UBS siezes executive pay, 1 month later, opens accounts to IRS?

[Neomega]

Jan 28, 2009
UBS Slashes Its Bonus Pool for 2008 by More Than 80%
http://www.bloomberg.com/apps/news?pid=20601087&sid=aat3AmlPVS8Q&refer=home


Feb 20, 2009
IRS unlocks UBS vault hiding Americans evading taxes
http://www.usatoday.com/money/industries/banking/2009-02-19-ubs-tax-evaders-irs_N.htm

Funnily, these two stories are not entirely related, and yet, Switzerland is one of the only countries that dared slash the financial sector's executive bonus pool* by such a drastic amount.

When the Swiss banking system breaks its code of secrecy it has held since the middle ages, something big is coming.




*They slashed it by 80%, and its the only bank I know of to do so.

 

[sonorakitch]

I agree with you. I think it is odd to say the list. Really it's too bad the Swiss didn't just tell the IRS to go to hell.

 

[Princeps]

Really it's too bad the Swiss didn't just tell the IRS to go to hell.

Yeah, those poor rich people and their meagre millions.

 

[Grisu]

Jan 28, 2009
UBS Slashes Its Bonus Pool for 2008 by More Than 80%
http://www.bloomberg.com/apps/news?pid=20601087&sid=aat3AmlPVS8Q&refer=home

I think their boni are still way too high as they are...

Feb 20, 2009
IRS unlocks UBS vault hiding Americans evading taxes
http://www.usatoday.com/money/industries/banking/2009-02-19-ubs-tax-evaders-irs_N.htm

Funnily, these two stories are not entirely related, and yet, Switzerland is one of the only countries that dared slash the financial sector's executive bonus pool* by such a drastic amount.

When the Swiss banking system breaks its code of secrecy it has held since the middle ages, something big is coming.

The banking secret still stands, though weakened. At least there's no plans to break it for the domestic business. I think a lot of pressure could be removed if we just got rid of the differentiation between tax fraud and tax evasion. That way the swiss authorities could release information on accounts of people who are being prosecuted for tax evasion as well without needing to break the banking secret.

I agree with you. I think it is odd to say the list. Really it's too bad the Swiss didn't just tell the IRS to go to hell.

Sometimes I wish they'd done just that, though the economic consequences for Switzerland would probably have been bad.

Yeah, those poor rich people and their meagre millions.

My opposition to that deal isn't that I want to protect the wealth of the people who own those accounts. I oppose that the swiss authorities got involved in the first place and allowed the UBS to release those data. If they hadn't, the UBS wouldn't have had a choice but defy the US Justice and get punished for it....They way it is, UBS managed to hurt Switzerland quite a bit with their reckless practices and they don't even get punished for it.

 

[mitsho]

1) The UBS did something criminal in the American market.
2) The American state (IRS) accused the UBS and wanted it punished.
3) The Swiss state stepped in and protected the UBS due to monetary reasons (and saving the bank as a whole).
4) The American and the Swiss state worked something out that works for both (America gets the names and doesn't bankrupt the UBS thus aving thousands of Jobs in the US while Switzerland saves the UBS and does somehow get to keep its face...)

Now the fifth step would be to punish the UBS for their criminal behaviour (too high boni), but that doesn't seem to happen. the pirates of the wall street can keep sailing...

(and now I am going to read the articles)

 

[Cutlass]

I agree with you. I think it is odd to say the list. Really it's too bad the Swiss didn't just tell the IRS to go to hell.

Then the US should have told UBS to either fork over the info or cease and desist any and all business activity within the US or with any company that does business in the US.

 

[Neomega]

Then the US should have told UBS to either fork over the info or cease and desist any and all business activity within the US or with any company that does business in the US.

There are other Swiss banks. Why was UBS targeted? I know UBS is not the only Swiss bank that harbors tax evaders.

 

[Grisu]

There are other Swiss banks. Why was UBS targeted? I know UBS is not the only Swiss bank that harbors tax evaders.

rather easy: they are the big profile bank to attack and they were already vulnerable. Easy pickings

 

[Grisu]

Then the US should have told UBS to either fork over the info or cease and desist any and all business activity within the US or with any company that does business in the US.

they should have done the latter then, since the former is breaking swiss law.

 

[Cutlass]

There are other Swiss banks. Why was UBS targeted? I know UBS is not the only Swiss bank that harbors tax evaders.

But do they have evidence of any other bank having deposits believed to violate US tax laws?

 

[Neomega]

But do they have evidence of any other bank having deposits believed to violate US tax laws?

How can you be so naive?

 

[Cutlass]

How can you be so naive?

I'm not saying that none do. I'm saying that the government may not have evidence of it right now. And if they do, they may want to establish the precedent first before going after them.

 

[I'm Cleo!]

they should have done the latter then, since the former is breaking swiss law.

Well, presumably it's also Swiss law (through treaties, WTO agreements, something) not to be an accessory to a Swiss company violating another country's laws.

Cleo

 

[Grisu]

Well, presumably it's also Swiss law (through treaties, WTO agreements, something) not to be an accessory to a Swiss company violating another country's laws.

Cleo

Of course. But that doesn't really have anything to do with handing over the information. Any violation of US tax law happened long before.
If they violated US tax law there, they should be punished by the US for it.

But they still shouldn't be allowed ot hand over the information without due process (don't know what the english term for a Rechtshilfegesuch - request for judicial assistance?). Without that, they're violating swiss law on top of the US law they've already violated. So far swiss law doesn't view tax evasion as a crime (as opposed to tax fraud), so unless the tax evasion was more than just putting your money on a swiss bank and not mentioning it to the IRS, such a request would be denied.

I agree that this situation should be changed, but until then, the law still stands and should be respected. Apparently our government doesn't see it this way (though they tried to paint it that it was done on such a large scale that it could be considered tax fraud)

I know it's a nasty situation, but the UBS got themselves in it by their own actions and they should be the ones paying for it.

Anyway, I hope the UBS gets punished by the swiss authorities for the trouble they caused now, but I dont' think that's happening...

 

[I'm Cleo!]

KaeptnOvi,

The word is probably "warrant" or, to sound like a lawyer, "order," as in "they shouldn't give the information out without a warrant." "Due process" has a particular constitutional meaning in American law.

It is a hard question. It seems to me like there's a conflict in the law. Obviously UBS shouldn't be hiding money for its American clients -- then it's an accessory to tax evasion. But there's also the Swiss law preventing the disclosure of the information. I guess the question might be: how does Switzerland resolve such conflicts in its law?

It's sort of like China and copyright. China just doesn't enforce copyright laws -- what do you do?

Cleo

 

[Grisu]

KaeptnOvi,

The word is probably "warrant" or, to sound like a lawyer, "order," as in "they shouldn't give the information out without a warrant." "Due process" has a particular constitutional meaning in American law.

maybe something like that, but less strong. since a Rechtshilfegesuch is just a request from one state to another for assistance. Similar to the process when a criminal of one country is arrested in another. Or maybe i'm just mixing up terms

It is a hard question. It seems to me like there's a conflict in the law. Obviously UBS shouldn't be hiding money for its American clients -- then it's an accessory to tax evasion. But there's also the Swiss law preventing the disclosure of the information. I guess the question might be: how does Switzerland resolve such conflicts in its law?
It's sort of like China and copyright. China just doesn't enforce copyright laws -- what do you do?

Absolutely, that's what it eventually boils down to. And as I said, I'd be in favour of making tax evasion criminal and thus making it possible for foreing states to seek information on tax evaders who hide their money in Switzerland. That way the banking secret could be upheld as well. That would solve your described china-dilemma.

But for the time being it remains that the UBS has (possibly) broken US law by being an accessory to tax evasion. And they, and they alone, should pay for that. I know, that's not really realistic, but it would be my solution in an ideal world (ok, in an ideal world there'd no crime )

 

[I'm Cleo!]

maybe something like that, but less strong. since a Rechtshilfegesuch is just a request from one state to another for assistance. Similar to the process when a criminal of one country is arrested in another. Or maybe i'm just mixing up terms

No, it's probably just a little different in the U.S. and Switzerland. Judges don't "ask" for things here; parties ask and the judge grants an "order."

Absolutely, that's what it eventually boils down to. And as I said, I'd be in favour of making tax evasion criminal and thus making it possible for foreing states to seek information on tax evaders who hide their money in Switzerland. That way the banking secret could be upheld as well. That would solve your described china-dilemma.

But for the time being it remains that the UBS has (possibly) broken US law by being an accessory to tax evasion. And they, and they alone, should pay for that. I know, that's not really realistic, but it would be my solution in an ideal world (ok, in an ideal world there'd no crime )

But I don't think UBS is an accessory to tax evasion unless it doesn't give up the information to the I.R.S. Of course, as we've discussed, by following Swiss law (banking secrecy) it becomes the accessory. It's really a damned-if-you-do-damned-if-you-don't situation.

Cleo

 

[Grisu]

No, it's probably just a little different in the U.S. and Switzerland. Judges don't "ask" for things here; parties ask and the judge grants an "order."

even from another country?

But I don't think UBS is an accessory to tax evasion unless it doesn't give up the information to the I.R.S.

even if they knew they were storing this money on their bank exactly for that purpose?

Of course, as we've discussed, by following Swiss law (banking secrecy) it becomes the accessory. It's really a damned-if-you-do-damned-if-you-don't situation

I don't think that's the main problem. The problem's more that they got greedy and seemed to actively encourage tax evasion. So I think you're letting them off the hook a bit too easily Why else would the US have ignored it for so long and now suddenly strike? This isn't exactly the first democratic administration.

It the UBS' only problem really is just the swiss banking secret, they have two possible options: move their HQ from Switzerland, so they won't be bound by it anymore or stop doing business in the US. Of course, neither option is really viable for them, but that's not really my problem.

 

[Neomega]

I don't think that's the main problem. The problem's more that they got greedy and seemed to actively encourage tax evasion. So I think you're letting them off the hook a bit too easily Why else would the US have ignored it for so long and now suddenly strike? This isn't exactly the first democratic administration.

The reason why I started this thread is, why did America suddenyl act. It is well known that the Caymans, the Bahamas, Lichtenstein and Swiss banks have always harbored suspicious accounts. Why now?

And... is the fact that the government intervened and slashed executive bonuses related?

 

[Grisu]

The reason why I started this thread is, why did America suddenyl act. It is well known that the Caymans, the Bahamas, Lichtenstein and Swiss banks have always harbored suspicious accounts. Why now?

And... is the fact that the government intervened and slashed executive bonuses related?

What do you mean? the government did preciously little after they pumped huge sums into UBS to keep it afloat to stop high Boni, and IIRC they explicitly refused to limit them. The slashing of the Boni was done by the bank itself, probably mostly as a PR stunt since public opinion is rather not in favour of the UBS and they've been losing quite some capital while customers pulled their money out.

and btw, 2 bn is still a huge amount if you consider that the bank was brought to the brink of ruin last year.