ZURICH (Reuters) - U.S. authorities should show restraint in a crackdown on banks accused of helping rich Americans dodge taxes, while indicting another bank could risk significant collateral damage, the head of a Swiss-American business lobby group said on Monday.
The comments by Martin Naville, head of the Swiss-American Chamber of Commerce, came after the United States indicted Wegelin, the oldest Swiss private bank, last week on charges it enabled Americans to evade taxes.
“It should be in the interest of the U.S. to negotiate this thing. The collateral damage also for the U.S. is enormous. Switzerland is the protector of U.S. interests in Iran and Cuba, as well as one of the largest net jobs creator in the USA,” Naville told Reuters.
Close Swiss-U.S. diplomatic and business ties helped seal a deal in 2009 for the country’s biggest bank UBS AG to settle criminal tax charges by paying a fine of $780 million.
The indictment of Wegelin signals a ramping up of pressure on 10 other Swiss banks under investigation by the Justice Department, including Credit Suisse, Julius Baer and Basler Kantonalbank.
Switzerland has been lobbying for a year to get these investigations dropped in return for the payment of hefty fines and the transfer of names of thousands of U.S. bank clients suspected of dodging taxes.
Naville described the decision to indict Wegelin as an “overzealous” move by Manhattan U.S. Attorney Preet Bharara. “There should be no interest from an American perspective to really kill this middle road of negotiations.”
The threat of an imminent U.S. indictment, seen as the kiss of death for businesses, drove Wegelin to break itself last month.
“They will in all likelihood get names and money much, much faster with the negotiated path,” Naville said. “If they go the hardball way they will get it sometime down the line, but much later and with a lot of collateral damage in Switzerland and the USA.”
In addition to Swiss representation of U.S. interests in Iran and Cuba, Naville noted the two countries’ close business relationship, with Switzerland ranking as sixth-biggest foreign investor in the United States.
Naville said the U.S. move against Wegelin would make it harder for the Swiss government to win approval in parliament in coming weeks for a proposal aimed at allowing banks to transfer data on groups of clients despite strict Swiss bank secrecy.
That in turn could provoke the U.S. Justice Department to indict another bank, he said, possibly including one of the state-controlled Swiss cantonal banks.
“A move against a cantonal bank would be seen in large parts of Switzerland as a direct attack against Switzerland,” he said. “After such a move it would be immensely difficult to find a negotiated solution in the short term ... If there is any kind of message I can send to our American friends it is ‘please don’t do this’.”
Editing by David Holmes