Learn About Illicit Financial Flows
Key Terms

Swiss Banker indictments exposes weaknesses of Rubik Deals

January 20, 2012

By Alex Marriage

Alex Marriage is an Advocacy and Outreach Assistant at the European Network on Debt and Development (Eurodad) in Brussels.

January 3rds’ indictment of three Swiss bankers by a US court on tax evasion charges, shows that robust action against offshore centres can succeed. This underlines the terrible deal the populations of Germany, Britain and Greece will be getting if their governments conclude one sided tax deals, known as Rubik, with the Swiss Government.

Indictment

The bankers, had helped American clients open accounts with their bank, many of these clients had fled UBS after an earlier US probe. The bankers told their clients that the bank was less at risk as it did not have offices outside Switzerland. However this proved to be untrue. This case alone covered some $1.2 billion in assets hidden from the US tax collectors. The bankers could be sentenced for up to five years if convicted. Contrast this, with Dave Harnett departing senior UK tax official’s statement, in August justifying the amnesty he had just initialled as part of Rubik, saying “I don’t think it does let fraudsters off, because we weren’t going to catch them anyway,”

Legality and efficacy of Rubik both questioned

The Rubik concept was drafted by the Association of Foreign Banks in Switzerland (AFBS) and by Swiss banks to protect banking secrecy against the international moves towards automatic tax information exchange, which followed the global financial crisis.
It has since been enthusiastically promoted by the Swiss finance ministry.

The European Commission has stated it will take Germany and Britain to court if they implement the Rubik treaties. However the EU accepts the amnesty for past tax evasion but is opposed to the anonymous return of tax in the future which contradicts the European Savings tax directive, which calls for automatic information exchange on relevant types of information, such as interest on savings. The EU argues that Germany and Britain have already handed authority to negotiate direct taxation treaties over to Brussels. The deals also contradict the directive by fixing different tax rates than those agreed by member states at EU level.

The EU has been planning to extend the scope of this directive. Without the final withholding tax element, intended to protect bank secrecy it appears Switzerland would have little incentive to proceed with the deals. An expert briefing argues the Rubik deals will not protect Swiss banking secrecy in the long term. This strongly suggests that all those involved should stop wasting their time and abandon these deals.

Share

Disclaimer: Unless specifically stated to be the views of the Financial Transparency Coalition, the opinions expressed on this blog are solely the opinions of the individual blogger and are not necessarily those of the Financial Transparency Coalition.

Latest Press Releases

G20 Introduces “Transparency” Behind Closed Doors

Financial Transparency Coalition · September 21, 2014

WASHINGTON, D.C.—The G20’s recent focus on financial transparency is a welcome development, but instituting bare minimum requirements, or plans that allow for ...

Press Release: No Role for Public Scrutiny in OECD Plan to Curb Corporate Tax Dodging

Financial Transparency Coalition · September 16, 2014

WASHINGTON, D.C. — The Organization for Economic Cooperation and Development’s (OECD) new recommendations to fight multinational corporate tax avoidance look robust from ...

US$401.6 Billion Flowed Illegally out of Brazil from 1960 to 2012, Finds New GFI Report

Global Financial Integrity · September 8, 2014

RIO DE JANEIRO, Brazil / WASHINGTON, DC – More than US$400 billion flowed illegally out of Brazil between 1960 and 2012— draining domestic ...