Swiss politicians block treaty on UBS clients
Source: Agencies |
June 9, 2010, Wednesday
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Print Edition
Print Edition
SWITZERLAND'S efforts to calm a banking furor hit a major setback yesterday as nationalist and left-wing politicians blocked a treaty with the United States that would have allowed UBS to hand over thousands more files on its American clients to US tax authorities.
The Swiss government and Washington had painstakingly crafted the treaty last August to resolve a dispute over the bank's alleged role in aiding tax evasion, but 104 politicians in Switzerland's lower house voted against the deal, compared to 76 in favor. Sixteen abstained.
The government had urged approval of 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, which has faced intense pressure from US authorities since 2007.
Last year the bank agreed to turn over hundreds of client files and pay a US$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 US-Swiss agreement, it may face a crippling civil investigation just as the bank is recovering from the subprime crisis and seeking to rebuild its US business.
The deal was blocked by politicians 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 US tax treaty. The government rejected both parties' demands.
The bill will now go back to the upper house for further debate and could be voted on again by the lower house later this month.
The Swiss government and Washington had painstakingly crafted the treaty last August to resolve a dispute over the bank's alleged role in aiding tax evasion, but 104 politicians in Switzerland's lower house voted against the deal, compared to 76 in favor. Sixteen abstained.
The government had urged approval of 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, which has faced intense pressure from US authorities since 2007.
Last year the bank agreed to turn over hundreds of client files and pay a US$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 US-Swiss agreement, it may face a crippling civil investigation just as the bank is recovering from the subprime crisis and seeking to rebuild its US business.
The deal was blocked by politicians 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 US tax treaty. The government rejected both parties' demands.
The bill will now go back to the upper house for further debate and could be voted on again by the lower house later this month.
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