By Geoffrey Smith
Investing.com -- Credit Suisse continued to help ultra-rich Americans evade U.S. taxes for years, despite pledging to stamp out the practice as part of a plea deal in 2014, the Senate Finance Committee said in a report published Wednesday.
"Based on the committee's findings, the total amount concealed in violation of Credit Suisse's 2014 plea agreement is more than $700 million," the Senate said in a statement accompanying the results of a two-year investigation. Over $100M of that belonged to a single Latin American family whose members used their status as dual citizens to hide their assets, it added.
The revelations raise the risk of additional financial penalties for the Swiss bank, which had to be rescued with a hastily arranged takeover by cross-town rival UBS (SIX:UBSG) two weeks ago after a string of expensive governance failings finally undermined its viability. One of those disasters had been a $2.6 billion fine levied by the U.S. after it pleaded guilty in 2014 to helping U.S. citizens evade taxes.
"Credit Suisse got a discount on the penalty it faced in 2014 for enabling tax evasion because bank executives swore up and down they'd get out of the business of defrauding the United States," Committee Chairman Ron Wyden said in the statement. "This investigation shows Credit Suisse did not make good on that promise, and the bank's pending acquisition does not wipe the slate clean."
As such, the revelations expose UBS to fresh legal jeopardy, 14 years after it was forced to overhaul its own wealth management business in the U.S. on similar concerns. UBS paid $780M in 2009 to settle allegations that its wealth management unit - which caters to high net-worth individuals - had also helped U.S. citizens dodge taxes.
"In addition to a significant penalty for the bank, the individual bankers involved in these schemes must also face criminal investigation," Wyden said. "It simply makes no sense to allow the bankers who have their hands on these hidden accounts and enable tax evasion to get away scot free."
The Committee's statement named Alexander Siegenthaler as playing a "significant role in the management of the U.S.-Latin American family's accounts, adding that Siegenthaler "supervised several Credit Suisse bankers who faced criminal charges in the United States. Siegenthaler reported directly to the head of private banking for all of the Americas, who in turn reported directly to the global head of private banking."
Credit Suisse said in an e-mailed spokesman that the bank "does not tolerate tax evasion" and stressed that the accusations levelled at it were overwhelmingly historical.
The bank said it is "actively cooperating with U.S. authorities including the DOJ to address some remaining legacy conduct or policy concerns, and will continue to do so.”