Credit Suisse Group AG helped American customers hide as much as $10 billion in assets from the Internal Revenue Service, more than double the amount previously known, according to a U.S. Senate committee.
A report by the Senate Permanent Subcommittee on Investigations criticized the Zurich-based bank for failing to discipline any senior executives in the face of widespread tax evasion fostered by 1,800 Credit Suisse employees serving U.S. clients. The firm also misled investors about growth in its private banking unit, according to the report.
The Justice Department has failed to use all its legal tools in its criminal probe of whether Credit Suisse, the second-largest Swiss bank, helped U.S. clients evade taxes, according to the report. Lax enforcement also allowed Credit Suisse to turn over the names of only 238 U.S. account holders to prosecutors, the report said.
This U.S. inaction symbolizes a larger problem in a five- year crackdown on offshore tax evasion, the subcommittee said. Prosecutors have “failed to utilize available U.S. legal means to obtain the names of tens of thousands” of Americans who owe billions of dollars in taxes and whose identities are still hidden by the Swiss, according to the 176-page report.
“The Department of Justice must take firm action to obtain the names of persons who hid those assets” and cheated on taxes, said Senator Carl Levin, a Michigan Democrat who chairs the panel. “They owe Uncle Sam, they owe the people of the United States.” He added: “Simple justice requires that tax cheats must come clean, pony up, and face the consequences.”
Hearing Today
Levin’s committee will hold a hearing in Washington today that will include testimony by Credit Suisse Chief Executive Officer Brady Dougan, three other bank executives and two Justice Department officials who coordinate the tax crackdown.
The bank last week paid $197 million to U.S. regulators and admitted it serviced thousands of American accounts without authorization. It’s the biggest of 14 Swiss banks under criminal investigation, and seven of its bankers were indicted in 2011 on charges of helping clients conceal assets from the IRS and avoid paying taxes on them. The Justice Department told the bank in 2011 that it was a target of the probe. The bank has said it’s trying to resolve the case.
“Credit Suisse has yet to admit that its U.S. cross-border business was largely a dishonest enterprise, dominated by undeclared accounts and U.S. account holders dodging U.S. taxes,” the report said. “The bank has not developed or implemented lessons learned that would guide the bank for the future.”
1,800 Bankers