A tax-evasion case involving the Swiss bank UBS and 52,000 of its wealthy US clients is turning into a diplomatic chess game.
Swiss President Hans-Rudolf Merz asked US Treasury Secretary Timothy Geithner to drop a Justice Department lawsuit seeking to force UBS to turn over the clients’ names, Daniel Haener, a Swiss government official in New York, said on Sunday.
Under Swiss bank secrecy laws, disclosing clients’ names is a criminal offense that can carry prison terms and large fines.
Switzerland instead is proposing to negotiate a new tax treaty with the US that would make possible such disclosures. However, the treaty would not apply to the clients in the continuing case. The current treaty, forged in 1996, does not require Switzerland to disclose clients’ names, and the US is eager for a new treaty that does. Formal talks on a new treaty are scheduled to start today.
For its part, the Justice Department is unlikely to scale back or drop its case against UBS, according to a senior person briefed on the matter. The agency “is not going to give in,” the person said on Sunday.
Haener, the acting consul general of Switzerland in New York, said on Sunday that Merz had asked Geithner for the names case against UBS to be withdrawn after a new agreement is signed. Haener said that “according to Mr. Merz, Mr. Geithner took note but was not yet in a measure to answer.”
The Treasury Department, in a statement on Sunday, said that Geithner “listened to the Swiss concerns regarding the UBS case and indicated that he understood the importance of appropriately resolving the matter.”
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