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U.S., EU keep close watch on Swiss banks
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10:21, March 10, 2009

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Some countries, deep inside their financial crisis, are very short of money after have launched massive economic stimulus packages. So, they turn attention to huge amounts of capital in the strongboxes of "tax haven" nations.

At the US Senate subcommittee hearing on March 4, the Swiss banking giant UBS official Mark Branson told the subcommittee that the Swiss Bank Corporation help US citizens evade tax, given his previous position as the bank's chief legal officer. According to a US Department of Justice official, Swiss banks have helped American citizens to evade 220 million US dollars of tax from 2000 to 2007.

US Senator Carl Levin (D-MI) at the hearing cited Switzerland as the strongest supporter of banking secrecy. In accordance with the U.S. law, he noted, such secrecy is part of the attempted crime.

UBS AG and other major Swiss banks have helped rich American taxpayers to evade tax since 1999, acknowledged a US Taxation Bureau report. The United States put a top executive at UBS AG on a wanted list last year. On Feb. 18 this year, UBS agreed to pay a fine of 780 million dollars to the U.S. in a bid to quell the charge of the US government for helping nearly 17,000 Americans evade taxes, and this Swiss banking giant unprecedentedly handed over the account details of roughly 250 clients. The US Department of Justice, however, did not "buy it", and insisted on opening up the account details of another 52,000 American clients.

Swiss Foreign Minister Micheline Calmy-Rey said on March 6 at a press conference at the end of her talks with visiting US Secretary of State Hillary Clinton that "it is very hard for Switzerland to accept such pressure on UBS," which is also indirect pressures on her country. But Switzerland and the U.S. agreed to step up cooperation so as to avoid the escalation in the incident.

Meanwhile, some EU nations have also accumulated grievances with UBS for its holding of bank deposits of their tax evasion clients. According to relevant statistics, German individuals hold an estimated 200 to 300 billion euro in accounts in banks in such Swiss cities as Geneva, Zurich and Lugano for evading several dozen billion euro of tax.

For this reason, German Finance Minister Peer Steinbruck and his French counterpart Ms. Christine Lagarde on March 3 called on G20 countries to end bilateral treaties in the financial sector with "tax haven" countries. In fact, Germany and France in October 2009 jointly called a meeting of APEC finance ministers, at which Switzerland was criticized and its government was urged to further improve their banking monitoring mechanism in an effort to prevent discreditable money from going on to flow into its banks.

Meanwhile, Argentine President Christina Fernandez de Kirchner said on March 1 that her country would propose at the April London Summit to do away with "tax havens" totally, saying that the Argentine government holds that the monitoring of capital flows should be standardized and strengthened, and that the credit system of international financial institutions be adjusted.

In face of censures and pressures, Swiss Federation President and Finance Minister Hans-Rudolg Merz said on March 5 that except for 250 to 300 US customers, Switzerland pledged to maintain its tradition of banking secrecy and keep improving it. He underscored that Swiss banks do not protect tax evaders and the acceptance of illegal money do not comply with the interests of Switzerland.

Moreover, Mark Branson, chief financial officer for UBS global wealth management, told a US Senate investigative panel on March 5 that UBS, Switzerland's largest bank, withhold of all but 300 of 4,700 US clients with accounts who did not pay US taxes on their assets.

"Swiss Banking Secrecy", a 75-year-old law in Switzerland, is a fundamental state law to back up its bank sector. The erosion of Switzerland's banking secrecy with the amendment of the existing banking law is expected to reduce the contribution of its financial sector to its national GDP from 12 percent to about 6 percent.

By People's Daily Online and contributed by PD reporter Zou Zhipeng and three overseas resident reporters

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