In a Los Angeles Times op-ed, Burt Neuborne urges accountability for Swiss banks

In an op-ed in the Los Angeles Times, Burt Neuborne urges the U.S. to hold Swiss banks accountable for secrecy laws that allow illegal activity to thrive

In an op-ed in the Los Angeles Times, Burt Neuborne, Inez Milholland Professor of Civil Liberties and legal director of the Brennan Center for Justice, argues that the United States should put an end to Swiss banking secrecy laws that allow people to cheat the federal government out of taxes and permit terrorists to prosper.

Noting the recent settlement between Swiss banking giant UBS, the Swiss government, and the United States in the Internal Revenue Service’s lawsuit to learn the names of thousands of Americans with secret accounts at UBS who allegedly cheated on their taxes, Neuborne writes that until the details of the pact are made public, it is not possible to determine whether progress has been made in putting an end to secrecy.

“Why is it that so many countries, including the U.S., can’t collect taxes from large numbers of cheats?” asks Neuborne, who was the court-appointed lead counsel for Holocaust survivors in their claims against Swiss banks. “Why is it that petty tyrants can plunder their nations’ treasuries with impunity? Or that drug lords can launder their funds without fear of discovery? Or that terrorists can move funds around the world so easily? It’s because Swiss bankers—and their clones in Lichtenstein and other banking black holes—refuse to make information about secret accounts available to government investigators.”

Neuborne writes that even though the Swiss claim to be willing to turn over information to foreign law enforcement officials, they will only do so if there is evidence of wrongdoing by a particular client, but without access to the information in the bank’s records, it is usually impossible to determine whether wrongdoing is taking place.

“Bank secrecy is Switzerland’s most valuable national asset,” Neuborne writes. “When Holocaust survivors complained that Swiss bank secrecy made it impossible to find thousands of bank accounts of deceased victims, Swiss banks settled the case in 1998 for $1.25 billion rather than allow the victims to inspect their books.”

In federal court in Miami, where the U.S. lawsuit was filed against UBS, the Swiss government has offered to have UBS turn over a few thousand names when the known facts point to tax fraud, but it insists on preserving the general principle that information will not be turned over in the absence of specific proof of wrongdoing.

“If Swiss bank secrecy can survive this debacle, the message to the tax cheats of the world will be clear: Swiss banks are open for business as usual,” Neuborne writes. “If, however, the IRS hangs tough, an equally important message will go out: Opening a Swiss bank account will no longer shield you from legitimate efforts by your government to obtain financial information needed to enforce the tax laws. It just might mean one less rogue state.”

Posted on August 13, 2009