Credit Suisse boss tells Senate that he 'regrets' tax ploy

Brady Dougan, Chief Executive of Credit Suisse Brady Dougan, Chief Executive of Credit Suisse is testifying before a US Senate Committee

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The boss of Swiss bank Credit Suisse has said he "deeply regrets" that some of its bankers violated US tax laws.

But Chief Executive Brady Dougan said in a statement to a US Senate committee that there was only "scattered evidence" of improper conduct.

A US Senate report alleged the bank had helped US clients hide billions of dollars from the US taxman.

Mr Dougan admitted some private bankers had helped Americans hide income and assets to illegally avoid US tax.

Analysis

Bank statements hidden in sports magazines, secret elevators, and false claims in US visa applications.

According to a Senate report, these are just some of the ways Credit Suisse helped its 22,000 American customers avoid US taxes.

At a hearing in Washington, the chief executive of the Swiss bank fought back against the allegations.

Brady Dougan told senators that only a small group of Swiss-based private bankers were to blame for helping US clients dodge taxes and that management had been kept in the dark.

America's crackdown on tax evasion has had a huge impact on Swiss private banking. Earlier this year, Switzerland's oldest bank closed its doors for good and in 2009 UBS paid a $780m fine.

Deep regret

He said: "We deeply regret that - despite the industry-leading compliance measures we have put in place - before 2009, some Credit Suisse private bankers appear to have violated US law."

"The evidence showed that some Swiss-based private bankers went to great lengths to disguise their bad conduct from Credit Suisse executive management."

The report said that in 2006, Credit Suisse held 22,000 accounts from US customers worth 12bn Swiss francs ($13.5bn; £8.1bn).

Mr Dougan disputed some of the findings of the report, saying the subcommittee wrongly assumed every US client account held in Switzerland was hidden from the US government.

He said the bank was fighting lawsuits in Switzerland from clients trying to prevent it from giving information to the US authorities.

"These are not the actions of an institution flouting US law enforcement or hiding behind Swiss law," he said.

Stalled effort

Start Quote

The whole idea that the Swiss government is cooperating with us is a joke”

End Quote US Senator Carl Levin Democrat, Michigan

Currently, the US Justice Department (DOJ) is investigating 14 Swiss banks over tax evasion - five years after UBS admitted to helping US clients hide money.

"It's five years later, and the sad truth is that the era of bank secrecy is not over," said Senator Carl Levin, a democrat from Michigan and chairman of the Senate committee that published the report.

"We have great concern that the battle to collect those unpaid taxes on hidden offshore assets seems stalled."

During the Senate hearing, US politicians lashed out at Credit Suisse executives both over the bank's behaviour and over the Swiss government's perceived obstructions into helping US authorities identify Americans who are evading tax.

"The whole idea that the Swiss government is cooperating with us is a joke," said Mr Levin.

He also scolded the DOJ for having only identified 238 client names from Credit Suisse out of 20,000 accounts.

"To collect those unpaid taxes and hold U.S. tax evaders accountable, the critical first step is to get their names," he said.

According to the report, after Credit Suisse started phasing out its tax evasion practices, the number of Swiss accounts held by US clients at Credit Suisse fell by 85%.

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