Swiss parliament votes against UBS client disclosure

10 June 2010

The Swiss parliament's lower house has rejected a government plan to allow UBS to disclose its American client accounts to the US authorities.

UBS has been pursued by the US Department of Justice (DoJ) and Internal Revenue Service since at least May 2008. In that month Bradley Birkenfeld, a former employee of UBS's American subsidiary, confessed to helping thousands of wealthy Americans avoid tax by setting up Swiss accounts.

In 2009, in order to escape a lawsuit brought by the DoJ, UBS agreed to hand over the names of more than 4,000 of its American clients. This agreement breached bank secrecy laws and so had to be approved by the Swiss authorities. The Swiss federal government duly rubber-stamped it in August 2009.

However, the country's courts, and now its parliament, have been less co-operative, and have held up at least some of the disclosures for many months. Several UBS clients' appeals have been upheld in the courts, and earlier this month a parliamentary committee recommended that no more disclosures should take place without a national referendum.

The lower house - the National Council - has decided to follow this recommendation. On Tuesday 8 June it voted 104-76 to reject the disclosure deal unless a referendum  - which would take at least three months - is carried out.

Even the Swiss Bankers Association is unhappy at the National Council's decision, which it said "has unfortunately done a disservice to Switzerland’s standing as an economic and financial centre ... party political calculations took priority over the national interest."

Further negotiations with parliament's upper house (which has approved the disclosure agreement) will now be needed to resolve the deadlock. A final vote is expected on 18 June.

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