An international investigative report reveals that Credit Suisse Bank account holders include dictator elite, intelligence officers, corrupted officials and people who are involved in human rights abuse. Leading businessmen, bureaucrats and a foreigner who was questioned for tax evasion are found in Thailand.
Credit Suisse logo in Zurich (Source:flickr/alex.ch)
SuisseSecret is the name of a collaborative journalism project utilising bank account data leaked by an anonymous source to the German newspaper Süddeutsche Zeitung. The paper made the data available to the Organized Crime and Corruption Reporting Project (OCCRP) and 46 other media partners on 5 continents. Prachatai is OCCRP’s partner in Thailand.
Reporters looked through thousands of bank records and interviewed insiders, regulators, criminal prosecutors, and tax authorities. They also dug through court records and financial disclosure statements to corroborate the findings. The data covers over 18,000 accounts that were opened by more than 30,000 account holders from the 1940s until well into the last decade. Together, the accounts held funds in excess of $100 billion.
The study reveals that a number of the accounts belong to people investigated for criminal and financial wrongdoing, including individuals linked to authoritarian regimes and human rights abuse.
Examples cited by OCCRP and SZ include a Yemeni spy chief known for his brutal interrogation methods; a financial backer of Zimbabwe’s former president Robert Mugabe, and Venezuelan bureaucrates linked to the country’s economic crisis.
Although Credit Suisse pledged to stop providing services to criminals, corrupt officials and controversial customers, company insiders told reporters that prevailing bank practices still fall short of due diligence.
I believe that Swiss banking secrecy laws are immoral. The pretext of protecting financial privacy is merely a fig leaf covering the shameful role of Swiss banks as collaborators of tax evaders. Common Reporting Standards (CRS) is a step in the right direction [to address the problem] but many developing countries are not covered by this agreement. Moreover, the CRS requirement of reciprocity imposes a disproportionate financial and infrastructural burden on developing nations, perpetuating their exclusion from the system in the foreseeable future. This situation enables corruption and starves developing countries of much-needed tax revenue. These countries are the ones that therefore suffer most from Switzerland’s reverse-Robin-Hood stunt,” stated the anonymous source.
“I want to emphasise the fact that the responsibility for this state of affairs does not lie with Swiss banks but rather with the Swiss legal system. Banks are simply being good capitalists by maximising profits within the legal framework they operate in. Simply put, Swiss legislators are responsible for enabling financial crimes and —by virtue of their direct democracy— the Swiss people have the power to do something about it. While I am aware that banking secrecy laws are partly responsible for the Swiss economic success story, it is my strong opinion that such a wealthy country should be able to afford a conscience. (...)
I am aware that having an offshore Swiss bank account does not necessarily imply tax evasion or any other financial crime. I am sure that some of the accounts (...) have a legitimate reason for existing or that they have been declared to tax authorities in compliance with the relevant legislation. However, it is likely that a significant number of these accounts were opened with the sole purpose of hiding their holder’s wealth from fiscal institutions and/or avoiding the payment of taxes on capital gains,”
Findings on Thailand
While the report has not contained any scandalous revelations about Thailand’s Credit Suisse account holders, it does include the names of individuals who have been accused of fraud and tax evasion in the past.
Prachatai is investigating and will report additional information as it becomes available. As the data is historical, revealing the details of accounts that were maintained in the past, the confirmation process is necessarily slow. It also may not represent the current state of the transaction.
Of the people mentioned, one is a European who had a company here in the 1980s but now operates businesses in other countries. His name also turned up in an earlier investigation after the ‘Panama Papers’ were leaked. An investigative report by a French outlet in the past found that he co-owned a company in the British Virgin Islands, a tax haven, which allow him to avoid paying taxes on an estimated annual income of over 250 million USD.
Another foreign national on the list was found by the International Consortium of Investigative Journalists (ICIJ) to be acting as the director and intermediary for two companies in the Seychelles Islands and Cyprus, places known for offering tax incentives to encourage business registration.
In the company listed in the Seychelles, there was a separate legal entity that acted as secretary. This legal entity is also acted as shareholders and secretaries for other 27 firms registered in the British Virgin, Seychelles and Samoa, well-known tax havens. Names of the members in the companies were in Vietnamese, Chinese, Indian and Bahasa and scattered among them were legal entities that also served as shareholders, secretaries and intermediaries.
Similarly, the Cyprus firm has a discrete legal entity within that served as secretary and shareholder for two additional enterprises, businesses ostensibly engaged in the provision of oil field services.
A Prachatai investigation found that the individual maintains a residence in Thailand but left the country in early 2022. The true beneficiaries and the true nature of these tangled business practices remains an open question.
An investigation of a Thai national on the list found that the individual was convicted of fraud by the Court of Appeals within the past five years period. Prachatai email and social media queries have yet to receive a response.
Thailand’s other Credit Suisse account holders include people from a wide variety of backgrounds: well-known business people from the jewellery, hotel and real estate circles; owners of construction supply companies; trade association leaders; former high-level civil servants; elected and junta-appointed politicians with business backgrounds; and business people who back politicians.
Having an offshore bank account is not wrong in itself. There are legitimate reasons to have one. Offshore accounts can be used to facilitate international transactions and investment. Moreover, certain types of tax evasion are commonplace and not necessarily illegal. Much is left to the conscience of taxpaying citizens.
Prachatai is still collaborating with other media partners to investigate both the published and unpublished findings.
We have submitted a query to Thai tax authorities asking what, if any, declarations they received from taxpayers about offshore bank facilities in Switzerland during a certain period of the leak. After a month of waiting, we still have had no official response. An informal conversation with a tax official led one of our reporters to conclude that the data may not be available.
Overseas, Credit Suisse representatives told Süddeutsche Zeitung that they are reviewing allegations of wrongdoing, and that 90 percent of the accounts in question were either closed or in the process of closure before press inquiries began. They also emphasised that measures dealing with the tax evasion and financial crime-related activities have been implemented.
“Credit Suisse strongly rejects the allegations and inferences about the bank’s purported business practices. The matters presented are predominantly historical, in some cases dating back as far as the 1970s, and the accounts of these matters are based on partial, selective information taken out of context, resulting in tendentious interpretations of the bank's business conduct. While Credit Suisse cannot comment on potential client relationships, we can confirm that actions have been taken in line with applicable policies and regulatory requirements at the relevant times, and that related issues have already been addressed,” the bank stated in February 2022.
“These media allegations appear to be a concerted effort to discredit the Swiss financial marketplace, which has undergone fundamental changes since the global financial crisis, while also specifically targeting Credit Suisse with a barrage of inferred allegations,” said another Credit Suisse Group statement on February 4 2022.
What is Swiss banking secrecy?
Banking secrecy in Switzerland took shape during the 19th century, when attempts were made to codify international law and international humanitarian law within the Swiss legal system. Jurists Gustave Moyneir (1826-1910) and Henry Dunant (1828-1910) were central to the process.
In 1815, when the Congress of Vienna established Switzerland’s international neutrality, a large capital influx resulted. After the Swiss federation was formed in 1848, the country’s political situation stabilised, a requisite for banking secrecy.
Swiss bankers travelling to France during World War I began advertising their country’s bank secrecy policies. As the war dragged on, Switzerland experienced rapid capital movement into the country from wealthy clients seeking to avoid war-related taxes.
Disclosing client information has long been a civil offence in Switzerland. The Swiss Federal Assembly had made it a criminal offence in 1934, with the enforcement of the Federal Act on Banks and Saving Banks. The law was a landmark that transformed Swiss banks into strongholds of financial secrecy.
Amended in 2016, Article 47 of the law stipulates that those violating banking secrecy regulations can face up to three years in prison. A Swiss banker who discloses customer information without consent may be fined up to CHF 250,000.
Since 1934, secrecy laws have been intentionally violated by four people: Christoph Meili (1997), Bradley Birkenfeld (2007), Rudolf Elmer (2011), and Hervé Falciani(2014). All four were whistleblowers whose actions resulted in little more than federal arrest warrants, fines and career setbacks.
After the 2008 financial crisis, Switzerland signed the European Union Savings Directive (EUSD), which obliges Swiss banks to report “non-identifying” tax statistics to 43 European countries on an annual basis.
Banking secrecy, and the confederation’s neutrality, were challenged at the end of World War II. Switzerland’s trade with the Axis powers, especially Hitler’s Germany, raised questions about whether the confederation exploited its neutral standing to conduct illicit acts. In the four decades after WWII, there have also been numerous scandals involving politicians, businessmen and rulers who used Swiss banks to avoid scrutiny in their home countries.
Scandals continue to emerge, despite bank pledges to curb illegitimate financial activity.
A recent case hit the news on 7 February, when Credit Suisse was charged in a Swiss court for allowing an alleged Bulgarian cocaine trafficking gang to launder money via Credit Suisse transactions.
In a discussion with OCCRP representatives about Credit Suisse’s engagement with clients linked to corruption and human rights violations, one expert spoke of the ‘toxic organisational culture’ that contaminated the bank from top to the bottom.
Gerhard Andrey, a Green Party representative in the Swiss parliament, spoke of a case that arose in 2014 when Urs Rohner, the former chairman of Credit Suisse, denied responsibility for the bank’s involvement in tax evasion by American citizens.
“He’s the head of the company! If you’re CEO or president, you can’t say, ‘It has nothing to do with me,’ because you’re responsible for defining the culture,” Andrey said on the phone from the Swiss parliament. “Culture is defined top-down by senior staff, the board and executives.”
On condition of anonymity a former mid-level bank employee also spoke with frustration of feeling of powerless to take action.
“I took early retirement, as toxicity between compliance and business grew – the former slowly and fully becoming subservient to the latter,”
An October 2021 email from Credit Suisse’s chairman and CEO noted that a survey of 50,000 employees indicated that many felt the “need for an environment that empowers colleagues to speak up.”
Internal emails leaked to OCCRP confirm that the Bank’s work culture remains problematic, however. Experts note that things are unlikely to change until top executives face repercussions for scandals that still plague the bank.
“CEOs have to go to jail for this to hit home,” said James Henry, an economist and senior adviser to the U.K. charity Tax Justice Network who has studied tax evasion at Credit Suisse.
Although critics blame Credit Suisse for negligence, Switzerland’s government must also accept responsibility for creating a lax regulatory environment and imposing laws that punish those who speak out against corruption.