WASHINGTON – A Senate subcommittee investigation accused Swiss banking giant Credit Suisse of using elaborate “cloak-and-dagger” methods to hide the accounts of 22,000 wealthy American citizens with a total of up to $12 billion in assets from U.S. authorities so they could avoid paying taxes.
The bipartisan probe also sharply criticized the Justice Department for being lax in using subpoenas and other legal tools to pressure the bank to reveal most of the names of account holders, which have been withheld as part of a long Swiss tradition of bank secrecy.
“The key to piercing the cocoon of bank secrecy and collecting the taxes owed by tax evaders is getting the names on those accounts,” said Sen. Carl Levin, D-Mich., chairman of the Senate Permanent Subcommittee on Investigations.
“Yet after years of investigations, negotiations and jawboning, the United States has names for just 238 of those 22,000 Credit Suisse customers,” he said Tuesday in unveiling a 175-page report on the bank’s practices.
The subcommittee will hold a hearing today on the report’s findings. Senators will question Credit Suisse Chief Executive Brady Dougan, other company executives and two top Justice Department officials.
The report, based in part on 100,000 documents from Credit Suisse, said that the bank used tactics to help U.S. customers avoid paying taxes from at least 2001 to 2008.
Employees took dozens of trips to the U.S. to meet customers and personally recruit new ones at golf tournaments and other bank-sponsored events, avoiding paper trails while telling U.S. officials the visits were simply for tourism.
One former customer told the committee a Credit Suisse employee once delivered the customer’s bank statements hidden in a copy of Sports Illustrated magazine during a breakfast at a Mandarin Oriental Hotel in the U.S.
The unidentified client also described visiting the bank in Switzerland and being taken to a special meeting room via an elevator that was controlled remotely with no buttons. At the end of each meeting, the client signed an order to destroy the account statements that had been reviewed.
“I’m sure similar types of James Bond environments exist in other banks,” Levin said. The subcommittee focused on Credit Suisse because it is the second-largest bank in Switzerland.
A Credit Suisse spokesman said the bank was working on a response but did not immediately provide one.
The subcommittee investigation began in 2011 after the Justice Department indicted seven Credit Suisse employees on charges of aiding and abetting U.S. tax evasion. The bank itself also has been under criminal investigation by Justice officials since at least 2011.
Last week, Credit Suisse agreed to pay $196 million and admitted wrongdoing to settle allegations by the Securities and Exchange Commission that the bank provided brokerage and investment adviser services to as many as 8,500 U.S. customers without registering with the agency.
So far, the Justice Department’s efforts have produced few names of U.S. Credit Suisse account holders amid the difficulties of dealing with complex international treaties and Switzerland’s bank secrecy laws, the report said.
The Justice Department said Tuesday it is investigating 14 Swiss financial institutions for activities related to offshore tax evasion and has charged 73 account holders and 35 bankers and advisers with offenses related to offshore tax evasion since 2009.
The department also said its investigations have helped spur voluntary disclosures by U.S. taxpayers through an Internal Revenue Service program, started in 2009, that offers reduced penalties for people who owe back taxes, interest and penalties.
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