At the G8, Switzerland is the elephant in the room

"The era of bank secrecy is over." Maybe.

Another day, another plea. This time the European Union official in charge of tax policy, Commissioner Algirdas Semeta, has tried to persuade Switzerland to agree to surrender bank data as part of a drive to combat tax evasion.

Semeta’s request echoes several others that Switzerland has received in the past year to sign up for bank data transparency deals.

Countries particularly within the EU are continuously facing a push to sign up for bank data sharing agreements to assist a clamp down on tax debtors, and allow countries to conduct wide-ranging joint multiparty tax investigations. Globally, more than 50 countries have, so far, agreed to automatically exchange tax information.

Prime Minister David Cameron got ten overseas territories and dependencies to sign up for the international protocol on tax disclosure over the weekend – after much ado – and hailed the "landmark" Lough Erne agreement yesterday at the G8 Summit to rewrite global rules to stamp out tax evasion.

Europe’s big five – UK, France, Germany, Italy and Spain – started piloting the multilateral tax information exchange in April 2013, based on a Model Intergovernmental Agreement to improve international tax compliance and implement FATCA developed between these countries and the US. Austria is expected to join soon as well.

However, the elephant in the room is Switzerland – and its non-commitment to any of these agreements. It is also clear that the support of several other countries is dependent on deals Switzerland strikes.

For instance, Luxembourg’s Prime Minister, Jean-Claude Juncker, said the country would prefer there to first be negotiations with Switzerland, and Luxembourg will decide on its actions accordingly.

Being a $2trn offshore tax haven, Switzerland has a long tradition of bank secrecy that has made it the world's biggest offshore centre.

There is of course a thin line between privacy and secrecy. It’s not wrong to have offshore accounts. Switzerland is, perhaps, taking its sweet time only because it’s protective about its banks and clients.

However, Swiss Finance Minister Eveline Widmer-Schlumpf said, at the G8 summit on Monday, the Swiss government would probably "only be able to start formal talks with the EU" in the autumn, and would push for global standards on data exchange at the OECD.

Widmer-Schlumpf added that for Switzerland, it is important to engage itself "for a level playing field, not just within the EU but beyond the EU".

The "beyond EU" part is absolutely crucial for Switzerland too.

It’s no secret that Switzerland is under tremendous pressure from the US for bank data as well, what with its oldest private bank, Wegelin& Co pleading guilty to charges of helping wealthy Americans evade taxes through secret accounts earlier in the year, and paying $58 m in fines to US authorities.

Back in 2009, Swiss banking giant UBS was fined $780m and forced to deliver names of more than 4,000 clients to avoid indictment.

On last count, 14 Swiss banks were in US investigators' sights for aiding Americans evade taxes.UBS and Credit Suisse were even named in a wide-spread investigation by The International Consortium of Investigative Journalists (ICIJ) into offshore tax evasion.

Not that Switzerland is not paying heed. The Swiss government agreed to create a legal basis to enable its banks to settle investigations by US authorities, which could require lenders to pay up to billions of dollars in fines.

But as of yesterday morning, the lower house of parliament stalled the "Lex USA" bid, refusing to address a bill that allows banks to sidestep strict Swiss secrecy laws, even though the upper house of parliament had voted in favour of it, posing another roadblock in the settlement of the long running US-Swiss tax dispute.

Switzerland is clearly the joker in the pack and its movements can either make way for a complete data transparency code among countries, or block it. And it’s moving cautiously.

Semeta said at the G8 meeting on Monday, "It is widely accepted worldwide today that the era of bank secrecy is over." Most will believe it when Switzerland accepts it.

Photograph: Getty Images

Meghna Mukerjee is a reporter at Retail Banker International

Getty
Show Hide image

Commons Confidential: Dave's picnic with Dacre

Revenge is a dish best served cold from a wicker hamper.

Sulking David Cameron can’t forgive the Daily Mail editor, Paul Dacre, for his role in his downfall. The unrelenting hostility of the self-appointed voice of Middle England to the Remain cause felt pivotal to the defeat. So, what a glorious coincidence it was that they found themselves picnicking a couple of motors apart before England beat Scotland at Twickenham. My snout recalled Cameron studiously peering in the opposite direction. On Dacre’s face was the smile of an assassin. Revenge is a dish best served cold from a wicker hamper.

The good news is that since Jeremy Corbyn let Theresa May off the Budget hook at Prime Minister’s Questions, most of his MPs no longer hate him. The bad news is that many now openly express their pity. It is whispered that Corbyn’s office made it clear that he didn’t wish to sit next to Tony Blair at the unveiling of the Iraq and Afghanistan war memorial in London. His desire for distance was probably reciprocated, as Comrade Corbyn wanted Brigadier Blair to be charged with war crimes. Fighting old battles is easier than beating the Tories.

Brexit is a ticket to travel. The Independent Parliamentary Standards Authority is lifting its three-trip cap on funded journeys to Europe for MPs. The idea of paying for as many cross-Channel visits as a politician can enjoy reminds me of Denis MacShane. Under the old limits, he ended up in the clink for fiddling accounts to fund his Continental missionary work. If the new rule was applied retrospectively, perhaps the former Labour minister should be entitled to get his seat back and compensation?

The word in Ukip is that Paul Nuttall, OBE VC KG – the ridiculed former Premier League professional footballer and England 1966 World Cup winner – has cold feet after his Stoke mauling about standing in a by-election in Leigh (assuming that Andy Burnham is elected mayor of Greater Manchester in May). The electorate already knows his Walter Mitty act too well.

A senior Labour MP, who demanded anonymity, revealed that she had received a letter after Leicester’s Keith Vaz paid men to entertain him. Vaz had posed as Jim the washing machine man. Why, asked the complainant, wasn’t this second job listed in the register of members’ interests? She’s avoiding writing a reply.

Years ago, this column unearthed and ridiculed the early journalism of George Osborne, who must be the least qualified newspaper editor in history. The cabinet lackey Ben “Selwyn” Gummer’s feeble intervention in the Osborne debate has put him on our radar. We are now watching him and will be reporting back. My snouts are already unearthing interesting information.

Kevin Maguire is the associate editor (politics) of the Daily Mirror

Kevin Maguire is Associate Editor (Politics) on the Daily Mirror and author of our Commons Confidential column on the high politics and low life in Westminster. An award-winning journalist, he is in frequent demand on television and radio and co-authored a book on great parliamentary scandals. He was formerly Chief Reporter on the Guardian and Labour Correspondent on the Daily Telegraph.

This article first appeared in the 23 March 2017 issue of the New Statesman, Trump's permanent revolution