Jim Armitage: Alone and unloved, Swiss provide a salutary lesson for the Eurosceptics

 

Conservative backbenchers like to cite Switzerland as an example of how it’s possible to trade in Europe while remaining out of the European Union. But within Switzerland itself, this benefit is not quite so apparent. As the noose tightens on the world’s most famous tax evasion mecca, it finds itself increasingly friendless.

The descent of the Swiss secret banking system began in 2009, when the US tax authorities cornered a weakened UBS into handing over the account details of thousands of Americans suspected of evading taxes. There were howls of protest in Switzerland about what was seen as US bullying of a private company in a sovereign state. Gunboat diplomacy of the worst order.

In fact, of course, it was morally little worse than the CIA spraying the foreign crops of opium and coca destined to create havoc in US cities.

It was bad – very bad – for the country’s banking system. But it only got worse as emboldened US investigators then put the squeeze on other Swiss banks accused – mostly rightly – of helping rich Americans evade paying their dues.

So serious were these attacks from Washington that some Swiss banks actually had to close down as their dubious clientele fled.

However, it still had Europe’s tax dodgers to service – a massive market of many millions of wealthy folks whose blacked-out Mercedes-driving ranks were constantly being re-supplied from the states of eastern Europe.

But cash-strapped European governments, emboldened by the US effort, began hatching their own plans. For several years now, they have been slowly forcing offshore centres to share information on their shadowy clients.

This week saw a major breakthrough as Luxembourg and Austria gave key concessions on their banking secrecy arrangements.

You can absolutely guarantee that this will have been in return for some pretty hefty compensation in other areas to soften the blow for the pair. That’s the way the EU club works. It’s all about negotiations and deals. What you lose on the swings, you get back on the roundabouts (unless, of course, you are a bankrupt country on the Mediterranean).

Switzerland, however, finds itself utterly isolated. While it has so far managed to do one-off deals with individual states, now, without even Luxembourg and Austria as allies, it will surely find itself under pressure to hand over its secrets from all states.

And, not being in the union, it will have no power to influence the debate, and no leverage to negotiate compensatory perks.

Clearly, Swiss politicians will want to trade banking secrecy for greater access to European customers and markets. But the EU bloc will understandably refuse to negotiate terms.

Optimists in Switzerland like to point out that its banking industry will survive due to its long history of being a safe haven for the world’s wealthy. Indeed, the Cyprus experience can only have been a wonderful marketing event.

But this is surely a misnomer. UBS handed over the banking details of nearly 4,500 of America’s richest people. Rogue Swiss bank employees have sold thousands more to foreign tax authorities.

Ask Emilio Botin, whose family controls Santander bank and was accused of squirreling the dynasty’s wealth away in Switzerland. His name was on the list of one of the Swiss leakers, resulting in a probe by Spanish authorities. As it happened, he had already settled the case voluntarily, paying a back-tax bill of €200m but his naming on the list caused huge embarrassment.

Banking secrecy is gradually becoming a thing of the past around the world. The death throes surely loom for many of Switzerland’s private banks and the super-profits they generate for the country’s economy. Without a seat at Europe’s table, Switzerland will struggle to negotiate for anything to replace them.

Apple boss dodges senators on tax evasion

Note the care with which Tim Cook picked his language when quizzed on Apple’s taxes. “We pay all the taxes we owe, every dollar,” he declared to Washington’s finest this week. Yes, but that’s not the point, Tim, as you well know. The senators have never accused you of not paying your tax bills – that would be tax evasion. Illegal.

What they’re condemning is the fact that a corporate giant like yours – the most valuable in the world by market capitalisation – bases its entire global intellectual property in a tiny tciy (Cork) in a tiny island (Ireland).

Asked why, Apple seemed evasive: ‘we have had that arrangement for three decades’.

Meanwhile, the whole Apple row in the Senate revolved around taxes it was reducing outside the US, in places like the UK. Cook got dragged to Washington but, really, he should have been answering to Westminster.

Prosecutors go all out for SAC

Vanity Fair’s lawyers must have deliberated somewhat before approving this month’s feature on the legal travails of one of the world’s most successful hedge fund tycoons. Headline-sized letters at the top of the page declare:  “If Steve Cohen gets off, he will be the OJ Simpson of insider trading,” says a source.”

Well, guess what? If Wall Street’s gossips aren’t a million miles from the mark, he may do just that.

Steve Cohen is not just a big fish on Wall Street. He is a monster white whale. For years, his Connecticut-based SAC hedge fund generated some of the most astonishing returns in the world. How? In his view, one word: “Edge”.

US prosecutors took a dim view of what “edge” means, deciding that it could mean trading illegally on secret inside information. SAC and Mr Cohen deny that.

For five years, federal investigators and an ambitious attorney in Preet Bharara have been muscling associates and employees of SAC. But still no charges have been laid against Mr Cohen.

This past week or so saw big developments in what must be the biggest insider trading investigation ever to sweep America.

First, Mr Cohen was subpoenaed to appear before a grand jury. The same then happened to four of his top executives.

Now it appears he has been negotiating a deal for SAC to pay a huge fine and close itself to outside investors. That would bring humiliation, but no jail time for Mr Cohen.

Not for the first time, Wall Street awaits the white whale’s next move.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksA special investigation by Andy McSmith
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Office Manager / Financial Services

£30000 - £37000 per annum: Recruitment Genius: Established in 1999, a highly r...

Jemma Gent: Year End Accountant

£250-£300 Day Rate: Jemma Gent: Are you a qualified accountant with strong exp...

Jemma Gent: Management Accountant

£230 - £260 Day Rate: Jemma Gent: Do you want to stamp your footprint in histo...

Beverley James: Accounts Payable

£22,000 - £23,000: Beverley James: Are you looking for the opportunity to work...

Day In a Page

HIV pill: Scientists hail discovery of 'game-changer' that cuts the risk of infection among gay men by 86%

Scientists hail daily pill that protects against HIV infection

Breakthrough in battle against global scourge – but will the NHS pay for it?
How we must adjust our lifestyles to nature: Welcome to the 'Anthropocene', the human epoch

Time to play God

Welcome to the 'Anthropocene', the human epoch where we may need to redefine nature itself
MacGyver returns, but with a difference: Handyman hero of classic 1980s TV series to be recast as a woman

MacGyver returns, but with a difference

Handyman hero of classic 1980s TV series to be recast as a woman
Tunnel renaissance: Why cities are hiding roads down in the ground

Tunnel renaissance

Why cities are hiding roads underground
'Backstreet Boys - Show 'Em What You're Made Of': An affectionate look at five middle-aged men

Boys to men

The Backstreet Boys might be middle-aged, married and have dodgy knees, but a heartfelt documentary reveals they’re not going gently into pop’s good night
Crufts 2015: Should foreign dogs be allowed to compete?

Crufts 2015

Should foreign dogs be allowed to compete?
10 best projectors

How to make your home cinema more cinematic: 10 best projectors

Want to recreate the big-screen experience in your sitting room? IndyBest sizes up gadgets to form your film-watching
Manchester City 1 Barcelona 2 player ratings: Luis Suarez? Lionel Messi? Joe Hart? Who was the star man?

Manchester City vs Barcelona player ratings

Luis Suarez? Lionel Messi? Joe Hart? Who was the star man at the Etihad?
Arsenal vs Monaco: Monaco - the making of Gunners' manager Arsene Wenger

Monaco: the making of Wenger

Jack Pitt-Brooke speaks to former players and learns the Frenchman’s man-management has always been one of his best skills
Cricket World Cup 2015: Chris Gayle - the West Indies' enigma lives up to his reputation

Chris Gayle: The West Indies' enigma

Some said the game's eternal rebel was washed up. As ever, he proved he writes the scripts by producing a blistering World Cup innings
In Ukraine a dark world of hybrid warfare and murky loyalties prevails

In Ukraine a dark world of hybrid warfare

This war in the shadows has been going on since the fall of Mr Yanukovych
'Birdman' and 'Bullets Over Broadway': Homage or plagiarism?

Homage or plagiarism?

'Birdman' shares much DNA with Woody Allen's 'Bullets Over Broadway'
Broadchurch ends as damp squib not even David Tennant can revive

A damp squib not even David Tennant can revive

Broadchurch, Series 2 finale, review
A Koi carp breeding pond, wall-mounted iPads and a bathroom with a 'wellness' shower: inside the mansion of Germany's 'Bishop of Bling'

Inside the mansion of Germany's 'Bishop of Bling'

A Koi carp breeding pond, wall-mounted iPads and a bathroom with a 'wellness' shower