The House of Representatives has rejected a deal with the United
States that would have enabled the handover of data on thousands of
customers of the Swiss bank UBS.
June 8, 2010. Parliamentarians on Tuesday voted 104 to 76
against the controversial settlement deal on sharing banking data that
was signed last August between the US and Switzerland. There were 16
The decision is not final however and the issue
will now go back to the Senate for review.
The issue was hotly
debated until late on Monday night and rejected on Tuesday by the Social
Democrats who failed to obtain guarantees of restrictions for "too big
to fail" banks, and by the Swiss People's Party who were against caps on
Under the terms of the deal, Switzerland
has until August 20 to process a US request for administrative help
concerning 4,450 accounts held by US citizens at UBS. The Internal
Revenue Service believes those accounts could contain taxable but
The Senate approved the deal on Thursday but
the green light is needed from both chambers of parliament.
deal is expected to be approved once again by the Senate, where it is
backed by the majority parties, but a second rejection by the House of
Representatives would effectively bury the accord.
was further complicated by an earlier vote in which the People's Party
and the Social Democrats joined forces to ensure that the agreement, if
accepted by parliament, would be put to a referendum. The timing
involved in holding a nationwide vote would prevent Switzerland from
meeting the August deadline laid out in the UBS settlement deal.
tied into the debate is a roadmap by the cabinet which outlines a
timetable of supporting measures designed to prevent a future crisis
with "too big to fail" banks. This was rejected by parliamentarians on
Last week senators also voted against debating the
planning of those measures, which include questions regulating banker
bonuses, liquidity and how risks are distributed.
The Swiss government was forced to seek
parliamentary approval for the UBS settlement deal after the Federal
Administrative Court ruled in January that it was illegal.
deal was drawn up in an effort to protect UBS from legal action after
the US sued the bank for information on around 52,000 clients.
followed allegations that UBS had worked to help rich Americans stash
portions of their wealth away from US tax collectors.
employee Bradley Birkenfeld acted as a whistleblower, alerting US
authorities about the bank's activities and resulting in American
justice authorities fining UBS $780 million and the deal to disclose the
details of 4,450 clients.
Evasion or fraud?
The deal signed in August 2009 was widely
regarded as the first breakdown in Switzerland's 75-year-old tradition
of banking secrecy.
The government has said failure to pass the
deal would damage Switzerland's reputation as a reliable partner that
follows through on its commitments.
But in its January's ruling
the Federal Administrative Court stated that the handing over of
confidential UBS client details to US investigators by the Swiss
authorities was not fully enforceable because it gave too broad a
definition of tax fraud.
Under a current treaty in place with
the US, Switzerland can help foreign investigators only in cases of tax
fraud unless parliament says otherwise. The US request for UBS
information was based on tax evasion, which Switzerland considers a
A new agreement with the US that does away with
the distinction between tax fraud and tax evasion has been signed but
not yet put into force.
June 8, 2010
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