Hoping to avoid a diplomatic showdown, word is Swiss banking giant UBS and the U.S. Justice Department have reached an agreement in general that will deal with the releasiing of 52,000 American UBS clients, who of some, are thought to have evaded taxes through using undisclosed accounts. Details of the agreement haven’t been released, although it was said there are more to be worked out before things are finalized.
I’m not sure how this will really work out, as Swiss law doesn’t allow for the names to be released, and the Swiss government has already said they won’t allow the disclosure of the names of the UBS clients, and will block any effort to release them, whether a U.S. judge ordered them to or not.
“I am reporting to the court that the parties have reached an agreement in principle on the major issues,” said Justice Department lawyer Stuart Gibson Gibson. “There are some other issues that need to get resolved and we expect to be able to resolve them during the coming week.”
According to UBS and the Swiss government, the argument is that compliance with the IRS demand would force them to violate strict bank secrecy laws in Switzerland, subjecting UBS officials to criminal sanctions under Swiss law, including prison. Another big part of the argument is that such action would violate a US-Swiss treaty.
Again, if that’s the case, it will be fascinating to hear what the agreement could be short of violating Swiss law and UBS banking officials going to jail for complying. I don’t see the middle ground here.
The judge presiding over the case, upon being told of the potential agreement, postponed a hearing scheduled for Monday until August 10, and also set another status conference for August 7 in hopes a final agreement has been reached.
