Neue Zürcher Zeitung: the Swiss dog that didn't bark

We have just received the following story from Switzerland.

On Monday an 81 year old lawyer confessed before a New York court to not having declared income amounting to US$26.4 million from his tax return. As a result he has been fined a stunning $9.8 million. A decision on whether he will also have to serve a prison sentence will be taken on the 27th of September.

The lawyer had placed his money on a Swiss UBS account via an offshore company. However, when UBS came under investigation by the US tax authority, he transferred his money in May 2008 to the Wegelin & Co. Private Bankers.

The Tagesanzeiger and the Bund, two major Swiss newspapers located in Zurich and Bern respectively, have described this as an “embarrassing case” for the Wegelin Bank.

However, what intrigues about this story is that the Neue Zürcher Zeitung (NZZ) did not deem this story worthy of any notice beyond simple reproducing the Reuters news feed on its online edition. Nothing can be found in today or yesterday’s print edition. But maybe this isn’t so surprising after all when you consider that Konrad Hummler, one of the managing partners of the Wegelin bank, has recently also been appointed president of the board of directors of the Neue Zürcher Zeitung. This starts to smell a little less fresh.

Rather than report on this “embarrassing case”, the NZZ chose to publish the following advert:

“I'm not a client at Wegelin&Co. because I prefer to swim in my money”. Dagobert Duck.
Wegelin&Co. Private bankers since 1741. For all who prefer to invest their money.

Amusing, isn't it? Only for those who prefer to evade their taxes . . .

What's not so funny is that the linkages between a private bank and a major Swiss newspaper appear to stand in the way of allowing a public discussion about the behaviour of Swiss banks. It mutes questions such as whether we, as Swiss citizens, consider it right that the torch is merely passed from the big banks to small private banks, while the basic business model of helping foreigners evade their taxes remains intact.

Two years ago Konrad Hummler declared he didn't care whether Bank Wegelin was on a US-list of institutions suspected of enabling tax evasion, as long as the Bank conforms to Swiss law. This will remain the case so long as there is no automatic information exchange to support cooperation between one jurisdiction and another. And instances like the one described here help keep automatic information exchange a non-issue in Switzerland.