Thu, Feb 27, 2014 - Page 15 News List

Senate probe says bank helped hide billions from IRS

Bloomberg

Credit Suisse Group AG helped US customers hide as much as US$10 billion in assets from the Internal Revenue Service (IRS), more than double the amount previously known, according to a US Senate committee.

A report by the Senate Permanent Subcommittee on Investigations criticized the Zurich-based bank for failing to discipline any senior executives in the face of widespread tax evasion fostered by 1,800 Credit Suisse employees serving US clients. The firm also misled investors about growth in its private banking unit, according to the report.

The US Department of Justice has failed to use all its legal tools in its criminal probe of whether Credit Suisse, the second-largest Swiss bank, helped US clients evade taxes, according to the report.

Lax enforcement also allowed Credit Suisse to turn over the names of only 238 US account holders to prosecutors, the report said.

This US inaction symbolizes a larger problem in a five-year crackdown on offshore tax evasion, the subcommittee said.

Prosecutors have “failed to utilize available US legal means to obtain the names of tens of thousands” of Americans who owe billions of dollars in taxes and whose identities are still hidden by the Swiss, according to the 176-page report.

“The Department of Justice must take firm action to obtain the names of persons who hid those assets” and cheated on taxes, said Senator Carl Levin, a Democrat who chairs the panel. “They owe Uncle Sam, they owe the people of the United States.

“Simple justice requires that tax cheats must come clean, pony up, and face the consequences,” he added.

Levin’s committee was scheduled to hold a hearing in Washington yesterday with testimony by Credit Suisse chief executive officer Brady Dougan, three other bank executives and two Justice Department officials who coordinated the tax crackdown.

The bank is the biggest of 14 Swiss banks under criminal investigation, and seven of its bankers were indicted in 2011 on charges of helping clients conceal assets from the IRS and avoid paying taxes on them.

“Credit Suisse has yet to admit that its US cross-border business was largely a dishonest enterprise, dominated by undeclared accounts and US account holders dodging US taxes,” the report said. “The bank has not developed or implemented lessons learned that would guide the bank for the future.”

Of the 1,800 bankers who serviced US clients, only 10 have been disciplined and none was fired, the committee said.

“To date, no bank executive or senior official at Credit Suisse has been identified as responsible for any of the misconduct in Credit Suisse’s cross-border activity, even though that activity went on for decades, involved tens of thousands of US clients and billions of dollars,” the report said.

Senator John McCain, a Republican on the committee, said it was not plausible that senior management was not involved, considering the systemic misconduct.

“If you believe that, I have some beachfront property in Arizona,” McCain said. “You think all this was coming for all these years in this fashion and nobody knew about it? It defies logic or reason.”

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