Swiss Banks: We Have Nothing More to Say to EU’s Panama Panel

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By Joe Kirwin

Two leading Swiss banks defended their decision not to testify before a March 6 European Parliament Panama Papers committee probing the role intermediaries, such as banks and tax advisers, played in setting up accounts in Panama and other offshore tax havens.

Both UBS AG and Credit Suisse Group insisted March 3 they already gave information to a European Parliament committee investigating the LuxLeaks scandal and have nothing more to say on the issue.

Luxembourg is being investigated by the European Commission for giving hundreds of favorable tax rulings to multinational companies.

The EU panel’s two-day visit to Luxembourg, from March 3 to 4, included meetings with the nation’s finance minister and local divisions of accounting firms KMPG LLP and PricewaterhouseCoopers LLP as well as international banking institution HSBC Holdings Plc. The panel also met with HSBC’s U.K. representatives early February during a fact finding mission to London.

Luxembourg Media Cites Government Pressure

Other Luxembourg-based banks and accounting firms, including Ernst & Young LLP and Deloitte LLP, declined to meet with the European Parliament committee.

Luxembourg media reported March 3 that the Luxembourg government persuaded one invitee not to meet with the European Parliament.

“Today’s revelations in the Luxembourg press that one of the representatives invited by our committee was advised by the government not to attend our session is frustrating,” European Parliament member Sven Giegold told Bloomberg BNA March 3 after the visit.

“It is regrettable that several invitees declined to appear and we would welcome clarity on whether the Luxembourg government interfered in this process,” said Giegold.

Claims Disputed

Luxembourg Ministry of Finance Spokesman Bob Keiffer told Bloomberg BNA in a March 3 email that no such interference took place.

“There is no basis for that claim,” Kieffer said. “In Luxembourg, the ministry has neither the authority nor the wish to give such instructions.”

After the meeting, European Parliament committee members said that while Luxembourg was initially helpful on tackling tax avoidance and evasion in the wake of the LuxLeaks scandal, the country has been less helpful of late.

“Luxembourg has, along with some other EU countries, blocked country-by-country tax and profit reporting legislation,” Giegold said. “They also have helped block a move by EU member states to establish zero corporate tax rates as a criteria in the EU tax haven blacklist.”

Tax Haven Intermediaries

European Parliament members of the Panama Papers committee will hold their third hearing March 6, probing the activities of intermediaries such as banks, accounting firms and lawyers in setting up offshore accounts designed to hide wealth and avoid taxation. Based on year-old revelations in documents leaked from the Panamanian law firm Mossack Fonseca & Co. and distributed among members of the International Consortium of Investigative Journalists, more accounts were linked to Switzerland than any other European country. The U.K. was second, followed by Luxembourg.

The decision by UBS and Credit Suisse not to testify has triggered a howl of protest from a range of committee members spanning the political spectrum. Some have even called for the EU law-making body to deny lobbying access to the two banks.

“The banks’ refusal to stand before the committee is blatant disrespect for democracy and the European citizens,” Danish European Parliament member Jeppe Kofod, the lead representative on the committee for the Socialists and Democrats political group, told Bloomberg BNA in a March 3 email.

“If it was up to me, we should ban banks’ and multinational companies’ lobby access to the European Parliament if they refuse to stand before inquiry committees,” he added.

Previous information

Officials from both UBS and Credit Suisse told Bloomberg BNA they declined to testify March 6 because they already gave information on the Panama Papers.

“Our position on the Panama Papers is well known,” Credit Suisse spokesman Dominique Gerster told Bloomberg BNA March 3.

UBS spokesman Samuel Brandner told Bloomberg BNA in an email that “UBS asked the chairman of the committee to be excused for this hearing.” He added that the bank had submitted answers to questions about the Panama Papers that were posed by the European Parliament committee investigating LuxLeaks, and which preceded the Panama Papers investigative committee.

In early February, the U.K’s tax authority, Her Majesty’s Revenue and Customs, also met with the committee in London.

Whistleblower Protection

A key recommendation of the European Parliament‘s LuxLeaks committee--probing 2014 leaks from a trove of Luxembourg tax deals—called for legal protection for whistleblowers, such as those behind the revelations about the hundreds of favorable tax rulings offered by the Luxembourg government.

The European Commission moved to boost such protection when it launched a public consultation on the issue March 3.

“There are already strong protection mechanisms built into EU law in certain key areas, ranging from audit and money laundering rules to trade secrets, market abuse, capital requirements and other instruments regulating financial services,” the European Commission said in a March 3 statement.

The European Commission public consultation will be open until May 29.

To contact the reporter on this story: Joe Kirwin in Brussels at correspondents@bna.com

To contact the editor responsible for this story: Penny Sukhraj at psukhraj@bna.com

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