Wed, May 21, 2014 page15

• Credit Suisse pleads guilty in US tax case

  • AP, WASHINGTON
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  European bank Credit Suisse AG pleaded guilty on Monday to helping wealthy Americans avoid paying taxes through secret offshore accounts and agreed to pay about US$2.6 billion.

  The US Department of Justice said it was the largest penalty imposed in any criminal tax case. Credit Suisee is the largest bank to plead guilty in more than 20 years.

  The settlement resolves a years-long criminal investigation into allegations that Credit Suisse, Switzerland’s second-largest bank, recruited US clients to open Swiss accounts, helped them conceal the accounts from the Internal Revenue Service (IRS), the US tax collection agency, and enabled misconduct by bank employees. The case is part of an administration of US President Barack Obama crackdown on foreign banks believed to be helping US taxpayers hide assets.

  Officials said a criminal charge was necessary to account for the bank’s pattern of misconduct, which included a lack of cooperation and document destruction, but the deal was structured in such a way as to allow the bank to continue operating.

  The penalties will be paid to the US Department of Justice, the US Federal Reserve and the New York State Department of Financial Services.

  As part of its plea agreement, Credit Suisse acknowledged that it helped clients use sham entities to hide undeclared accounts, destroyed bank records and concealed transactions involving undeclared accounts.

  The case was filed in a federal court in suburban Alexandria, Virginia, where eight former Credit Suisse employees have been charged. Two have pleaded guilty.

  Credit Suisse chief executive Brady Dougan said in a statement on Monday that the bank regrets its past “misconduct,” and was looking to resolve the matter and move forward.

  The bank has said it stopped providing private banking services outside the US to Americans several years ago.

  The criminal case follows a US Senate subcommittee investigation that found the bank provided accounts in Switzerland for more than 22,000 US clients totaling US$10 billion to US$12 billion.

  The report said Credit Suisse sent Swiss bankers to recruit American clients at golf tournaments and other events, encouraged US customers to travel to Switzerland and actively helped them hide their assets. In one instance, a Credit Suisse banker handed a customer bank statements hidden in a Sports Illustrated magazine during a breakfast meeting in the US.

  The administration’s action against Credit Suisse, a banking fixture on Wall Street, comes amid public outrage that boiled over from the financial crisis that plunged the economy into the deepest recession since the Great Depression of the 1930s. Calls for holding big Wall Street banks accountable, and sending top executives to jail, have come from consumer advocates, lawmakers and others, putting the US Department of Justice on the defensive.

  In 2009, Switzerland’s largest bank, UBS, entered a deferred prosecution agreement with the US Department of Justice in which it agreed to pay US$780 million in fines and turn over the names of thousands of customers suspected of evading US taxes. The nation’s oldest bank, Wegelin & Co, pleaded guilty in January last year to US tax charges, admitting that it helped American clients hide more than US$1.2 billion from the IRS.
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