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

Photo: Getty
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There are sinister goings-on in the race to become the UN's next Secretary-General

The United Nations can and must do better than this, says David Clark. 

2016 was meant to be a year of firsts for the United Nations as it prepares to choose a new Secretary-General. Optimism was growing that the top job would go to a woman for the first time in the world body’s seventy-year history. There was an emerging consensus that it should be someone from Eastern Europe, the only region never to have held the post, provided a candidate of the right calibre was put forward. Above all, the selection was supposed to break new ground in openness and transparency after decades in which decisions were stitched up in private by a handful of the most powerful countries. Innovations like open nominations, public campaigning and candidates hustings were introduced in a bid to improve public scrutiny.
 
All of that now threatens to be turned on its head as the battle to succeed Ban Ki-moon becomes embroiled in intrigues and plots, according to stories that have surfaced in the Belgian and Portuguese media in the last week. Allegations centre on the activities of former European Commission President, Jose Manuel Barroso, and ex-Portuguese MEP turned lobbyist, Mario David. Both are said to be promoting the undeclared candidacy of Kristalina Georgieva, the serving European Commission Vice-President from Bulgaria. Barroso reportedly arranged for Georgieva to participate in a recent meeting of the Bilderberg group in order to boost her profile with world leaders. David is said to be touring the capitals of Eastern Europe to canvas support.
 
While there is nothing necessarily unusual about senior European politicians supporting a colleague in her bid for a major international job, there are two things that make this case very different. The first is that Bulgaria already has an official candidate in the person of Irina Bokova, a career diplomat currently serving her second elected term as Director-General of UNESCO. Reports suggest that Barroso is among those pressing the Bulgarian government to switch its nomination to Georgieva, while David’s role has been to find another country in the region willing to nominate her in the event that Bulgaria refuses to budge. The second piece of the puzzle is that Portugal also has an official candidate – its former Prime Minister, Antonio Guterres – who Barroso still publicly insists he is supporting.
 
It is in the nature of the way these matters are often decided that there is no necessary contradiction between these facts. Georgieva’s candidacy would appear to stand no real chance of success. She lacks diplomatic experience and news reports suggest that the Bulgarian Prime Minister’s decision not to support her was based on information linking her to the communist-era intelligence services. And while there is nothing to stop another country nominating her, precedent suggests that a lack of domestic support will be fatal to her chances. Georgieva is highly unlikely to end up as UN Secretary-General, yet she could still have a significant role to play as a spoiler. Bulgaria’s official candidate, Irina Bokova, is frequently described as the frontrunner. As a woman from Eastern Europe with heavyweight UN experience, she certainly has an edge. A rival Bulgarian woman candidate would create doubt about the strength of her support and potentially open the way for other candidates. The aspirants who stand to benefit most are men from outside Eastern Europe. Step forward Antonio Guterres.
 
Those with the best chance of preventing these manoeuvres from succeeding are the governments of Eastern Europe. Although the principle of rotation does not confer on them the automatic right to have one of their own chosen to run the UN, a degree of unity and professionalism in the way they approach the contest would make their claim much harder to resist. Unfortunately there has so far been little evidence of the kind of collective solidarity and diplomatic co-ordination that helped to deliver the top UN job to Africa and Asia in the past. The strongest advocate for Eastern Europe is currently Russia, although it has stopped short of threatening to use its veto in the way that China was prepared to do for Asia when Ban Ki-moon was appointed in 2006.
 
In addition to casting doubt on Eastern Europe’s chances, the descent into private plotting is an ominous warning to those campaigning for the UN to become more open and representative – the appointment of a new Secretary-General may not prove to be the turning point they had hoped for. What is the point of public hustings for candidates when the real discussions are taking place at a closed meeting of Bilderberg group? Why bother to encourage women candidates to put forward their names when the power brokers of international diplomacy already have their man? Seventy years after it was established, the UN should have found a better way to do this. It still can.

David Clark was Robin Cook’s special adviser at the Foreign Office 1997-2001.