Credit Suisse CEO In Spotlight Following Poor Second Quarter Results

by Ulrika Lomas, Tax-News.com, Brussels

20 August 2002

In a recent interview, Credit Suisse Group CEO, Lukas Muhlemann defended Switzerland's banking secrecy laws, and admitted that he could understand why high level managers such as himself are coming under fire as global economic uncertainty takes its toll on the world's markets.

Mr Muhlemann spoke to the Swissinfo news service following last week's announcement of disappointing second quarter results as a result of substantial losses by Creit Suisse's insurance arm, Winterthur.

When questioned as to the Swiss position on banking secrecy in the ongoing dispute with the European Union over savings interest, the Credit Suisse CEO explained that:

'In contrast to other countries, banks do not automatically furnish customer information to the tax authorities. Bank secrecy is only broken when there is a criminal investigation and I personally think that's a good regime.'

Dismissing the suggestion that Swiss banking secrecy provisions aid tax dodgers, Mr Muhlemann added: 'In Switzerland we have a withholding tax on financial instruments and there is currently a loophole on foreign financial instruments where there is partly no withholding tax on bonds. Here we've made a proposal in the discussions with the EU to close that loophole and I think it's a very sensible proposal'

He continued: 'I think the principle of self-declaration and the withholding tax is a very good system. It avoids criminalisation for small omissions or offences, but captures the revenue very pragmatically if the declaration is not complete.'

Speaking with regard to the backlash against senior management which has come about as a result of the recent corporate accounting scandals and falling markets, the Credit Suisse boss told the news service that:

'I think it's clear as long as equity markets went up, managers were highly applauded because they were seen as responsible for the very positive developments that people could feel in their pockets...Now markets have gone the other way, and it's clear that we have the opposite reaction. Those who have been applauded are now the scapegoats and are guilty for the losses suffered by many investors, including the managers themselves.'

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