeze on its own citizens with the threat of draconian penalties.

  5. Switzerland just a week ago signed a groundbreaking agreement with the UK called Rubrik in which Switzerland will impose a tax on undeclared UK resident funds remitting the proceeds back to the UK anonymously. My sense is Switzerland will now try to force the rest of the world to abide by the same terms the UK agreed to. However, many countries for moral and ethical reasons will refuse to agree to the same deal as the UK which means this whole saga will drag on. (I will also note the UK signed a similar agreement with the Liechtenstein and the HMRC and UK government have come under cricitism for what some people consider to be legalizing tax evasion).

    What I would really be nervous about given the increasingly close ties between the UK and Switzerland is not travelling to Switzerland but travelling to the UK and being extradited from the UK to Switzerland.

    Here is an interestingly link about the existing "deal" the UK signed with Liechtenstein. I find the involvement of LGT Bank to be quite interesting as historically LGT was one of the baddest of the bad on this front.


Please make sure that your comment is relevant to the blog entry. For those regular commenters on the blog who otherwise do not want to identify by name, readers would find it helpful if you would choose a unique anonymous indentifier other than just Anonymous. This will help readers identify other comments from a trusted source, so to speak.