Chief Swiss Negotiator in U.S. Tax Dispute ResignsGiles Broom
Switzerland’s top negotiator in talks to resolve a U.S. Justice Department probe of Swiss banks that allegedly helped Americans dodge taxes will step down at the end of August.
State Secretary for International Financial Matters Michael Ambuehl, 61, who led negotiations with the U.S. that culminated in a deal for UBS AG in August 2009, will leave the government to become Professor for Negotiation and Conflict Management at the Swiss Federal Institute of Technology in Zurich, the Bern-based Finance Ministry said in a statement on its website today.
While the Swiss government played an important role in the UBS settlement, since then it has “fumbled every time against the Americans,” said Hans Geiger, a retired Swiss banker and professor of banking at the University of Zurich. “It’s a lousy job. Maybe Ambuehl got tired of it.”
Swiss Finance Minister Eveline Widmer-Schlumpf noted “with regret” Ambuehl’s decision to quit the post he took up in 2010, the ministry said, adding that the government plans to appoint a successor in due course. Switzerland has been in talks with the U.S. for more than two years to settle a Justice Department investigation of at least 14 financial firms, including Credit Suisse Group AG and Julius Baer Group Ltd., that allegedly helped Americans hide money from the Internal Revenue Service.
“When the captain leaves the ship, that certainly isn’t an easy situation for the Swiss delegation,” Pirmin Bischof, a Christian Democrat lawmaker, told SRF radio today.
Widmer-Schlumpf said on May 17 that the signing of an agreement with the U.S. was imminent, Tages-Anzeiger reported, citing comments made at a meeting of political party heads. Still, in January 2012, the minister said an agreement may come “within the next couple of months,” before adding in September that U.S. elections would cause delays.
Ambuehl’s resignation “once again shows the glaring deficiencies in leadership at the head of the Finance Ministry,” the Swiss People’s Party said in an e-mailed statement. “This resignation really comes at the worst possible times and raises many questions.”
The Swiss Bankers Association, which represents 347 financial firms, said it regretted Ambuehl’s departure and thanked him for his “great commitment” to the country’s financial center.
“He wants to get on with his life, I get it, negotiations have been taking a very long time,” said Christopher Wheeler, a London-based banking analyst at Mediobanca SpA. “Maybe they get some genius in who can speed things up, but I suspect this will just slow down things as the new incumbent has to get his head around all the issues. And the longer it drags on the less helpful it is for banks.”
Switzerland, the biggest haven for offshore wealth, wants to prevent another Swiss bank being indicted after Wegelin & Co. pleaded guilty in a Manhattan federal court in January to conspiring to help conceal more than $1.2 billion from the IRS.
UBS AG, the biggest Swiss bank, avoided prosecution in 2009 by paying $780 million, admitting it fostered tax evasion and giving the IRS data on more than 250 accounts. That deferred prosecution agreement and the handover by UBS of a further 4,450 accounts, following the deal brokered by Ambuehl, set a precedent for current negotiations.
Zuercher Kantonalbank, which is fully owned by the canton of Zurich, expects to pay a fine as part of a deferred prosecution agreement, the bank said yesterday.
Credit Suisse, Switzerland’s second-biggest bank, set aside 295 million Swiss francs ($307 million) for U.S. tax matters in the third quarter of 2011. Julius Baer, the country’s third-biggest wealth manager, has said the cost of the investigation isn’t “reliably assessable.” HSBC Holdings Plc’s Swiss private bank said last year that fines and penalties relating to a tax-evasion probe by the U.S. “could be significant.”