A leading Washington tax lawyer supports my conclusion that the UBS-U.S. Department of Justice settlement agreement announced last week was certainly not a victory for U.S. DoJ prosecutors.
In fact, Miller & Chevalier tax partner George Clarke III, says that the decision by the DoJ to file suit against UBS on Thursday in Miami seeking 52,000 more UBS names is proof that the DoJ failed to pierce Swiss bank secrecy laws.
That conclusion by a leading tax expert gives the lie to the leftist media coverage that gleefully trumpeted the deal as the supposed death of Swiss bank secrecy.
Miller & Chevalier of Washington, D.C., is ranked among the top tax law practices in the United States and is one of the nation's oldest law firms, founded in 1929 as the first American federal tax law practice.
Good Outcome for UBS
While the deferred prosecution agreement between UBS and federal prosecutors initially might have looked like a win for the U.S. government, in reality, Clarke said, UBS isn't disclosing nearly as many client names as U.S. officials suggested.
In an interview with The American Lawyer that is worth reading, Clarke pointed out that "it looks better and better for UBS...it's a very good outcome for UBS. They're now essentially clean."
Swiss Secrecy Law Upheld
Concerning the new DoJ law suit filed last week against UBS, Clarke said the case now comes down to "...Swiss law and the question of whether a U.S. court can compel a third party to essentially violate its own laws, in this case Swiss law, to comply with a U.S. court proceeding."
He noted that there is ample American case law and decisions that hold that a U.S. court has no power to compel foreign persons to violate their own nation's laws.
Swiss Force Levin Cancellation
Meanwhile, at least for the moment, the Swiss government has had enough of the anti-tax haven circus conducted by Senator Carl Levin (left) and his U.S. Senate Permanent Subcommittee on Investigations.
The subcommittee had scheduled yet another anti-tax haven hearing on the UBS matter next Tuesday, Feb 24 and the Swiss government originally intended to send a representative. But the Swiss government said Sunday it will not attend the hearing, an apparent protest against the DoJ lawsuit aimed at forcing UBS to hand over data on 52,000 UBS American customers. Switzerland also declined an invitation to a new March 4th subcommittee hearing, Swiss Finance Ministry spokesman Roland Meier said.
"Switzerland notes that despite the agreement, U.S. authorities have launched a civil lawsuit against UBS," Meier said. "Switzerland regrets that the Department of Justice has threatened UBS with unilateral measures, despite cooperation of UBS and Swiss authorities with the U.S. authorities."
Swiss Threaten Retaliation
Meanwhile, the conservative Swiss People's Party (SVP) called for retaliation against the United States over its treatment of Switzerland and UBS.
The populist SVP, the country's leading party, said gold stored by the Swiss National Bank in the United States should be repatriated and, with more than a touch of irony, SVP said Switzerland should ban the sale of U.S. investment and equities in the country to protect Swiss investors after the failure of U.S. regulators and American banks.
No More Blackmail
The SVP also said Switzerland should also reconsider its policy of representing the United States in countries such as Cuba where the U.S. has no diplomatic presence, and should not take in any detainees from the U.S. prison at Guantanamo Bay in Cuba, which the Swiss government said last month it would consider doing.
The SVP also said it would call for an urgent debate in parliament on ways to protect Swiss banking secrecy from "further foreign blackmail."
This from the leading political party in a nation that holds over US$4 trillion of the world's cash and assets under its management and control.
** For an understanding of the many advantages offered by Switzerland and its bank secrecy law, you can find it in my book, Swiss Money Secrets.
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