Legal News

Switzerland: Anything But Neutral on Secrecy Laws

By Ashby Jones

Is Switzerland winning the battle of the names? According to an NYT story out Tuesday, the answer appears to be yes.

The Justice Department may drop its case, filed in February, geared toward forcing the Swiss bank UBS to divulge the names of 52,000 wealthy American clients suspected of offshore tax evasion, reports the NYT. The move could happen by mid-July. Click here, here, here, and here for earlier LB posts on the UBS situation.

In February, the Justice Department sued UBS in a federal court in Miami to compel the bank to turn over the names, shortly after UBS agreed to pay $780 million to settle accusations that it had allowed wealthy Americans to hide billions in offshore bank accounts.

According to the NYT, the reversal comes in the midst of an intense lobbying campaign mounted by UBS and senior Swiss government officials to persuade Washington to drop the case. UBS has argued that disclosing client names would cause it to violate Swiss financial secrecy laws and open its executives and bankers to prosecution in Switzerland.

"To have a complete meltdown in Swiss-U.S. relations and go to the mat with Switzerland three years from now when money is getting back into the system doesn't make sense," said an American official to the NYT. "The Swiss do not want this to be litigated, and it is possible it will settle before then," said the official.

Adding to the DOJ’s calculus: that scores of wealthy clients, worried about being prosecuted, have come forward in recent months to declare their accounts.

Karina Byrne, a UBS spokeswoman, and a Justice Department spokeswoman, Beverly Lumpkin, both declined to comment to the Times.

Full post as published by Law Blog - WSJ.com on June 23, 2009 (boomark / email).