CSFB Fined For Misleading Japanese Tax Authority

by Robert Lee, Tax-News.com, London

20 December 2002

The UK's Financial Services regulator has fined the London-based derivatives arm of Credit Suisse First Boston an unprecedented £4 million for its attempts to mislead the Japanese tax authorities in the mid- to late 1990s.

CSFB's London derivatives operation, formerly known as Credit Suisse Financial Products (CSFP) faced accusations that, between 1995 and 1998 it had concealed and destroyed documents, removed papers offsite to avoid an audit by the Japanese tax authorities, colluded to misinform the tax authorities, and arranged to remove information about trades from lists given to investigators.

According to a Financial Services Authority statement released yesterday, CSFP chose this course of action because it feared that the Japanese financial regulator might conclude that a sister company was conducting certain types of banking business on CSFP's behalf without the necessary Japanese licence, and that the country's tax authority might decide that this business should be taxed in Japan.

Carol Sergeant, Managing Director for Enforcement at the FSA announced that:

'The unprecedented size of the fine makes it clear that we consider any attempt to mislead regulators and other authorities whether in the UK or other countries to be an extremely serious issue.'

However, the FSA added that it had taken into account changes at management level within the organisation, and a 'significant improvement' in its compliance culture.

CSFB on Thursday acknowledged and accepted the FSA charges, but explained that it takes its regulatory responsibilities very seriously, dismissing the incidents as an 'abberation' on the part of some of its former employees.

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