Reuters: Regulatory News: UPDATE 1-Swiss lower house committee rejects U.S. tax deal again

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UPDATE 1-Swiss lower house committee rejects U.S. tax deal again Jun 19th 2013, 14:28 Wed Jun 19, 2013 10:28am EDT * Committee votes 16 to 9 against debating U.S. deal * Swiss government fears U.S. indictment of banks * Government could still help banks reveal information By Ruben Sprich BERNE, June 19 (Reuters) - A Swiss parliamentary committee has again urged the lower house to reject a draft law aimed at protecting the country's banks from criminal charges in the United States for helping wealthy Americans to evade tax. The Swiss government has warned that the bill's failure could prompt impatient U.S. prosecutors to indict banks, though it could still use an executive order to allow them to hand over data to try to avert charges. The economics committee recommended by 16 votes to nine on Wednesday that the lower house should refuse to debate the legislation, even after the upper house confirmed its support earlier in the day. The lower house has now begun a procedural debate that will end with a vote on whether to hold the substantive debate. If it repeats its Tuesday decision not to debate the legislation, the draft law is effectively dead. The bill is aimed at allowing banks to sidestep Swiss secrecy laws by disclosing their U.S. dealings so they can strike deals to avoid prosecution. The deals are nevertheless expected to include fines that could cost the industry as much as $10 billion. Lawmakers from the upper house endorsed a statement saying they supported a solution to the long-running tax dispute and called on the government to allow banks to cooperate under existing laws. The lower house is expected to back the call too. The government's attempt to fast-track the legislation through parliament to meet a U.S. ultimatum angered many lawmakers in this fiercely independent country. While right-wing lawmakers have opposed the bill on the grounds that it could set a precedent that might prompt other countries to seek similar concessions from Switzerland, the centre-left has rejected it on the grounds that Swiss banks should be forced to face the music for aiding tax evasion. PROTRACTED NEGOTIATIONS Switzerland's biggest bank, UBS, was forced in 2009 to pay a fine of $780 million and deliver the names of more than 4,000 clients to avoid indictment, giving the U.S. authorities information that allowed them to pursue other banks. Since then, the government has been engaged in protracted negotiations to try to reach a settlement for the whole financial industry but has been hamstrung by Swiss secrecy laws and bickering among banks over who should pay the heavy fines. The protection of client information has helped to make Switzerland the world's biggest offshore financial centre, with $2 trillion in assets. But the haven has come under fire as other countries have sought to plug budget deficits by clamping down on tax evasion, with authorities probing Swiss banks in Germany and France as well as the United States. U.S. authorities have more than a dozen banks under formal investigation, including Credit Suisse, Julius Baer , the Swiss arm of Britain's HSBC, privately held Pictet in Geneva and local government-backed Zuercher Kantonalbank and Basler Kantonalbank. An indictment felled Wegelin & Co this year. The bank paid a $58 million fine and closed its doors for good after pleading guilty to helping wealthy Americans evade taxes through secret accounts. Link this Share this Digg this Email Reprints

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