Tax officials alerted to possible global fraud

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http://www.abc.net.au/worldtoday/content/2008/s2496841.htm

Tax officials alerted to possible global fraud PRINT FRIENDLY EMAIL STORY
The World Today - Friday, 20 February , 2009 12:21:00
Reporter: Simon Santow
ELEANOR HALL: The Swiss based bank UBS is fending off claims that it's fostering global tax evasion. UBS paid more than a billion dollars to United States tax authorities to settle a case in which it was accused of assisting its customers to commit fraud.

Now tax authorities around the world, including in Australia, are examining the possibility of uncovering billions of dollars that they suspect are hidden in offshore accounts.

Simon Santow has our report.

SIMON SANTOW: For the giant Swiss based global bank UBS, the court action in the United States has been both embarrassing and damaging to its business.

An employee blew the whistle when he told tax authorities that UBS bankers had helped their clients in America avoid tax.

At the heart of the deception is what sets banks in Switzerland apart from other banks in other Western nations - the secrecy surrounding account details or even the fact a customer holds an account.

IAN RAMSAY: Well I would have little doubt that this major announcement of the penalty that UBS will pay is a matter that is being following closely by taxation authorities around the world.

After all, it is an unprecedented development for UBS to pay such a large sum of money to the US Government but also of course for UBS to agree to hand over the names of some of its clients to regulatory authorities.

SIMON SANTOW: But according to professor Ian Ramsay from Melbourne University's Centre for Corporate Law, it would be a mistake to assume wealthy Australian clients will also necessarily have the cloak of anonymity lifted on their Swiss bank accounts.

IAN RAMSAY: UBS would strongly resist handing over the names of its clients. After all it has taken some years for UBS, under significant pressure, to hand over the names of these US clients to regulatory agencies in the United States. So I think that UBS would strongly resist doing the same in relation to regulatory agencies in other countries.

SIMON SANTOW: So in a sense are you saying that there is a limitation to what they have admitted they have done wrong?

IAN RAMSAY: Well what we do need to acknowledge is that although this is quite an extraordinary development it is limited to the United States. In other words the settlement is with key US regulatory authorities. Moreover it concerns US clients of UBS.

So what we don't know is whether of course the actions that UBS engaged in, in relation to its US clients, there were any other clients in other countries if you like, that UBS was also providing services to and those services might be in breach of relevant laws. We just don't know the answer to that yet but of course that would be something that other taxation authorities would be considering.

SIMON SANTOW: In Switzerland banking is the country's major industry and the decision to release the names and the account details has been branded by some as a 'capitulation'.

Pierre Mirabaud is the head of the Swiss Bankers Association. He told the BBC it would be a mistake to confuse secrecy laws with any official attempt to hide tax evaders.

PIERRE MIRABAUD: The banking secrecy law in Switzerland does not cover dodgy individuals, does not cover crime and does not cover illegal transactions like money laundering, like drug dealing and so on.

REPORTER: But the clear allegation is that you don't look too closely to find out whether those individuals …

PIERRE MIRABAUD: Completely wrong. I deny that completely and the OECD has declared that Switzerland is not on any black list of unco-operating state.