ZURICH--The lower house of Switzerland's Parliament voted
against adopting a controversial plan for banks to step around the
Alpine nation's banking secrecy laws and hand information about
their dealings with American tax cheats to U.S. authorities in the
hope of reaching a sweeping resolution.
The vote sends the measure back to the upper house, which
approved it last week, for further debate.
The proposed plan would have many of the country's roughly 300
banks start providing details to the U.S. Department of Justice
about their past relationships with American clients and the
employees who assisted those clients.
The Swiss cabinet, which announced the plan last month,
cautioned Parliament to act swiftly to approve it--implying that if
banks don't come forward now, U.S. authorities may ultimately come
down hard on them with indictments and heavy fines.
Still, critics have called the plan a violation of Swiss
sovereignty, which unfairly exposes local bankers, advisors and
attorneys to legal prosecution in the U.S. Critics have also said
the plan lacks important details on the potential size of fines for
the banks that opt to participate.
Now, following its rejection by a 126-67 vote in the lower
house, the measure is being tossed back to the Swiss Parliament's
upper house for further consideration on Wednesday. The
Parliament's summer session is scheduled to end on Friday. The
autumn session doesn't begin until Sept. 9.
About a dozen banks have already been under investigation by
U.S. authorities, including Credit Suisse Group AG (CSGN.VX) and
Julius Baer Group AG (BAER.VX). Those banks have begun handing over
information as part of the U.S. crackdown on American tax evasion.
UBS AG (UBSN.VX), the country's biggest bank, resolved its issues
with the DOJ thanks to a deferred prosecution agreement in
2009.
Credit Suisse has already set aside 295 million Swiss Francs
($321 million) to deal with the U.S. tax probe. Julius Baer hasn't
made a specific provision, but analysts generally estimate the
Zurich-based bank could be hit with fines ranging from CHF200
million to CHF500 million.
As Swiss lawmakers have considered the proposed plan for a
sweeping resolution for banks, they've been reminded of the
indictment of Wegelin & Co. Wegelin, Switzerland's oldest bank,
was hit with a U.S. indictment last year and is now defunct.
Still, the proposed plan for banks to resolve their issues with
the U.S. by skirting banking secrecy laws drew criticism from the
largest political parties in the lower house of Parliament.
The right-wing Swiss People's Party has railed against the
measure as "blackmail" on the part of U.S. authorities pressing
Swiss officials to do their bidding, while the left-leaning Social
Democrats have said banks should be left to resolve their legal
issues on their own.
Though they haven't been given specific details about the fines
in store for participating banks, lawmakers have estimated
penalties will amount to as much as CHF10 billion.
While banks would be expected to hand over data on their
business with American clients under the terms of the plan, the
exact identities of U.S. account holders would remain unknown.
Swiss officials have said the country remains unable to hand
over such detailed information on clients until the U.S. Senate
passes a 2009 amendment to a longstanding tax treaty between the
countries.
Write to John Letzing at john.letzing@wsj.com
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