Swiss bank UBS has come under fire this week by a Senate subcommittee, which
alleges that it assisted US clients in shirking their tax liabilities.
The Senate Permanent Subcommittee on Investigations on Wednesday published
a report summing up the results of its six month probe into UBS and Liechtestein's
LGT bank, launched in the wake of revelations that the latter bank had helped
wealthy Germans to conceal income, thereby illegally reducing their tax bills.
The scandal first broke in February, after it emerged that the home of Klaus
Zumwinkel, Chief Executive of Deutsche Post, one of Germany's largest companies,
had been raided by police as part of a tax evasion investigation. He was accused
of hiding about EUR1 million from German tax collectors in Liechtenstein.
The raid followed the delivery of information about hundreds of wealthy German
clients to the intelligence services by a former employee of LGT.
The informant is said to have handed over a disc to the German intelligence
service, the BND, containing confidential information on more than 1,000 clients.
The BND is believed to have paid the informant a sum of between EUR4 and EUR5
million for the disk - a sum which the German government regarded as a sound
investment, considering the potential pay off if the tax evasion allegations
were confirmed.
The scandal prompted other governments, including the US authorities, to launch
examinations into whether their citizens had evaded taxes in this way.
Commenting ahead of a Thursday hearing on the matter, Senator Carl Levin (D-Michigan),
chairman of the subcommittee was predictably shrill on the matter, arguing,
according to an Associated Press report, that:
"The iron ring of secrecy around tax haven banks and their deceptive banking
practices enable and encourage tax cheats to hide assets from the United States.
Congress needs to enact strong penalties on tax haven banks that help US taxpayers
avoid paying taxes to Uncle Sam."
In addition to condemning UBS for its "aggressive" marketing of its
offshore banking products, whilst acknowledging that it had not technically
violated reporting requirements under the US Qualified Intermediary Program,
the subcommittee made several recommendations in its report, including the imposition
of tougher rules on foreign banks operating in the US, and more stringent IRS
reporting requirements for such institutions, coupled with heavier penalties
for failures to provide such information.
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