Swiss vote may crack banks' code of secrecy
Eager listeners crowded into the school hall in the Swiss lakeside village of Meilen, near Zurich, to hear politicians and bankers do battle over the survival of an institution that is as Swiss as the Matterhorn - bank secrecy.Skip to next paragraph
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In hundreds of meetings like this throughout the nation, the Swiss people have been preparing to vote next weekend (May 20) on whether their famous bank secrecy should be weakened substantially to allow foreign governments access to the Alpine nest eggs of delinquent citizens.
The referendum, backed by Social Democrats, church organizations, unions, and third-world organizations, is aimed at stopping the billions in flight capital that pour into Switzerland.
At present, Switzerland does not give legal assistance on currency regulation or tax avoidance, except where fraud is involved. A ''yes'' on Sunday would change all this, except in cases where bank customers faced possible political or racial persecution at home.
Fifty years ago, to protect Jewish clients from Nazi snooping, Switzerland made breaking bank secrecy a crime punishable by up to six months in jail or a maximum $22,000 fine. Even a bank employee who gives out information through carelessness faces criminal proceedings. This makes Swiss bank secrecy the toughest to penetrate, apart from tiny neighboring Liechtenstein, in the world.
Although it is the Mafia and third-world dictators who have given Swiss bank secrecy a bad name, ''ordinary'' tax dodgers find the tight-lipped Swiss equally useful. French customs officials constantly battle against citizens' fondness for a Geneva bank vault by tapping telephones, opening mail, and badgering people at border crossings. This month the Swiss government protested their sniffing around on Swiss territory.
Nikolaus Senn, the country's top banker, boomed from the Meilen podium: ''Why does capital come here from other countries? Because we're politically stable - the only country where there is no worry about the government changing. Why should we adjust our laws to suit countries with rampant inflation and mismanaged economies? ''
The chief executive officer of the country's biggest financial institution, Union Bank of Switzerland, sits on a lion's share of the $300 billion in foreign funds that is said to be managed by Swiss banks. No one knows the actual figure, because the banks are just as secretive on that as they are on the names of their clients.
Third-world organizations claim that some $50 billion is flight capital from developing countries. ''Ridiculous,'' cry the angry bankers. But one of them recently admitted to possibly a modest $5 billion.
''A country poor in natural resources needs a strong financial center for industrial existence,'' exclaimed industrialist Christoph Blocher.
Social Democratic Party president Helmuth Hubacher shot back: ''All money is not OK just because it's money.''
Bankers have warned that a ''yes'' by the voters will lead to a massive outflow of funds, causing interest rates to skyrocket, unemployment, and a collapse of stock exchange prices.
They claim to have done enough against flight capital through a recent gentleman's agreement that forbids the encouragement of flight capital and makes the full identification of customers obligatory.
Already more flight capital is going into the United States than into Switzerland, Mr. Senn claims. Stop it from going to Switzerland, he says, and more will just flow into New York, London, Singapore, Luxembourg, and Liechtenstein.
The Swiss voters' dilemma: Even if they should vote ''yes,'' can they economically afford to do so?