THE SWISS BANK TWEETS

THE SWISS BANK TWEETS

IN THE END, IT’S ALL ABOUT THE GOOSE

Jeffrey Robinson © 2012

The SWISS BANK TWEETS began with a single Tweet from Katharina Bart, the Zurich based Reuters journalist whose insights into Swiss banking are as keen as anyone’s.

On June 6, she posted this: “Bank secrecy good for the #Swiss because it lowers taxes says #Eichenberger MT @SwissBankingSBA.”

She was referencing an article from that day’s German language newspaper, Mittwoch, which carried the quoted comment attributed to Dr. Professor Reiner Eichenberger, Head of the Center for Public Finance in the Department of Economics at the University of Fribourg.

The link to the article is: http://ow.ly/boA8X

Reiner is a serious guy who doesn’t mix his words, as was the case in December 2001, here quoted by Swissinfo. “It is very important for Switzerland that the pressure to lift the banking secrecy laws is spread out to other countries. Without an ally such as Liechtenstein, Switzerland would be alone in its role as sinner.”

For a man who makes economic judgments and not moral assessments, his was an interesting choice of words — “Sinner.”

Anyway, in her Tweet, Bart copied in the Swiss Banking Association, which notes on its own Twitter page (@SwissBankingSBA) that it is “the leading professional organisation of the Swiss financial centre.”

A staunch and faithful defender of its members interest, the SBA’s singular mission is to spin stories that might, at first glance, be considered harmful to anyone in the secret banking business.

The SBA and I are no strangers. Since writing The Laundrymen in 1992, I have often criticized them for playing fast and loose with the truth.

Accordingly, my response to Bart’s Tweet was, “It’s so good for Switz that #SBA is willing to lie and cheat to maintain it. Shameless hypocrisy.”

Within 12 hours, the SBA responded with, “@WritingFactory Mr. Robinson, polemics does not bring us anywhere. Our communication is always open and honest.”

Along with the response came this link to the SBA’s website: http://www.swissbanking.org/en/home/standpunkte-link/medien.htm

For the SBA to claim that its communication is always open and honest is yet another example of the SBA’s turbulent relationship with the truth. It is not open in the transparent sense of letting the chips fall where they may, and is all-too-often blatantly dishonest when the chips need to be swept under the carpet. But then, the SBA is not paid to tell the truth. It is paid to defend, blindly, its members interests.

And for many of us, those interests are, increasingly, indefensible.

For years, its president Pierre Mirabaud, one of Geneva’s leading private bankers, maintained an aggressive stance to ward off any and all criticism of banking secrecy. That the rest of the world was out of step with Switzerland was characteristic of his spin.

He often asked, “Why should Switzerland renounce its traditions of banking privacy just because the tax systems of neighbouring countries do not work properly or efficiently?”

Privacy being the deliberately chosen “softer” word than secrecy.

And the answer to his question is obvious: the tax systems of neighboring countries is not efficient in part because Switzerland will not renounce — and, in fact, actively encourages — it’s tradition of allowing people to pay for the privilege of hiding their assets.

When Mirabaud’s term came to an end a few years ago, Patrick Odier took over. Managing partner of the private Swiss bank Lombard, Odier is a highly educated, very articulate man. Unlike Mirabaud, who often came across as a snake oil salesman, Odier could sell used cars with only three wheels. And yet, slick as he is, he occasionally lets his cover slip by saying odd things.

Speaking at Davos in 2010, Odier wanted the World Economic Forum audience to know, “It is also important that politicians understand that bankers are not trying to protect what they have been doing [in the past].”

What makes this such a strange comment is that Odier’s presidency of the SBA is firmly committed to doing exactly that — maintaining the status quo of ultimate bank secrecy.

Earlier this year, while several European countries tried to strike tax arrangements with Switzerland — with the gnomes rightly fearing that a serious deal would lead to an exodus of high worth tax-evading clients — Odier stated categorically that capital flight would not happen. “Much of that money will stay one way or another to be managed professionally in Switzerland.”

The reason he could say that with such confidence was because he knew that the Swiss Banking Association, together with the government, would never allow anyone, especially a bunch of foreigners, to kill the goose that continues to lay golden eggs.

Secret banking is big business in Switzerland and anything more than window dressing to placate a few angry tax-hungry nations would be commercial suicide.

Defending that position, in December 2011, Odier made the outrageous claim, “Bank client secrecy protects wealth and does not hide it.”

Personally, I find it hard to believe that such an intelligent man could say something so totally dumb. But then, this sort of nonsense is exactly what the SBA’s president is put in office say with a straight face.

At the same time, as pressure has mounted from cash strapped nations in the rest of the world to hunt down tax dodgers, Odier has shrugged off their concerns with his version of the “out of step” rebuke. “Regrettably, you always find someone who doesn’t want to pay his taxes who will go to an island or I don’t know where…”

Which is yet another dumb thing to say because he knows damn well where many of these people go… Switzerland!

While the Swiss have sat down with Germany, Britain and Austria, pretending to look for some common ground, and while they are still pretending to negotiate with other nations, at every turn, Odier’s SBA has been quick to note, that “client privacy” has been defended.

In other words, if you want to evade taxes by hiding money in Switzerland, don’t believe what you read in the papers about the Swiss giving in to Germany, Britain, Austria, et al.

In other words, “We are still open for business.”

And, from the Swiss viewpoint, why not? If you don’t pay your taxes in Germany, Britain, Austria — or, especially, the United States — that’s no one’s business in Switzerland.

However, for all sorts of reasons, Odier and the SBA must pretend that it is. So they publicly agree with those nations looking to find tax dodgers and even claim to support a fairness doctrine of levying both punitive back taxes and a withholding tax on future earnings on certain accounts.

What the SBA doesn’t have to say is what every SBA member bank and banker knows full well — as long as you can disguise the beneficial ownership of your secret Swiss tax-evading accounts, you’ll always be welcome.

Plausible deniability lives.

Just do whatever the Swiss need you to do so that they can reclaim their virginity.

What’s more, by their own admission, the Swiss have made it abundantly clear that they will not agree to any deal that jeopardizes secrecy. After all, secrecy — not privacy but outright secrecy — is the cornerstone of the nation’s $2 trillion wealth management industry. If you kill their version of “omerta” the country would not only suffer irreparable economic losses, but unemployment would soar.

Professor Reiner got that very right!

Which is why Odier, and his predecessor Mirabaud — and everyone who will follow them — will never allow the SBA to waver in its unremitting stance to protect the goose.

At any cost.

Even at the cost of the truth.

In January 2012, Swiss journalist Jean-Michel Berthoud noted in Swissinfo that the nation’s bank secrecy legislation was causing problems in the international fight against money laundering.

Because Swiss law obliged the Money Laundering Reporting Office (MROS) to withhold certain information from its foreign counterparts, the
Financial Action Task Force (FATF) was warning that if Switzerland refused to exchange information, it could wind up on a black list.

Under normal circumstances, that should embarrass someone.

At the same time, the Egmont Group, an alliance of 127 financial intelligence units (FIUs) from all over the world, threatened to suspend Swiss membership unless the law on sharing was changed.

And if this was any other nation, the embarrassment would compound.

But this is Switzerland. And while a few politicians there agreed that the country could not refuse to align itself with international practice, the SBA is immune from embarrassment.

Shamelessly, it insisted that no exchange of information should be permitted unless the case is quite specific. That means, the case must be so narrowly framed that an exchange of information won’t really make a difference.

Nor, the SBA insisted, should information be passed on to third parties. “The Swiss authorities must see to it that if there is any suspicion that information is being forwarded elsewhere, that particular foreign money-laundering unit doesn’t receive any [information] in future.”

Of particular concern to the SBA, and other bodies, such as the Forum of Self-Regulatory Organisations, is the notion that foreign authorities could loosely define tax evasion as money laundering, and use that as a back door to obtaining information on tax evaders with accounts in Switzerland.

The SBA has stated that while it does not welcome international tax evaders and wanted to root them out, tax evaders were not money launderers and therefore deserved “omerta” protection.

Along with chocolates, watches and cheese with holes, hypocrisy is now a major export.

In the meantime, the Swiss announced that in 2011, suspicious asset flows reached a record high of around $3.21 billion. Much of that appears to have come from wealthy North Africans shifting assets away from “Arab Spring” nations.

Unfortunately, though, by the time of the announcement, much of that money had already found a home in Switzerland.

So how does Switzerland explain that, in spite of having money laundering and PEPs statutes in place, the money got there.

It doesn’t.

Nor do the Swiss apologize for the fact that, despite claims to the contrary, the money laundering and PEPs statutes they have in place, don’t work.

Ignoring the blatantly obvious, the Swiss prefer to respond that it did the right thing by freezing the assets of deposed leaders and their cronies from Tunisia, Egypt and the Ivory Coast.

Bully for them.

Except, under Swiss money laundering and PEPs statutes, they’re not supposed to look the other way, bank the money, hold onto it until they get caught and then freeze it.

In that Reuters’ article, Patrick Odier spoke about fierce competition between financial centers. And he reiterated that Switzerland would remain the clients’ favorite thanks to its “culture of privacy, professionalism and the security and stability granted by the traditional safe haven.”

For “culture of privacy,” read “culture of ultimate secrecy.”

Now, in addition to tax evading clients, add in PEPs, despots, defrocked dictators, still frocked dictators, corrupt politicians, their families and their mates.

Furthermore, Odier said, “We want to be known and develop because we’re good, not because we have illegitimate advantages.”

One can only assume that Odier wasn’t actually admitting to “illegitimate advantages,” even if everyone knows that’s what they are.

While he called on other nations to ratify treaties with Switzerland that are, in reality nothing more than window dressing to make it look as if the Swiss are cooperating — when they absolutely are not — he then let the cat out of the bag by admitting, “The pragmatic solution is worth 10 theoretical solutions that will never happen because Switzerland and its banks will not accept the automatic exchange of information.”

Secrecy lives.

And the SBA is there to defended it at all costs.

Its latest sleight of hand is to propose a new code of conduct for Swiss bankers, obliging them to turn away clients suspected of tax evasion. This follows along the same lines of those codes of conduct that oblige Swiss bankers to clamp down on money laundering, as well as accounts opened by politically exposed persons.

So tell me Mssrs Ali, Mubarak, Gaddafi, Ivory Coast, Abacha and your friends, just how well have those codes of conduct worked to keep your money out of Switzerland over the past 40 years?

In short, Swiss regulations, laws, statutes and enforcement are abject failures. But then, after years of sham and pretense, the SBA is not suddenly going to be “open and honest” by admitting that poachers make lousy game keepers.

And that became the subject of my Tweets in response to the SBA. There were 13 in all:

1) As a trade organization, your economic interest is obvious. Your objectivity is not. When have you ever criticized abuse?

2) Are you saying Swiss banking has always been honest and above board? If so, why does dirty $ continue to show up?

3) Are you saying the constant criticism of Switz banking practices, which protect Switz banking practices, are wrong?

4) How do you defend PEP/corruption $, which shows up, despite laws that it shouldn’t be there to begin with?

5) Was condemnation of UBS wrong? Why is capital flight (US tax evasion) openly encouraged by your member bankers?

6) How do you defend your members for deliberately hiding $ for Ben Ali, Mubarak, Abacha? et. al.

7) When was the last time one of your members was criminally prosecuted in Switz for #moneylaundering

8)How do you defend prosecution of whistleblowers at the expense of your members handling dirty money?

9) The Whistleblower Protection Act 2011 does not protect anyone in the private sector (bankers). Did you lobby against it?

10) Am I wrong to say your mission is to do whatever it takes to avoid killing the goose that lays the golden egg?

11) Why does #SBA constantly claim the world is out of step with Switz? How does that make you credible?

12) If Switz secrecy disappeared tomorrow, 50 jurisdictions would take its place. No excuse. It’s still indefensible.

13) Finally, I stand by what I said. Your job, as a trade organization, is to do & say whatever to defend your members.

I never expected any answers yet, less than 24 hours later, the SBA Tweeted back. I was surprised that it did, but not surprised that its answers reinforced my original claim of shameless hypocrisy.

Seven Tweets came from the SBA in response to my 13 points. Here they are, along with my rejoinders:

SBA 1) Wow, usually we’re comfortable with 140 signs, what is longer goes to our (very informative) website: swissbanking.org

JR 1) Informative? As opposed to spin, propaganda and sleight of hand? But that’s all right. You’re just doing your job.

SBA 2) Dirty money shows up ’cause it exists. But CH has effective laws to identify, block, seize & restitute it.

JR 2) So how come Swiss bankers continually deny that they have it, get caught with their pants down, then try to keep it?

SBA 3) The gvt is willing and able to act. And we support its actions. More on this: swissbanking.org/en/home/dossie…

JR 3) You’re rewriting history. Able, yes. Willing, no. Nothing happens until you get caught hiding it, and then you fudge it.

SBA 4) Untaxed money: we don’t want that any more and are working hard to find mutually agreeable solutions.

JR 4) Ludicrous. The industry is based on tax evasion/avoidance. Case after case shows Swiss bankers encouraging it.

SBA 5) More on this here: bit.ly/KDs9bz and here: bit.ly/KOzzbk

JR 5) A real tax treaty would kill the goose. And that will never happen. This is window dressing. You’re faking it.

SBA 6) And btw: Last conviction of Swiss banker for money laundering (to our knowledge) on 27 April 2012.

JR 6) Last? Or first? Swiss banker prosecuted by the Swiss? Who was he? Google, Bing and I are all at a loss. Details please.

SBA 7) We won’t tell names, Google it yourself, it’s public. Swiss laws/justice are working.

JR 7) How about a hint? Money laundering in Switz? PEPs violations? How well are Swiss laws/justice working. Or not!

I closed with four additional Tweets.

The first was: It’s good that you responded, but open and honestly? No. You’re rewriting history and trying to defend the indefensible.

The second was less polite but much to my point: You can dress everyone up in a brand new wedding gown, but Switz is still the whore on the street corner.

The third suggested: When you start putting Swiss bankers in jail for #moneylaundering and PEPs violations, please get back to me.

While the fourth was an after thought: BTW, if bankers in Switz are so lawful, how come you lobbied to exclude bankers from the Whistleblower Act? Just curious.

*****

June 15 – The saga continues:

For over a week, the SBA chose to ignore my questions, hoping perhaps that I would go away.

Mistake!

So  I confronted the SBA’s silence in a Tweet on Thursday afternoon, June 14, and this response appeared on Friday morning,  June 15, divided into five Tweets.

1) We communicate daily: we answer journalists’ critical questions, publish positions, dialogue with authorities, write articles

2) …in newspapers, give presentations in schools… In our name (open) & stating clearly what we want and why (honest).

3) Most people, even if they do not agree with our ideas, are pleased to discuss with us – and they are not offending.

4) From you we so far only got rants as answers to our messages…

5) …thus our inclination to continue that dialogue may have diminished.

Of course, it is pitifully obvious that these Swiss PR people — and that’s what the SBA is, a public relations office — cannot answer my questions openly and honestly without letting the cat out of the bag.

The truth and nothing but the truth is not a product that PR companies sell.

The SBA is not some altruistic bunch of chocolate and cheese loving hippies hoping to better mankind. It is a group of PR flacks who have been given phones, computers, office space and salaries to spin, vigorously (“communicating daily”) in an effort to control the news about its members’ aims and ambitions (“publish positions” which, among other things, means maintaining that banking secrecy is both moral and justifiable) and,  as importantly, to protect its members from embarrassment. (Such as truthful answers to my questions.)

It’s also hard to deny that — when the SBA insists, “In our name (open) & stating clearly what we want and why (honest)” — theirs is not a definition of open or honest. Citing the source isn’t what open means. And taking a position doesn’t equate to honesty.

Nor is it an open or honest response to my questions. Rather, it is a juvenile ploy to avoid answering — when the questions are too tough, accuse the questioner of offensive ranting — but again, that’s what these folk are being paid to do.

PR is about managing a client’s image at all costs, even at the expense of openness and honesty.

(Note: This is not a rant, it is a statement of fact.)

In fact, nothing could be more evident of the SBA’s reluctance to engage than its five Tweet response. It feigns offense to deflect embarrassment and to justify its inability to defend the indefensible by burying its head in the sand: “… thus our inclination to continue that dialogue may have diminished.”

Still, being the eternal optimist that I am, I reckon that open and honest communication is always worth another try.

So here goes.

“Dear SBA, please… s’il vous plaitbitte… just answer the damn questions!”

To be continued.

That is, if and when the SBA can figure out how to spin this.

*****

 

For more:

Jeffrey Robinson's Criminal Intent - The Swiss Wash Whiter:   

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