Swiss laws provide for mutual assistance to be given to foreign powers if there is prima facie evidence of money laundering or other criminal activity, nowadays including tax fraud. But secrecy laws are still tight, and simple tax planning or avoidance is certainly not enough to breach them.

"A priori it is not a simple case of tax evasion that would be rejected out of hand," said Rudolf Wyss, head of the international legal assistance division of the Swiss Justice Department. In Switzerland, as in some other countries, a court order is needed even after the Justice Department has agreed to give cooperation.

The Justice Department says it has indeed seen credible evidence of tax fraud and has appointed investigating judge Daniel Dumartheray, who has a hawkish record on foreign assistance cases. Judge Dumartheray said the Australian case showed some evidence of serious fraud. "This exposes the limit between tax evasion and fraud," he said. "But we could co-operate (with the handing over of documents) if there are ingenious manoeuvres and fictitious structures and artificial operations."

The ATO's Carmody in July said: "For some time we've been trying to crack open some of these offshore schemes and the information we obtained then, and I should say since, which is a lot that's come forward since, is giving me more and more confidence that we have made significant inroads there."

"A rough estimate at the moment of that territory, it needs to be refined down further, is probably around 500 people," he stated, adding that the total amount of money involved is somewhere in the region of A$300 million (US$230 million).

The problem is, of course, that for tax authorities and governments any attempt to minimize tax bills is morally reprehensible, whether it is actually criminal or not. Usually it isn't, and Strachans has said it will vigorously fight the ATO's allegations. A director and partner of Strachans, Philip de Figueiredo, said that if the Geneva courts find against the firm and for Australia, the company plans to appeal in the Supreme Court in Lausanne.

The Australian Crime Commission, which is working with the ATO on offshore cases, recently said it had raided 85 homes in four states in connection with the offshore tax investigation, issuing 48 warrants in respect of suspected tax evasion. The Commission has also interrogated a number of prominent Australian figures, but has been attacked in court as behaving unconstitutionally, and is battling more than a dozen Federal Court challenges across four states, including some from individuals who allegedly failed to pay tax on film royalties received from the US via tax haven bank accounts. They say the commission is constitutionally invalid because its powers to investigate future crimes are too broad; a Federal Court judge, John Mansfield, is expected to hand down his judgement soon.

Just last week, the Swiss Banking Association urged the Swiss authorities to be more selective in the granting of requests for judicial assistance from foreign powers which, it argues, are becoming increasingly politically motivated and unjustified.

"In the last few years, Switzerland has made great efforts to combat money laundering and funds linked to potentates, and it has proved too that the relevant laws can also be applied very strictly in the financial sector and that banking confidentiality protects neither drug traffickers nor terrorists," observed Urs Roth, chief executive of the Bankers' Association.

However, Roth went on to observe a growing awareness among the legal community that judicial assistance treaties with Switzerland are being abused by foreign powers, and that the Swiss authorities are turning a blind eye to possible injustices in a foreign prosecution by simply deciding on the basis of procedural criteria.

"Quite recently, legal experts and practitioners have been increasingly critical of the judicial assistance practice of the Swiss authorities. There are suspicions that the judicial authorities in foreign countries may start a prosecution just as a pretext to get at financial information through judicial legal assistance or to put companies under economic pressure by having their accounts blocked. This clearly would be an abuse of judicial assistance. Judicial assistance cannot be allowed to serve domestic political goals by being misused to exert pressure on influential or politically unpopular persons or companies," Mr Roth noted.

He went on to add that: "Switzerland, it is true, bears no responsibility for foreign proceedings but it has a duty not to be simply a willing provider of assistance in cases that are clearly politically motivated. The protection of personal financial privacy is part of the bedrock of the Swiss legal psyche and is the right of every respectable bank customer in Switzerland, whatever his or her nationality. Switzerland must not be pushed by the judicial assistance process into becoming simply a purveyor of information."