News / Economy

Credit Suisse to Pay $2.5B Fine in US Tax Evasion Case

The logo of Swiss bank Credit Suisse is seen below the Swiss flag at a building in the Federal Square in Bern, Switzerland, May 15, 2014.
The logo of Swiss bank Credit Suisse is seen below the Swiss flag at a building in the Federal Square in Bern, Switzerland, May 15, 2014.
VOA News
Credit Suisse has agreed to pay a $2.5 billion fine to authorities in the United States for helping Americans evade taxes after becoming the largest bank in 20 years to plead guilty to a U.S. criminal charge.

The bank's guilty plea resolves its long-running dispute with the United States over tax evasion, but could have implications for the clients and counterparties that do business with the group.

Credit Suisse said it had not seen a material impact in the past few weeks on its business, and that clients faced no legal obstacles from doing business with it despite the guilty plea.

Switzerland's second largest bank escaped what could have been the worst outcome for its business - its top management stayed in place and it will not have to hand over client data, protected by Swiss secrecy laws. And the New York state bank regulator decided not to revoke the bank's license in the state.

U.S. prosecutors said the bank helped clients deceive U.S. tax authorities by concealing assets in illegal, undeclared bank accounts, in a conspiracy that spanned decades, and in one case began more than a century ago.

"This case shows that no financial institution, no matter its size or global reach, is above the law," Attorney General Eric Holder said at a news conference in Washington.
 
CEO Dougan Brady of Swiss bank Credit Suisse attends the company's annual shareholder meeting in Zurich, Switzerland, May 9, 2014.CEO Dougan Brady of Swiss bank Credit Suisse attends the company's annual shareholder meeting in Zurich, Switzerland, May 9, 2014.
x
CEO Dougan Brady of Swiss bank Credit Suisse attends the company's annual shareholder meeting in Zurich, Switzerland, May 9, 2014.
CEO Dougan Brady of Swiss bank Credit Suisse attends the company's annual shareholder meeting in Zurich, Switzerland, May 9, 2014.

"We deeply regret the past misconduct that led to this settlement," Credit Suisse CEO Brady Dougan said on Tuesday.

The Justice Department has not often pursued such convictions of financial companies, especially large ones that could become destabilized following an indictment. But U.S. politicians have pushed for tougher punishment for big banks in response to the 2007-2009 financial crisis.

Fine to be paid

Credit Suisse will pay the penalties to the U.S. Department of Justice, the Internal Revenue Service, the Federal Reserve and New York's banking regulator, the New York State Department of Financial Services. It had already paid just under $200 million to the Securities and Exchange Commission.

Switzerland's left-wing Social Democrats renewed a call first made last week for Dougan and other executives to step down to allow the bank to make a fresh start.

Asked whether he had considered such a move, Dougan, a 24-year veteran of the bank who took over as CEO in 2007, said resignation had "never been a consideration" and he remained committed to the bank.

New York bank regulators discussed replacing Dougan and others, a source familiar with the negotiations said. But in the end, the option was not made a condition of the deal.

The Swiss government said its main concern was that Credit Suisse was managed well and could move on, and that any change in leadership "wasn't the concern of politics."

The bank's chairman, Urs Rohner, told Swiss radio on Tuesday that he and CEO Dougan personally had a clean record, but the same could not be said for the bank's behavior in past decades.

Switzerland's regulator effectively cleared the two, saying it had found no evidence that Credit Suisse top management knew of specific misconduct.

Switzerland's largest bank, UBS, in 2009 entered a deferred prosecution agreement with the Justice Department in which it agreed to pay $780 million in fines and turn over the names of thousands of customers suspected of evading U.S. taxes, an AP report said.

The country's oldest bank, Wegelin & Co., pleaded guilty in January 2013 to U.S. tax charges, admitting that it helped American clients hide more than $1.2 billion from the IRS.

Bank can continue operating

In the Credit Suisse case, officials said a criminal charge was necessary to account for the bank's pattern of misconduct, which included a lack of cooperation and document destruction. But the deal was structured in such a way as to allow the bank to continue operating, the AP reported.

Zurich-based Credit Suisse is on a regulators' list of 29 ``global systemically important banks'' whose failures would be considered a threat to the entire financial system.

The criminal resolution follows a Senate subcommittee investigation that found the bank provided accounts in Switzerland for more than 22,000 U.S. clients totaling $10 billion to $12 billion, according to the AP.

The report said Credit Suisse sent Swiss bankers to recruit American clients at golf tournaments and other events, encouraged U.S. customers to travel to Switzerland and actively helped them hide their assets. In one instance, a Credit Suisse banker handed a customer bank statements hidden in a Sports Illustrated magazine during a breakfast meeting in the United States.

Shares in Credit Suisse climbed Tuesday, gaining 2.84 percent to reach 26.81 Swiss francs on the Swiss stock exchange's SMI index, the French news agency AFP reported.

Analysts said that the fact that Credit Suisse had drawn a line under its legal problems outweighed the importance of paying what is the heaviest fine ever levied in a U.S. tax case, $2.5 billion.

Some information for this report was provided by Reuters, AP and AFP.

You May Like

Photogallery US Nurse ‘Cured of Ebola,’ NIH Says

update Nina Pham, Texas nurse who treated first Ebola patient in US, received no experimental drugs; WHO expects vaccine surge in 2015 More

Video Islamic State Militants Encroach on Baghdad

Iraqi capital not under ‘imminent threat,’ US military says, amid worries about foothold More

Video Hong Kong Protesters Focus on Holding Volatile Mong Kok

Activists say holding Mong Kok is key to their movement's success, despite confrontations with angry residents and police More

This forum has been closed.
Comments
     
There are no comments in this forum. Be first and add one

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
After Decades of Pressure, Luxembourg Drops Bank Secrecy Rulesi
X
October 21, 2014 12:20 AM
European Union finance ministers have reached a breakthrough agreement that will make it more difficult for tax cheats to hide their money. The new legislation, which had been blocked for years by countries with a reputation as tax havens, was approved last week after Luxembourg and Austria agreed to lift their vetoes. But as Mil Arcega reports, it doesn’t mean tax cheats have run out of places to keep their money hidden.
Video

Video After Decades of Pressure, Luxembourg Drops Bank Secrecy Rules

European Union finance ministers have reached a breakthrough agreement that will make it more difficult for tax cheats to hide their money. The new legislation, which had been blocked for years by countries with a reputation as tax havens, was approved last week after Luxembourg and Austria agreed to lift their vetoes. But as Mil Arcega reports, it doesn’t mean tax cheats have run out of places to keep their money hidden.
Video

Video Kobani Refugees Welcome, Turkey Criticizes, US Airdrop

Residents of Kobani in northern Syria have welcomed the airdrop of weapons, ammunition and medicine to Kurdish militia who are resisting the seizure of their city by Islamic State militants. The Turkish government, however, has criticized the operation. VOA’s Scott Bobb reports from southeastern Turkey, across the border from Kobani.
Video

Video China Political Meeting Seeks to Improve Rule of Law

China’s communist leaders will host a top level political meeting this week, called the Fourth Plenum, and for the first time in the party’s history, rule of law will be a key item on the agenda. Analysts and Chinese media reports say the meetings could see the approval of long-awaited measures aimed at giving courts more independence and include steps to enhance an already aggressive and high-reaching anti-corruption drive. VOA’s Bill Ide has more from Beijing.
Video

Video US ‘Death Cafes’ Put Focus on the Finale

In contemporary America, death usually is a topic to be avoided. But the growing “death café” movement encourages people to discuss their fears and desires about their final moments. VOA’s Jerome Socolovsky reports.
Video

Video Ebola Orphanage Opens in Sierra Leone

Sierra Leone's first Ebola orphanage has opened in the Kailahun district. Hundreds of children orphaned since the beginning of the Ebola outbreak face stigma and rejection with nobody to care for them. Adam Bailes reports for VOA about a new interim care center that's aimed at helping the growing number of children affected by Ebola.
Video

Video Young Nairobi Tech Innovator on 'Track' in Security Business

A 24-year-old technology innovator in Nairobi has invented a tracking device that monitors and secures cars. He has also come up with what he claims is the most robust audio-visual surveillance system yet. As Lenny Ruvaga reports from the Kenyan capital, his innovations are offering alternative security solutions.
Video

Video Latinas Converting to Islam for Identity, Structure

Latinos are one of the fastest growing groups in the Muslim religion. According to the Pew Research Center, about 6 percent of American Muslims are Latino. And a little more than half of new converts are female. VOA’s Carolyn Presutti travelled to Miami, Florida -- where two out of every three residents is Hispanic -- to learn more.
Video

Video Exclusive: American Joins Kurds' Anti-IS Fight

The United States and other Western nations have expressed alarm about their citizens joining Islamic State forces in Syria and Iraq. In a rare counterpoint to the phenomenon, an American has taken up arms with the militants' Syrian Kurdish opponents. Elizabeth Arrott has more in this exclusive profile by VOA Kurdish reporter Zana Omer in Ras al Ayn, Syria.
Video

Video South Korea Confronts Violence Within Military Ranks

Every able-bodied South Korean male between 18 and 35 must serve for 21 to 36 months in the country’s armed forces, depending upon the specific branch. For many, service is a rite of passage to manhood. But there are growing concerns that bullying and violence come along with the tradition. Reporter Jason Strother has more from Seoul.
Video

Video North Carolina Emerges as Key Election Battleground

U.S. congressional midterm elections will be held on November 4th and most political analysts give Republicans an excellent chance to win a majority in the U.S. Senate, which Democrats now control. So what are the issues driving voters in this congressional election year? VOA National Correspondent Jim Malone traveled to North Carolina, one of the most politically competitive states in the country, to find out.
Video

Video Comanche People Maintain Pride in Their Heritage

The Comanche (Indian nation) once were called the “Lords of the Plains,” with an empire that included half the land area of current day Texas, large parts of Oklahoma, New Mexico, Kansas and Colorado.The fierceness and battle prowess of these warriors on horseback delayed the settlement of most of West Texas for four decades. VOA’s Greg Flakus reports from Lawton, Oklahoma, that while their warrior days are over, the 15,000 members of the Comanche Nation remain a proud people.
Video

Video Turkey Campus Attacks Raise Islamic Radicalization Fears

Concerns are growing in Turkey of Islamic radicalization at some universities, after clashes between supporters of the jihadist group Islamic State (IS) or ISIS, and those opposed to the extremists. Pro-jihadist literature is on sale openly on the streets of Istanbul. Critics accuse the government of turning a blind eye to radicalism at home, while Kurds accuse the president of supporting IS - a charge strongly denied. Henry Ridgwell reports from London.

All About America

AppleAndroid

World Currencies

EUR
USD
0.7893
JPY
USD
107.68
GBP
USD
0.6238
CAD
USD
1.1214
INR
USD
61.185

Rates may not be current.