Swiss bank heist (Hamodia, December 5)
“Now, when Hashem asks me ‘nu, did you see my Switzerland?’, I will be able to give a proper answer”. That is what the ageing R. Samson Raphael Hirsch supposedly said on his return to Germany, from a trip convalescing in Switzerland. Accurate or apocryphal, it’s a nice story, with a clear message.
But we can be pretty certain that R. Hirsch’s visit was what would today be called ‘health tourism’ — an area which the Swiss pioneered, as they did for many aspects of tourism. His motivation was health, not wealth — he was not there to meet with his Swiss bankers, or to check how his money was doing. But looking after other people’s money, securely and prudently, was another business that Switzerland pioneered and came to excel at.
In the twentieth century, a Swiss bank account became an almost essential and inevitable adjunct to wealth — especially if that wealth was accumulated illegally, or if its owners were afraid that it would be forcibly taken from them. The process that started with French aristocrats moving their wealth across the border to Geneva to save it from the revolution raging in their home country, became — over a period of two hundred years — a global trend. Switzerland became synonymous with neutrality in the areas of politics and diplomacy, and with secrecy and security in the areas of finance and investment.
Nobody realised it at the time, but the fall of the Berlin Wall — twenty-five years ago this month — sounded the death-knell for the Swiss banking industry. The demise of the Communist bloc left America as the global hegemon and removed the need for a country like Switzerland, able to offer a neutral zone to rival blocs.
Now the Americans, with their European allies, were able to start squeezing the Swiss. First, the sanctuary that Switzerland had provided for dictators and tyrants from around the world — such as African and South American leaders who had looted their countries — was smashed open. The Swiss were forced to provide information, and ultimately the money and gold that the criminal leaders had stashed in Swiss bank vaults.
From there it was all downhill for the old-style Swiss banking industry. The breakthrough — literal and metaphoric — over banking secrecy was extended to leaders of organised crime rings, drug-dealers, gun-runners, purveyors of ‘blood diamonds’ and other kinds of criminals who were regarded as beyond the pale by Western society. The Swiss were obliged to hand over the dirty money and any information they had, thereby severely compromising their reputation as a safe place for bad people’s money.
An important chapter in this process was the long struggle to force the Swiss banks to admit that they held considerable amounts of Jewish money, deposited with them before the Holocaust and whose owners did not survive to claim it after the war.
But the total collapse of Swiss banking secrecy has come in the last few years, because — following the global financial crisis — the US and governments in Western Europe had a desperate need to do whatever they could to generate more tax revenues. This included chasing after money that had been moved overseas to avoid paying taxes on it.
The biggest and best-known haven for this kind of money was Switzerland, although there are many others as well. The pursuit of American tax-payers’ money has led, via pressure on the Swiss government itself, to the Swiss banks agreeing to provide information on their foreign clients. The main weapon used to obtain this agreement was ferocious enforcement of American laws, resulting in multi-billion dollar fines on Swiss and other European banks.
With ‘black’ money largely gone, Swiss banks are now trying to create a new business model that will enable them to retain at least some of their old prestige — and profits. But, as even their former clients would generally admit, it couldn’t happen to nicer people…