Bank employee info transfer to US 'illegal'

A Geneva court has ruled that Credit Suisse's decision to provide US tax authorities with information on an employee was illegal, according to the ruling made public on Monday.

In April 2012, the Swiss government gave 11 Swiss banks the go-ahead to accommodate a US tax evasion probe and hand over the names of thousands of their employees and consultants working with American clients.
 
Fearful of harsh US penalties and prosecution, the banks then met Washington's demands, handing over personal information about numerous staff members, and reportedly also making personal documents, emails and details of telephone calls available.
 
But in a ruling reached on May 28th and made public on Monday, a Geneva court found in favour of a former Credit Suisse employee, who had challenged Switzerland's second largest bank over the information about her given to US authorities in 2012.
 
The woman, who was not named, had not been informed at the time that information concerning her was being shared — something that ran counter to Switzerland's long cherished bank secrecy practices, which are currently under international pressure.
 
In the first Swiss court ruling on the controversial practice, the Geneva court noted "the unlawfulness of Credit Suisse's communication to US authorities, outside an international process of mutual assistance, documents containing data" on the former employee, making it possible to identify her.
 
The court found that the woman, who was not named, "can legitimately consider that she will be at risk if she travels to the United States," and ruled that this impacted her "freedom of movement, (and) constitutes a deprivation of (her) personal liberty".
 
Lawyer Douglas Hornung, representing the former employee, described the ruling as "an important first-step victory."
 
It could have implications for the some 400 other current and former employees of Swiss banks who his law firm represents in similar cases.
 
Credit Suisse, which as a result of the US probes was slapped with a $2.8-billion fine last year after pleading guilty to having helped rich Americans evade taxes, said it had taken note of the Geneva court ruling.
 
"We plan to appeal," spokesman Jean-Paul Darbellay wrote in a statement sent to AFP.
 
"The court has decided on an individual case and has not determined that the cooperation under the authorization by the Swiss Federal Council is generally illegal," he said.

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AFP (news@thelocal.ch)

Rothschild Bank to pay $11.5m penalty

BY CARLA MAIN, BDlive

NEW JERSEY — Rothschild Bank, the Zurich-based private bank of the Rothschild financial dynasty, has become the latest Swiss bank to be fined by the US justice department for helping Americans conceal assets offshore.

The firm, overseen by Baron David de Rothschild and majority-owned by Paris Orleans, would pay a penalty of $11.5m, the department said on Wednesday.

Banca Credinvest, with headquarters on Lake Lugano, had agreed to pay $3m, it said.

The two banks join seven other Swiss firms that have settled with the US on condition that they reveal how they used shell companies and bank secrecy to conceal undeclared assets. More than 100 firms entered the programme at the end of 2013.

Rothschild Bank, which had US-related accounts with an aggregate balance of a maximum $1.5bn, knew it was "highly probable" that some clients did not comply with income tax and reporting obligations, and that some were hiding behind sham entities in Liechtenstein, Panama and the British Virgin Islands, the justice department said.

Rothschild closed 296 accounts of US taxpayers from August 1 2008, to the end of 2013, and encouraged customers to disclose undeclared assets to the US Internal Revenue Service. It had also obtained waivers from some former US clients to circumvent Swiss secrecy laws that normally prohibit banks from giving client names to foreign authorities, the justice department said.

"Rothschild Bank is pleased to reach this agreement … because this brings this historical matter to a conclusion," company spokesman Kilian Borter said.

On an unrelated front, prosecutors investigating Brazil’s largest corruption scandal said they had notified the US of evidence that at least four foreign companies had paid bribes to win Petrobras contracts. The allegations were against units of Samsung Heavy Industries, Skanska, AP Moeller-Maersk and Toyo Engineering, senior prosecutor Carlos Lima said.

Companies might face charges in Brazil that would restrict local operations and possible sanctions under the US Foreign Corrupt Practices Act, he said last week.

Samsung Heavy Industries "has not been contacted by any law enforcement authorities regarding this issue", the South Korean company said. Toyo and its Brazilian affiliate "are entirely unrelated to the bribery scandal of Petrobras", the Japanese company said.

Maersk said bribes were strictly forbidden for any employee or third party, that commissions were paid within industry norms, and that it had found no indication of improper activity. The Danish company had not been contacted by authorities.

Skanska said it had zero tolerance for unethical business practices and is investigating internally.

Petrobras, which prosecutors see as a victim of individual executives, is controlled by the state and its employees are deemed to be public officials. The US department of justice declined to comment on its role in the investigation. Petrobras did not reply to requests for comment.

In other news on bank settlements with regulators, a trader fired by Deutsche Bank as part of its London interbank offered rate rigging settlement with the New York Department of Financial Services is suing the bank over bonus payments that may total more than £5m.

Yves Paturel filed the suit along with a second trader, Gavin Black, in a London court in January, according to the filing, made available by the court on Wednesday. The pair were dismissed in April. Black has withdrawn his claim.

Bloomberg

Baron David de Rothschild’s Bank Fined Over U.S. Tax Dodging

by Giles Broom

Rothschild Bank AG, the Zurich-based private bank of the Rothschild financial dynasty, became the latest Swiss bank to be fined by the U.S. Justice Department for helping Americans conceal assets offshore.

The firm, overseen by Baron David de Rothschild, 72, and majority-owned by Paris Orleans, will pay a penalty of $11.5 million, according to a statement by the Justice Department on Wednesday. Banca Credinvest SA, with headquarters on Switzerland’s Lake Lugano, agreed to pay $3 million, it said.

Rothschild and Banca Credinvest join seven other Swiss firms that have settled with the U.S. in exchange for revealing how they used shell companies and banking secrecy to conceal undeclared assets. More than 100 entered the Justice Department program at the end of 2013.

“More and more information is flowing to the IRS agents and Justice Department prosecutors going after illegally concealed offshore accounts and the financial professionals who help U.S. taxpayers hide assets abroad,” Acting Assistant Attorney General Caroline Ciraolo of the Justice Department’s Tax Division said in the statement.

David de Rothschild, who was born in New York, and his brother Eric transformed Paris Orleans into a holding company providing wealth and asset management services, merger advice and merchant banking. It was originally founded as a French rail company in 1838.

Sham Entities

Rothschild Bank, which had U.S.-related accounts with an aggregate maximum balance of about $1.5 billion, knew it was “highly probable” that some Americans weren’t compliant with income tax and reporting obligations, and that some were hiding behind sham entities in Liechtenstein, Panama and the British Virgin Islands, the Justice Department said.

Edmond de Rothschild group is a separate asset manager and private bank led by Ariane de Rothschild and Benjamin de Rothschild.

The U.S. probe of the Swiss financial industry has already hit the country’s biggest banks, UBS Group AG and Credit Suisse Group AG, for more than $3 billion. About a dozen others, such as Julius Baer Group Ltd. and the Swiss unit of HSBC Holdings Plc, still face separate criminal investigations that may result in fines.

Rothschild closed about 296 U.S.-taxpayer accounts between Aug. 1, 2008 and Dec. 31, 2013 and encouraged customers to voluntarily disclose undeclared assets to the Internal Revenue Service. It also obtained waivers from some former U.S. clients in order to circumvent Swiss secrecy laws that normally prohibit banks from giving client names to foreign authorities, the Justice Department said.

“Rothschild Bank is pleased to reach this agreement with the U.S. DoJ because this brings this historical matter to a conclusion,” Kilian Borter, a company spokesman, said by telephone.

BSI SA, one of the largest private banks in the program, reached the first non-prosecution deal on March 30. It paid $211 million, admitting that it managed about 3,500 U.S. accounts with a peak value of $2.78 billion in 2008.

Lombard Odier, Geneva’s oldest bank, and the Swiss units of Deutsche Bank AG and Schroders Plc are among dozens of other companies waiting to conclude a deal.

http://www.bloomberg.com/