Arrest chills Swiss bankers' travel plans

ZURICH Wed Oct 23, 2013 4:23pm BST

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ZURICH Oct 23 (Reuters) - Seeing one of their select number hauled in handcuffs before a foreign court may prompt Swiss bankers to call their lawyers before they ring travel agents to book a winter break.

Arrested on a weekend trip to Bologna, former UBS man Raoul Weil now sits in an Italian jail fighting extradition to the United States - one of hundreds of Swiss bank executives caught up in accusations of helping Americans dodge their taxes.

"Maybe we'll all be taking our vacations in Ticino and Graubuenden," one senior private banker told Reuters, making light of concerns among his peers about travelling abroad by talking up the charms of Switzerland's picturesque mountains.

"There is definitely concern. Definitely," he said, speaking on condition that he and his bank not be identified.

It is unclear why Weil, 54, chose to cross the border, five years after he was publicly indicted by U.S. prosecutors. Switzerland does not extradite its own citizens in cases of tax fraud. But Italy, which acted on an Interpol warrant, has given the United States six weeks to seek Weil's transfer for trial.

Weil, who checked in to a Bologna hotel with his wife on Friday, has denied the charges.

It is unclear how many Swiss risk arrest. Some may be the subject of U.S. indictments not made public. The U.S. Justice Department did not answer a request for the figures. Martin Naville, chief executive of the Swiss-American Chamber of Commerce in Zurich, thinks the number may be in the low dozens.

Yet, he says, hundreds more have curbed their itineraries, avoiding setting foot on U.S. territory if not others, for fear of being caught up in the Justice Department's dragnet.

"I would say there are 1,000 people who are currently not travelling to the United States because they are afraid," said Naville, whose forum maintains close ties to both Swiss and American business leaders and senior bankers.

"AT RISK"

UBS paid $780 million in 2009 to settle its part in the U.S. case but that did not get individual employees off the hook. Weil, then head of UBS's private bank, one of those famously discreet Swiss institutions for the world's rich, was charged in 2008 with conspiring to help 17,000 Americans hide assets in Swiss bank accounts from U.S. tax authorities.

Naville said Swiss bank staff who had had few dealings with U.S. clients probably had little to fear. "But," he added, "If you have somebody who had 200 of those clients, had been very aggressive in pushing and peddling specific structures in overseas dominions and everything, that person is at risk."

For those in doubt, suggested Valentin Landmann, a Zurich attorney who has represented Swiss clients in the United States, the worst thing to do is to think the Americans will just forget about them. His advice to any banker in fear of travelling was to check their status directly with U.S. authorities.

Having acted for Swiss lawyer Edgar Paltzer, who pleaded guilty in August in New York to conspiracy to commit tax fraud, Landmann said bankers should consider coming clean to the U.S. authorities following a Swiss government-brokered deal in July.

Under it, Swiss banks have given U.S authorities the names of thousands of their staff involved in serving U.S. clients, but have not identified the senior managers.

Likening that deal to trying to fob off a hungry dog with cheap sausage while protecting the prime meat, Landmann said: "The vicious dog eats the baloney - then comes after the ham."

U.S. federal prosecutors in Florida said in 2008 that others at the Swiss bank - "at the highest levels of management" - were "unindicted co-conspirators not named as defendants" on a charge sheet which identified only Weil by name.

For many of those in Switzerland now uncertain of where they stand following his arrest, the Chamber of Commerce's Naville said seeking out a settlement with U.S. courts may be the best course: "If you're 75 and retired and can be happy not to travel outside Switzerland any more, then don't do anything," he said.

"If you're 45 and would still like to do business, then you have to solve it."

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