How Credit Suisse got a stiffer penalty than UBS

Tue May 20, 2014 10:53am EDT
 
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By Aruna Viswanatha and Karen Freifeld

WASHINGTON/NEW YORK (Reuters) - U.S. prosecutors first raised the specter of a criminal plea by Credit Suisse Group AG more than two years after starting an investigation into whether the Swiss bank had helped wealthy Americans evade taxes.

Credit Suisse on Monday became the largest bank in two decades to plead guilty to a U.S. crime and agreed to pay $2.6 billion in fines to prosecutors and regulators, a much more severe penalty than was dealt to rival UBS AG in 2009.

In a meeting with Credit Suisse's lawyers in March 2013, U.S. Justice Department officials, frustrated by what they viewed as poor co-operation from the bank, said an indictment was possible if they did not see an improvement, according to a person briefed on the situation.

Exact details of what prosecutors were seeking could not be learned, but Credit Suisse said Swiss law prevented it from handing over names of clients to U.S. authorities, and Swiss lawmakers did not want to do anything to help the bank to do so.

By that time, Credit Suisse, officials in the United States,

and the Swiss government had been negotiating for almost two and a half years with little success.

While U.S. prosecutors insisted on getting at names of alleged U.S. tax cheats, the Swiss government steadfastly maintained it would not invoke emergency law in order to allow Credit Suisse to deliver data on any of its clients.

In Switzerland, breaking banking secrecy laws can mean fines and up to three years on jail, though the Swiss government has said it will loosen those laws and adopt data sharing agreements with its neighbors if it becomes a global standard.   Continued...

 
The logo of Swiss bank Credit Suisse is seen below the Swiss flag at a building in the Federal Square in Bern May 15, 2014. REUTERS/Ruben Sprich