For almost eight decades, many Swiss bankers had an easy job taking in often untaxed money from wealthy customers from around the world. Now, the country’s first female finance minister is changing the way Switzerland’s 300 banks are doing business.
Eveline Widmer-Schlumpf, 57, has until the end of this week to convince the Swiss parliament of a plan she says will end a five-year-old dispute with the U.S. over untaxed assets in Swiss bank accounts. If she succeeds, it would be another step in the quest to crack down on tax evaders.
“It’s a chance to deal once and for all with the past, at least with respect to the USA,” she said before the lower house today. “There’s a real risk of further banks being targeted, there’s a real risk of escalation.”
Widmer-Schlumpf’s drive has provoked strong reactions in a country that stresses consensus and discretion over confrontation. Christoph Blocher, the chief strategist of the anti-immigrant SVP party, accuses her of giving up the country’s sovereignty, while Philipp Hildebrand, the former central bank governor and a supporter of hers, has said Swiss banking secrecy laws will soon be gone.
Since Widmer-Schlumpf joined the government in 2008, banking secrecy laws have been relaxed. Endurance and composure are her greatest strengths, she told Bloomberg News earlier this month in an e-mail.
Those attributes will prove crucial after parliament’s lower house in Bern today rejected the plan in an initial vote, setting off a process of political wrangling with the upper house, which approved the measure after hours of deliberations last week. The two chambers must come to an agreement by the end of this week.
“What we’re seeing with the U.S. is a cleaning-up of the legacies,” said Martin Naville, the head of the Swiss-American Chamber of Commerce in Zurich. “Looking forward, it’s pretty clear where it’s going. The writing is on the wall. It’s going to be an automatic exchange of information.”
In 2008, Switzerland’s finance minister at the time, Hans Rudolf Merz, said banking secrecy, introduced in 1934, would prevail and that its foreign opponents would “bite their teeth out” on it. His successor has shown otherwise.
Widmer-Schlumpf, who took over the finance ministry in 2010, has broken from her predecessor’s go-it-alone stance. “The U.S. negotiations show that you need the consent of other countries to resolve the past,” she said.
UBS handed over details on 4,450 accounts to the U.S. in 2010, and America’s pursuit of Switzerland’s biggest bank only opened the gates to further requests: Wegelin & Co. closed its doors, and at least 12 further institutions, among them Credit Suisse Group AG (CSGN) and Julius Baer Group Ltd. (BAER), are still under investigation.
Widmer-Schlumpf’s slender frame conceals a politician with 19 years of experience.
“She goes about her business quietly and pragmatically,” said Austrian Finance Minister Maria Fekter. “Even though she’s slight of stature she’s a tough negotiator.”
Having spent several months at the Sorbonne in Paris, before receiving her doctorate in law from the University of Zurich in 1990, Widmer-Schlumpf admits to loving tough questions and isn’t afraid of controversy.
“They’re swindling, making promises and then withdrawing them, and the pillars of our state are being eroded,” Blocher said in a 2012 debate about the government’s negotiations with the U.S.
Last month she argued for giving up the domestic distinction between tax fraud and tax evasion, prompting the SVP to say she was allowing the state to snoop on its citizens.
“The right says she’s a traitor, the left says she’s dithering,” said Michael Hermann, a political scientist at the University of Zurich.
Widmer-Schlumpf lives in Felsberg, a village of 2,300 in the eastern canton of Grisons set between a sheet of gray rock, the churning river Rhine, and an express highway. She was born on March 16, 1956, the daughter of Leon Schlumpf, a government minister in the 1980s and a proponent of women’s rights.
Her husband Christoph, an engineer whom she met when they were both teenagers, usually does the grocery shopping, according to a cashier at the local supermarket. They have two daughters and a son; her grandson was born in November 2011.
Impatience and Candy
A vegetarian who loves singing and music, and plays the accordion, she also likes to take hikes in the mountains. Her chief weaknesses are impatience and candy, she says.
Widmer-Schlumpf began her political career in 1994 when she was voted into the Grisons cantonal legislature. Later she served as the head of cantonal budget chiefs and on the central bank’s supervisory board, where she met Hildebrand.
Some parliamentarians and company executives say the U.S. bill is the realistic way forward.
“I don’t share the view that Switzerland is negotiating particularly poorly,” Credit Suisse Chairman Urs Rohner told the Neue Zuercher Zeitung on May 28.
Part of the reason for the criticism of Widmer-Schlumpf is that she once was a member for the SVP and unseated Blocher in government in 2007. That resulted in her expulsion from the party and led her to found the more moderate Bourgeois Democratic Part BDP.
“I say ‘hats off’ to Ms. Widmer-Schlumpf,” Christophe Darbellay, the chairman of lower house’s economics committee, told Tribune de Geneve in late April. “Each time one writes her and her little party off, she’s been able to stand before parliament with an unequaled courage, intelligence and power.”
While bankers and politicians are debating whether the country should be giving up banking secrecy altogether, most Swiss people aren’t really concerned by the question. Forty-seven percent of respondents said they’d be willing to have their bank data forwarded directly to the tax office, while only 43 percent opposed such a step, according to a poll of 1,102 last month conducted for Swiss television.
“It was mission impossible,” said Naville of the Swiss-U.S. Chamber of Commerce of Widmer-Schlumpf’s projects. “It touches some taboos, it touches some real economic interests, it touches a lot of foreign interactions.”
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