Swiss lawmakers reject deal with US in UBS tax row
June 8, 2010 The Swiss government and Washington had painstakingly crafted
the treaty last August to resolve a long-standing dispute over the
bank's alleged role in aiding tax evasion but 104 lawmakers in
Switzerland's lower house voted against the deal Tuesday, compared
to 76 in favor. Sixteen lawmakers abstained.
The government had urged lawmakers to approve the deal to avert
harm to the Swiss economy, which is heavily dependent on the
country's banking industry.
The deal is crucial to UBS - the country's largest bank - which
has faced intense pressure from U.S. authorities since 2007.
Last year the bank agreed to turn over hundreds of client files
and pay a $780 million penalty in return for a deferred prosecution
agreement. But Washington has signaled that unless UBS reveals a
further 4,450 American names demanded in the U.S.-Swiss agreement,
it may face a crippling civil investigation just as the bank is
recovering from the subprime crisis and seeking to rebuild its U.S.
business.
The deal was blocked Tuesday by lawmakers from Switzerland's two
biggest parties, the People's Party and the Social Democrats.
The Social Democrats had tied their consent to a binding
government commitment to tax bankers' bonuses. The People's Party
wanted parliament to vote against such a tax before dealing with
the U.S. tax treaty. Both parties' demands were rejected by the
government.
The bill will now be passed back to the upper house for further
debate and could be voted on again by the lower house later this
month. But lawmakers also voted to put any eventual compromise to a
popular referendum, making a further delay likely.
Shares in UBS AG fell 2.1 percent after the vote to 14.41 Swiss
francs ($12.41), as the bank now risks being drawn into costly
civil litigation by U.S. authorities over the 4,450 suspected
American tax cheats.
Switzerland has made many compromises in recent years to fend
off demands by Germany, France, the United States and others for an
end to its treasured banking secrecy rules, but the treaty that
failed Tuesday would have gone far beyond those measures.
Last year, the government agreed to do away with the difference
between tax evasion and tax fraud - a key legal distinction that
has allowed foreigners with accounts in Switzerland to avoid having
their details handed over to investigators back home.