TRANSCRIPTJUDY WOODRUFF: Offshore bank accounts and tax evasion, it’s a sore spot between the U.S. and Switzerland. Now a new Senate investigation is adding more fuel to that fire. The Senate probe finds that banking giant Credit Suisse helped thousands of wealthy Americans hide billions of dollars from the IRS overseas.
The report found that, in 2006, the Swiss bank had about 22,000 accounts with U.S. customers totaling more than $12 billion. But, so far, it has provided only 238 names, or just about 1 percent of the total, to U.S. authorities.
Today, the bank’s leadership testified before the Senate Permanent Subcommittee on Investigations. Credit Suisse general counsel Romeo Cerutti said Swiss law prevents his firm from disclosing more information.
But that drew a testy reaction from committee Chairman Carl Levin of Michigan.
ROMEO CERUTTI, General Counsel, Credit Suisse: Article 47 of the Swiss banking law, it’s the banking secrecy provision, prohibits us from furnishing any client names to anyone within Switzerland or outside of Switzerland. And this is subject to imprisonment and fines.
SEN. CARL LEVIN, D-Minn., Chair, Permanent Subcommittee on Investigations: You come to this country, and you’re governed by this country’s laws, by almost universally accepted law. And yet you hide behind the Swiss law, even though you’re operating here. And that’s just simply not going to cut it.
JUDY WOODRUFF: The report details what Credit Suisse allegedly did to help Americans evade taxes, and it also criticized the U.S. Justice Department for its role in prosecuting all this.
Gina Chon of The Financial Times has been covering this story, and she watched today’s hearing.
Welcome to the NewsHour.
GINA CHON, The Financial Times: Thank you.
JUDY WOODRUFF: Gina Chon, what did — first of all, what did this report say these banks have been doing?
GINA CHON: Well, it was a pretty scathing report and went into great detail about what Senator Levin called cloak-and-dagger tactics they employed to basically help their clients hide taxes, avoid U.S. taxes and hide assets.
So they listed using secret elevators that were remote-controlled, having a special office at the Zurich Airport, and even passing account statements hidden in “Sports Illustrated” magazine to hide these activities.
JUDY WOODRUFF: And so what was the reaction? We heard what Senator Levin was saying. What did other senators — what was the overall reaction of the committee today?
GINA CHON: Well, they were pretty harsh, and they spared no criticisms all around for both Credit Suisse, for the Swiss government, and for the Justice Department, for all failing to act more quickly and providing more transparency to get these names.
JUDY WOODRUFF: And for its part, Credit Suisse is what? They’re saying, well, we are just abiding by the law? Is that their explanation?
GINA CHON: Yes, they just kept repeating that they’re caught between a rock and a hard place, where they are under both U.S. law and Swiss law. And so if they abide by the U.S. laws and provide these names, then, as you heard Mr. Cerutti say, they could face prosecution.
And there was an interesting exchange with Senator Coburn where he basically asked Mr. Cerutti, well, where — where would you prefer to serve time, here or there?
JUDY WOODRUFF: And so, I mean, is it clear, though? I mean, does it come out of the hearing whether they are in violation of American law?
GINA CHON: Well, interestingly, even Justice Department officials, the deputy attorney general, James Cole, also said that the Swiss bank secrecy laws had prevented them from getting the names, and that the Swiss government had essentially blocked Credit Suisse from providing that. So even they agreed that that was a problem.
JUDY WOODRUFF: Well, in — and we mentioned that is another strand of all this, that the Senate report pointed a finger at the U.S. Justice Department and said, you’re not doing enough to go after this.
What is the explanation coming from the Justice Department?
GINA CHON: Well, they are also saying, even when they issue subpoenas, that the Swiss government also moves to block that, so that hasn’t even been effective in getting records. So what they are saying is they are trying to build a criminal case against Credit Suisse and try to use that then as incentive to cooperate.
JUDY WOODRUFF: Was there any new information or explanation that came out today? I assume the senators raised with the Credit Suisse officials some of these stories that you were just telling about hiding a financial report inside a “Sports Illustrated” magazine or having a meeting on an elevator. Did they bring some of this up?
GINA CHON: Sure.
Yes, a lot of that had come out in previous indictments, because there were seven former Credit Suisse bankers who were indicted back in 2011. But the problem is that the senators kept repeating that no one has faced trial, no one has had a U.S. extradition request, and that has been a problem for prosecution.
JUDY WOODRUFF: So, as of right now, what is the liability of Credit Suisse and its officials, its leadership?
GINA CHON: Sure.
Well, so, they stressed very heavily during the hearing that no management were involved or had knowledge of this. And they are negotiating with the Justice Department over negotiation for a settlement. And the hearing could possibly put more pressure than on Justice to get higher fines.
JUDY WOODRUFF: And just finally, these 238 names out of thousands, what has happened to these people? Are they being prosecuted in some way?
GINA CHON: Well, they said that they are forcing them now to pay the U.S. taxes, but they haven’t been prosecuted. What they are hoping to get is more names and some of the people who are responsible at the bank for perpetrating this.
JUDY WOODRUFF: Well, it is a story we will all continue to watch.
Gina Chon with The Financial Times, thank you.
GINA CHON: Thank you.