Headline July 06, 2014


"Offshore tax evasion" : _  As America arm-twisted the bulk of Switzerland's banks into a painful deal-

ANOTHER Swiss newspaper likened the deal to ''Swallowing Toads''.

Some of the prospective buyers in any future  M&A  wave still have to make their peace with the Americans.

Excluded from the deal are are  14   mostly large banks that have been under investigation for some time, including:

Credit Suisse and Julius Baer. They will have to settle individually, with fines expected to be steep, some perhaps comparable to the-

$780 million paid by the UBS in 2009.

These banks are also under pressure from European countries that have suffered tax leakage, including Germany, whose parliament has rejected a deal that would have allowed the Swiss:

To make regular payments of tax withheld from the clients while avoiding having to name names.   

Swiss Bankers gamely argue that bank secrecy remains intact, point out that privacy laws have not been dismantled.

But banks are being bullied into providing enough information, short of actual client names, to allow the Americans to make robust:

"Mutual legal assistance," requests that leave Swiss courts with no option but to order banks to provide clients personal details.

The courts still have some flexibility because America has yet to ratify an amended tax treaty with Switzerland, thanks to blocking tactics by Rand Paul, a Senator who argues :

It would violate American rights to privacy. But this obstacle will eventually be cleared or circumvented. That is for sure.

All of which fuels speculation that Switzerland could lose its crown as the leading offshore financial centre, even though it is still well ahead of fast growing rivals in Asia.

Till 2013, Swiss banks stayed at the summit, and the destination of the offshore financial wealth,  -in trillion of dollars-   graphed as follows:

Swiss, Britain and Ireland, Hong Kong and Singapore, Caribbean and Panama, United States, Others, and rounded off by Luxembourg.

It may find comfort in the fact that the Americans plan to use information harvested from the Swiss   -including  ''leaver lists'' , which contain data on account closures-

And transfers to banks abroad   -to go after other jurisdictions. Some wishful, thinking that.

This is a part of a  ''domino effect''  strategy, says Jeffrey Neiman , a former federal prosecutor, aimed at forcing tax evaders:

''So far off the beaten path that they can't be sure if the pirate waiting to take their money will be there when they return.'' :


But then,  how the world wishes for Nobel Laureate Ronald Coase. One of the giants that he was,  -as only he could help explain why companies exist? Why the financial world is, what it is?

Professor Ronald Coase often loved debating with his Chicago academics, counted on market  ''externalities''  : economic choices that impose social costs or benefits on others.

Yes, his insights revolutionised policy:

''I have made no innovations in high theory,'' was how Professor Ronald Coase modestly summed up his life's work. 

''My contribution to economics has been to urge the inclusion......of features of the economic system so obvious that ..........they tended to be overlooked.''

Attention to the overlooked helped Professor Coase transform both law and economics for ever and ever.

The world even now stands enthralled.

Professor Ronald Coase, probably sums up best the world of finance: "A scholar must be content with the knowledge  -that what is false in what he says will soon be exposed."

So, true , Sir, Professor.

I leave the rest for the Students and readers to surmise.

With respectful dedication to the Students, Professors and Teachers of Switzerland. See Ya all on !WOW!  -the World Students Society Computers-Internet-Wireless:

With respectful dedication to the memory of Professor Ronald Coase and for his distinguished work.

''' Coase Was Clear '''

Good night and God bless!

SAM Daily Times - The Voice of the Voiceless


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