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US moves toward legal action against Swiss bank: sources

Reuters  |  Washington 

US authorities are moving toward taking legal action against Wegelin & Co, which could lead to an indictment of one of Switzerland's last pure private banks, on charges that it enabled wealthy Americans to evade taxes, according to two persons with knowledge of the case.

Negotiations in the case have reached a critical stage, with an indictment possible though the bank is seeking a deferred prosecution agreement, which would be less damaging. The outcome depends on how prosecutors, the US State Department and the US Treasury Department agree to treat the matter, the sources said.

Founded in 1741, Wegelin is one of Switzerland's oldest banks. An indictment of it would be a blow to a national tradition of banking secrecy that dates back to the Middle Ages. It would be a step forward for a US crackdown on offshore tax evasion by Americans through Swiss banks.

The crackdown started around 2007 with an investigation of UBS AG, Switzerland's largest bank. It has since spread to the entire Swiss banking industry. Dozens of US clients and at least two dozen Swiss bankers have been charged, in moves that have strained US-Swiss relations.

Albena Bjorck, a spokeswoman for Wegelin, declined to comment on Friday when asked whether the bank was considering the possibility of being indicted. Charles Miller, a Justice Department spokesman, declined to comment.

The latest turn in the Wegelin case comes amid a broad criminal probe by the US Justice Department of 11 Swiss and Swiss-style banks, including Wegelin, suspected of selling offshore tax evasion services to tens of thousands of wealthy Americans. Inquiries, growing out of scrutiny of UBS, are focused on Credit Suisse AG and Basler Kantonalbank among

Basler Kantonalbank confirmed a year ago that it was under investigation and in contact with US authorities. Credit Suisse said in July its offshore private banking practices were under investigation and that it would "continue to cooperate with the US authorities."

On a parallel track, Swiss government officials and the US Internal Revenue Service are trying to negotiate a civil settlement for more than 300 other Swiss banks - the remainder of the Swiss banking industry - on the matter of private banking services that may have enabled tax evasion.

First Published: Mon, January 09 2012. 00:00 IST