How CS Mishandled New Nazi Account Allegations
A few months before Credit Suisse’s collapse, its new legal chief terminated Barofsky’s contract. However, political pressure from the US Senate Budget Committee prompted the investigation’s reopening after UBS took over. Is American political involvement a dangerous situation?
Yes. US committees, unlike those in Switzerland, have dozens of staff, significant budgets, and considerable power. My advice to UBS is to invest in public relations and lobbying to make it clear to US authorities, Congress, and key media outlets that these issues were thoroughly investigated under respected figures like Paul Volcker and resolved through the 1998 settlement. UBS should also emphasize the disproportionate costs compared to the results. A goodwill gesture toward the Simon Wiesenthal Center—involving financial compensation, as it is customary in such cases—might also help.
Given the previous settlement, wouldn’t such a gesture set a bad precedent?
During my tenure with the task force in 1996-1999 and again during the tax evasion disputes with the US starting in 2007, I learned that Swiss bankers prefer to resolve problems with checks rather than confrontation, often using shareholder money. I doubt this mentality has changed, especially since UBS can now point to Credit Suisse’s former management as responsible for these issues.
That seems like a weak approach. UBS has taken on both the assets and liabilities of Credit Suisse and should now act in shareholders' best interests.
It’s clear that UBS aims to resolve Credit Suisse’s legal and legacy issues quickly through settlements and payments to shed its baggage.
«My patience has run out.»
The takeover of Credit Suisse by UBS was also driven by American interests. Couldn’t Switzerland have negotiated support for resolving legacy issues in return?
I don’t blame anyone. In a crisis, you focus on extinguishing the biggest fires first. During those fateful days, nobody in Bern or Zurich was thinking about secondary or tertiary issues like potential Nazi accounts. However, Switzerland can now approach the new US administration to seek goodwill. The Swiss contribution to stabilizing the global financial system should be acknowledged. Negotiating a general settlement for a reasonable, modest amount would be a meaningful task for the State Secretariat for International Financial Matters.
Are the conditions for such an initiative favorable?
Better than one might think. Switzerland has historically faced challenges under Democratic administrations like Bill Clinton, Barack Obama, and now Joe Biden. Republican administrations have generally been more favorable toward Switzerland. The Donald Trump administration could potentially counteract the pressures UBS is currently facing. As a goodwill gesture, Switzerland might also consider revisiting the idea of a free trade agreement.
Who could take the lead on such an initiative?
I am confident that the Swiss embassy in Washington, political leaders in Bern, and UBS management can take the necessary steps. If UBS lacks direct access to decision-makers at the highest levels, connections could be established through former US ambassador Ed McMullen or the incoming US ambassador to Switzerland, Callista Gingrich. During my tenure, her husband Newt Gingrich, then-Republican House Speaker, supported my efforts. Of course, I’m also available if a few phone numbers are needed...
Read on the last page for Thomas Borer’s views on UBS’s challenges with the Department of Justice over Credit Suisse’s guilty plea.
