a blow to Switzerland’s fiscal rehabilitation operation

Monday’s revelations about Credit Suisse’s wealthy and disreputable clients partially challenge official discourse by Swiss banks and officials about efforts to be more fiscally transparent. They also underline the extent to which the country continues to depend on dirty money from developing countries.

A Swede convicted of human trafficking, a leader of a Serbian drug cartel, the former heads of the secret services of Yemen and Iraq suspected of acts of torture, or even hundreds of corrupt politicians from Venezuela or Eastern European countries.

The list of wealthy clients who stashed 100 billion Swiss francs (96 billion euros) in the vaults of Credit Suisse, revealed on Monday, February 21, by a media consortium led by the German newspaper Süddeutsche Zeitung, reminds one who is who of sulphurous personalities to be avoided by any honest banker.

“A Swiss Scandal”

This new tax scandal, dubbed “Swiss Secrets”, comes at the worst time for the mighty Swiss bank. With more than 1.5 million private clients worldwide, it has been crumbling under the weight of scandals for years.

She has been implicated in corruption scandals in Russia, China, has been linked to money laundering cases by the Vatican Bank and has been blacklisted by Washington for promoting transactions with Iran or Sudan. In mid-February, it also became the first major Swiss bank to be prosecuted domestically over a drug money laundering case linked to a Bulgarian trafficker.

Each time, Credit Suisse claimed that it was ancient history and that it had learned from past mistakes. The bank also used the same line of defense after the Süddeutsche Zeitung revelations. “A number of important steps within the scope of Swiss financial reforms have been taken in recent years,” the establishment reacted in response to the revelations, emphasizing that certain disputed accounts date back to the 1970s.

An argument that does not satisfy specialists in tax havens and banking secrecy. First, because most of the accounts were opened after 2010. And also because “experience teaches us that banks that try to blame scandals for past mistakes are also the ones that make the least effort to change and that often find themselves trapped in repeat business,” said Ronen Palan, economist and tax haven expert at City University of London, contacted by France 24.

But it is not the reputation of a single bank, however controversial, that is tarnished by these revelations. “It’s not just a Credit Suisse scandal, it’s also a Swiss scandal,” says Quentin Parrinello, head of tax justice advocacy at the NGO Oxfam, contacted by France 24. Christophe Farquet, historian author of the book “Histoire du Swiss tax paradise” , specifies that “other banks, whether Swiss or subsidiaries of foreign groups established in Switzerland, are also regularly suspected of similar acts”

The revelations of “Swiss Secrets” come to partially distort the official discourse maintained by the Swiss authorities in recent years about the “end of Swiss banking secrecy”. “From 2017 onwards, Switzerland started signing agreements for the automatic sharing of banking information that were real blows to the principle of banking secrecy”, recalls Christophe Farquet.

These “advances” saw Switzerland removed from the OECD and Europe’s infamous black and gray lists of “non-cooperative tax jurisdictions” in 2019. The Süddeutsche Zeitung’s revelations question the reality of Swiss efforts to exit the tax haven court. .

The dirty money of developing countries

They highlight, at the very least, “a problem with the severity of internal due diligence investigations related to clients and also the control procedures implemented in recent years by the Swiss authorities”, says Quentin Parrinello.

It’s hard for him to believe that Swiss bankers missed the corruption charges weighing on Ukrainian oligarch Rinat Akhmetov, who had multiple Credit Suisse accounts in 2016. And the more than 3,000 wealthy Venezuelans suspected of corruption who chose Swiss coffers to protect your money from the economic crisis that is hitting your country?

It is not just about insufficient control of the origin of the funds. These revelations also shed light on “Swiss banks’ double-talk” in the 2010s against tax evasion,” notes Christophe Farquet.

And most of these new accounts have one thing in common: they come from customers in developing countries. “Switzerland seems, therefore, on the one hand, to have wanted to make promises to the so-called rich countries – with which the first agreements for the automatic exchange of information were then signed – and, on the other hand, it actively courted corrupt businessmen, authoritarian politicians from developing countries to compensate for the anticipated decline of customers from developed countries”, summarizes the Swiss historian.

It is true that Bern then began to sign agreements for the automatic exchange of banking information with developing countries. And “these new revelations do not allow us to know how effective these new Swiss practices are in the very short term, particularly with regard to money from developing countries”, underlines Christophe Farquet. But “the whole history of the Swiss financial center casts doubt on banks’ desire to clean up these customers,” said Ronen Palan of City University in London.

Especially since these revelations demonstrate, according to this expert on tax havens, the extent to which Switzerland continues to be attracted to the dirty money of international crime or corruption in developing countries. “The Jeff Bezos and Mark Zuckerberg of this world do not appear in these revelations. This doesn’t mean that the big groups don’t do tax optimization, but that they don’t choose Switzerland”, observes Ronen Palan.

For him, the names that appear in these revelations prove the failure of the Swiss financial center “to evolve and remain competitive to attract customers who seek to invest their money in complex financial arrangements that yield a lot.”

The European People’s Party (EPP) – the main political formation of the European Parliament – estimated that the “Swiss Secrets” revelations could lead to Switzerland’s big return to the European tax haven blacklist. “The next discussions on updating this list will take place on Thursday, February 24th. We will then see what is happening and whether Switzerland is ‘too big’ or not,” notes Quentin Parrinello.

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