WASHINGTON Feb 25 The U.S. Justice Department is dragging its feet on prosecuting Swiss banks that helped Americans evade taxes and on collecting billions of dollars likely owed to the U.S. Treasury by tax dodgers, a powerful U.S. Senate panel said on Tuesday.
Five years after Switzerland's largest bank, UBS AG , admitted to helping U.S. taxpayers hide money from tax authorities and agreed to provide information about its clients, federal officials have gotten only a handful of names from other Swiss banks, the Senate Permanent Subcommittee on Investigations said.
Chaired by Democrat Carl Levin, the panel issued a report alleging misdeeds by Credit Suisse, Switzerland's second-largest bank. The report said Credit Suisse opened Swiss accounts for more than 22,000 U.S. customers with combined assets of as much as $12 billion.
With cash-strapped governments worldwide tightening international tax law enforcement, a public hearing on the Levin report slated for Wednesday will put pressure on the Justice Department to conclude its long-running probe of Credit Suisse. But the two are not yet in agreement over a resolution, a person familiar with the matter said.
"There's no number on the table... There's no indication that there's any finality in any discussions," said the person, who declined to be named.
Still, Credit Suisse last week agreed to pay $196 million and admit to wrongdoing to settle related charges leveled by the market-regulating U.S. Securities and Exchange Commission.
A Justice Department official said its investigation was at an advanced stage, but declined to provide details.
The agency said it has charged 73 account holders and 35 bankers and advisers related to offshore tax evasion since 2009, and is investigating 14 Swiss financial institutions.
"We won't hesitate to indict if and when circumstances merit," the department said in a statement.
Credit Suisse declined to comment.
DETAILS FROM 176-PAGE REPORT
The Senate subcommittee, known for long and detailed probes of financial misconduct, has been examining tax evasion for many years and held hearings on UBS in 2008 and 2009.
Four top Credit Suisse executives, including Chief Executive Brady Dougan, are scheduled to testify on Wednesday, along with two top Justice Department officials.
"Credit Suisse's practices facilitated tax evasion against the United States ... Negotiations have gone on for years, and still there are no commitments to provide names of account holders," Levin told reporters at a briefing.
"The Department of Justice needs to use the tools in its arsenal to collect the taxes owed," he added.
According to the 176-page report from Levin's panel, Credit Suisse bankers secretly traveled the United States - sometimes on tourist visas - to recruit clients. One former customer told the panel he once met a Credit Suisse banker at a hotel and, over breakfast, the banker handed over bank statements tucked into the pages of an issue of Sports Illustrated.
The report said that by 2008, over 1,800 Swiss bankers at Credit Suisse were handling one or more U.S. clients and that the bankers did not sufficiently check whether the clients were meeting their U.S. tax obligations.
The bank's officials are expected to stress that only a small group of Swiss-based private bankers had helped clients evade taxes and that it was not a widespread practice, according to a person familiar with the bank's thinking.
Credit Suisse had provided all the information to U.S. authorities it was allowed to under Swiss law, the person said. It wanted to provide additional information, but the U.S. Senate had not ratified a bilateral treaty between the two countries that would allow this, the person added.
The bank has been in authorities' sights for years. It disclosed in 2011 it had received a "target letter" from prosecutors indicating that the bank was under criminal investigation. Also in 2011 a grand jury issued a subpoena seeking client names and account information, the report said, citing a briefing by Credit Suisse.
Seven of its Swiss bankers were indicted in that year, but all remain overseas.
Instead of enforcing the subpoena or threatening to indict the bank and entering an agreement to obtain client names, the panel said, the DOJ has largely deferred to Swiss authorities who have limited the documents being turned over.
After about two years of digging, U.S. authorities had unearthed information on only 238 U.S. customer accounts out of the 22,000 total, the report said, citing an interview with Credit Suisse General Counsel Romeo Cerutti, who is scheduled to testify on Wednesday.
In the statement, the Justice Department said the agency was able to receive information through a U.S.-Swiss treaty process, but that information was not yet known to the public.