US laws, courts cracking Swiss bank secrecy?
If the United States has its way, Switzerland's famous bank and business secrecy laws will soon have as many holes as Swiss cheese. However, the tight-lipped Swiss are not taking the American assault on their historic institution lying down. Federal officials in Bern have formed an interdepartmental task force, aptly called ''America'' and headed by top diplomats, to work out their defense strategy.Skip to next paragraph
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''The individual right to privacy is a basic concept,'' says the Swiss Bankers' Association. A Zurich banker bemoaned recently: ''Secrecy has become a dirty word.'' Several recent American moves have had resentful Swiss murmuring about extraterritorial muscling and accusing the US of attempting to extend its laws overseas.
First came the affair of Swiss-based commodity dealer Marc Rich & Co. The firm was accused of massive tax evasion in the United States, and related documents held in Switzerland were requested by American authorities. However, without waiting for legal assistance from Switzerland through official channels, a New York judge slapped a $50,000 a day fine on the Rich company as long as the documents remained outstanding.
Protesting this use of ''extraterritorial'' power, the Swiss refused to allow the documents to leave the country until the fine was removed. The US did not reply to Switzerland's protest note until after the US reached agreement with the company, whereby it pleaded guilty to tax evasion and said it would pay around $200 million. After the Swiss received a belated reply to their diplomatic note, they grudgingly declared themselves ''satisfied'' and handed over the wanted documents. Early next year the countries will meet to discuss their ''legal assistance arrangements.''
Next came a US decision not to include Switzerland on a list of countries in which US multinational corporations may set up a special subsidiary known as a foreign sales corporation. Switzerland's exclusion from the list of possible FSC countries makes it less attractive for American investors.
To blame were Switzerland's restrictions on allowing American tax inspectors access to information from US firms based here. This has been a major conflict in negotiations on a new double tax agreement between the two countries.
Swiss bankers are concerned by a US Securities and Exchange Commission proposal to invalidate another country's secrecy laws through the introduction of ''waiver by conduct.''
The proposal, still at the discussion stage, is aimed at improving SEC control over US stock exchanges. A foreigner who bought or sold on an American market would automatically consent to disclosure in any SEC investigation.