U.S. Senator Carl Levin, whose subcommittee investigation traced $12 billion allegedly hidden by 22,000 U.S. taxpayers in the bank's secret accounts.
U.S. Senator Carl Levin, whose subcommittee investigation traced $12 billion allegedly hidden by 22,000 U.S. taxpayers in the bank\’s secret accounts.” credit=”Douglas Gillison

Detailing subterfuge they said was worthy of a spy novel, a Senate subcommittee on Tuesday unveiled a raft of allegations against Crédit Suisse, Switzerland’s second-largest bank, which they said had knowingly helped thousands of rich Americans evade U.S. taxes.

The subcommittee report was released as top brass from the bank, including its CEO Brady W. Dougan, prepared to testify before the Permanent Subcommittee on Investigations, which has in recent years aggressively pursued misconduct in the financial services industry.

The bank, among the world’s largest with $1.4 trillion under management, has been the target of a federal investigation since 2011. Seven of its bankers are under criminal indictment and it concluded a $196 million settlement last week with the Securities and Exchange Commission, admitting that it provided advisory services to U.S. clients without registering with the market regulator.

Speaking to reporters before the report’s release, Sen. Carl M. Levin (D-Mich.) said that at its height Crédit Suisse had held more than 22,000 accounts for U.S. citizens and residents, holding as much as $12 billion out of the view of the Internal Revenue Service.

“They sent bankers here to our country. They traveled here to meet with clients, dealing with tens of millions of dollars of banking business on any given trip, sponsored golf tournaments,” said Levin. “Sometimes they filed false visa applications claiming that they came to this country as tourists.”

One unnamed U.S. client cited in the report, who held $7 million in offshore assets, described the bank’s extreme secrecy to avoid disclosure.

Before meeting with a banker in Switzerland, the client entered a remotely controlled elevator with no buttons and was taken to a barren conference room, rather than the banker’s office.

No mail would be sent. No U.S. faxes would be accepted. And account statements could only be viewed in person.

Another client interviewed by the subcommittee described meeting a banker at a Mandarin Oriental hotel who, over breakfast, handed the client account statements concealed in a copy of Sports Illustrated.

American account holders were also encouraged to travel to Switzerland, where a branch office at the Zurich airport was known by the code SIOA5 and included a desk devoted to U.S. clients.

As another scandal involving the Swiss bank UBS broke in the United States, one banker at SIOA5 asked another about setting up an account for a U.S. client.

In an October 2008 email cited by the subcommittee, the colleague responded.

“He needs not to disclose anything to anyone. He has the choice of disclosing it to the U.S. authorities or not. It is his choice!” the email said.

The bank did not respond to requests for comment in advance of Wednesday’s hearing.

In 2008, the subcommittee had estimated that the use of offshore accounts cost the United States $100 billion in lost tax revenue annually.

The allegations against Crédit Suisse follow the 2009 settlement between the U.S. Justice Department and UBS, Switzerland’s largest bank, which agreed to pay $780 million to resolve allegations that it had conspired to impede the IRS.

UBS then identified thousands of undisclosed accounts to the IRS, resulting in the collection of $6 billion in back taxes, according to the committee.

“You might remember that just a few days ago we struggled to avoid a $6 billion cut in retirement benefits for our veterans,” said Levin.

However Levin and ranking member John McCain (R-Ariz.) both said the Justice Department had been “dragging its feet” in pursuing a similar result with Crédit Suisse, managing to identify just 238 of the 22,000 Crédit Suisse accounts.

In dealing with Crédit Suisse, the Justice Department had failed to use all the legal tools at its disposal, such as grand jury subpoenas and so-called “John Doe summonses,” which allow U.S. authorities to request information on groups of taxpayers.

The Justice Department was instead relying on information requests under international treaty while Swiss authorities were actively seeking to prevent the production of documents sought by U.S. investigators or the identification or U.S. clients.

Pending Justice Department criminal investigations are currently focusing on 14 major Swiss banks.

Deputy Attorney General James M. Cole and Kathryn M. Keneally, assistant attorney in the tax division, were also due to testify Wednesday before the subcommittee. The Justice Department did not respond to a request for comment.

Swiss President and Foreign Minister Didier Burkhalter was also due in Washington for meetings with U.S. officials on the unfolding political crisis in Ukraine. The Swiss Embassy did not respond to a request for comment.

Douglas Gillison

Douglas Gillison

Douglas Gillison is a former staff writer for 100Reporters. His investigative projects have included the declassification of 1,300 pages of FBI records from a 1997 political massacre and the exposure of payments by a publicly traded mining company that are now the subject of an international criminal bribery investigation.